Question

What is the difference between an audit, a review and a compilation?

I want the resources, please for the answer.

Answer 1

Audit	Review	Compilation
Accuracy of financial statements is assured. It is intended for investors, outside parties, creditors etc.	A review engagement report provides with limited assurance on the financial statements. These reports are intended to the stakeholders of the company to make sure that the financial statement provided is plausible.	Provides no assurance on the financial statements. Cannot claim if amounts are free from financial misstatements.
CPA provides with audit report. CPA ensures that all applicable financial reporting frameworks are incorporated while developing the financial statements.	CPA provides with review report. In this accountant uses discussions with client and analytical procedures to ensure financial statements are plausible and that they follow International financial reporting standards or Accounting standards for private enterprises (ASPE).	CPA provides with compilation report. It uses the financial statements and information provided by either client of client's book keeper
These reports are highly appropriate. These are required while selling the business or seeking high level of investment	These reports are typically appropriate. These are used when seeking high or complex credit or financing for growth of business	These reports are used initially when seeking lower amount of credit of financing. These can be used when significant collateral is in place.

The resource used for developing the above table is American Institute of CPAs (www.aicpa.org)