The objective of a financial statement audit is to express an opinion about whether financial statements are presented fairly in accordance with Generally Accepted Accounting Principles. An audit includes tests of accounting records and other procedures required to express the opinion.
The procedure includes tests of documentary evidence that supports transactions recorded in the accounts, tests of physical existence of assets and confirmation of receivables and liabilities. The audit includes examining supporting evidence of the amounts and disclosures in the financial statements, although it does not include a detailed examination of all transactions.
A financial statement review consists primarily of inquires of employees and analytical procedures regarding financial data. A review does not involve obtaining an understanding of internal control or assessing control risk, tests of accounting records and responses to inquires by obtaining confirming evidential matter, and certain other procedures ordinarily performed during an audit. A review does not provide assurance that the accountant will become aware of all significant matters that would be disclosed in an audit.
A financial statement compilation is the presentation of financial information that is the representation of management in the form of financial statements. A compilation does not consist of reviewing or auditing the financial statements - the accountant does not issue an opinion or any form of assurance.