Audit vs review — what's the difference?

General advice only · AFSL 222640 · Global Mutual Funds Pty Ltd

The direct answer

An audit provides reasonable assurance that financial statements are free of material misstatement, using detailed testing and evidence. A review provides limited assurance — mainly enquiry and analytical procedures — so it is cheaper and faster but offers less comfort. Which one you need is often set by law, a lender, a funding body, or your constitution.

What it depends on

The full answer depends on your specific circumstances. Here’s what matters.

Who is asking

Legislation, a regulator, a lender or a grant body may specify audit or review. Check the exact wording of the requirement.

Your risk and complexity

Where fraud risk, complex transactions or significant stakeholders exist, an audit's depth may be worth the cost even if not required.

Standards applied

In Australia audits follow Australian Auditing Standards (ASA) and reviews follow review standards (ASRE), issued by the AUASB.

The last 10%

What a qualified professional can add

The answer above covers the general position. Here’s where professional judgement — applied to YOUR specific situation — makes the difference.

Confirming which engagement type a requirement actually demands
Scoping the work to your risk areas
Delivering a report the requesting party will accept

Questions to ask before you engage one

If you decide to engage a professional, these questions help you evaluate whether they’re right for your situation.

Does our requirement say audit, review, or either?

What would each cost, and how long would each take?

What would an audit test that a review would not?

Could a review be upgraded to an audit later if needed?

Your next step

Get the exact wording of whoever is requiring assurance. "Audited" and "reviewed" are not interchangeable.

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