Is review of financial statement same as a financial audit?
The standards of review of financial statements are not met by financial audit since a review involves the execution of procedures that result in uncertain conclusions. The investigation (gaining knowledge about the nature of the firm and accounting practices) and analytical techniques used on the financial statements are the major steps in a review.
A financial audit comprises knowing the Company’s internal control over financial reporting in addition to learning about the business. Based on this knowledge, the auditor carries out substantive and control examinations to determine if the balances in the financial statements are fairly stated in conformity with current accounting principles. The independent auditor offers an opinion regarding the review of the financial statements in accordance with the applicable accounting rules after completing the audit procedures.
A financial audit requires more involved procedures for giving a judgement on the financial situation and performance of the Company, whereas a review of financial statements offers reasonable assurance regarding the financial statements.