Audit vs. Review Engagement: Key Differences Every Ontario Business Should Know
When lenders, investors, or shareholders request financial statements, many Ontario business owners are unsure whether they need an Audit or a Review Engagement. Both are assurance services performed by a CPA, but they differ significantly in assurance level, procedures performed, time commitment, and cost.
This guide clearly explains the differences so you can choose the right option for your corporation or small business.
What Is an Audit?
An Audit provides the highest level of assurance. The objective is to determine whether the financial statements are free from material misstatement.
Audit procedures typically include:
- Detailed testing of transactions
- Third-party confirmations from banks, suppliers, and customers
- Review of internal controls
- Fraud risk assessment
- Substantive testing and analytical procedures
Upon completion, the CPA issues an Audit Opinion, which lenders and investors often require for significant financing or complex operations.
When You May Need an Audit
- Significant commercial loans or refinancing
- Investor requirements
- Regulated industries
- Charities and nonprofits receiving grants
- Businesses with multiple shareholders
What Is a Review Engagement?
A Review Engagement offers moderate assurance. It is more detailed than a compilation but less intensive than an audit.
Review procedures include:
- Analytical procedures
- Financial ratio analysis
- Discussion and inquiries with management
The CPA issues a Review Engagement Report stating the financial statements are “plausible.”
When You May Need a Review
- Small to medium bank loans
- Lender requests for limited assurance
- Internal company planning
- Businesses wanting credibility at lower cost than an audit
Audit vs. Review: Side-by-Side Comparison
| Feature | Audit | Review Engagement |
|---|---|---|
| Level of Assurance | High | Moderate |
| Procedures Performed | Testing, verification, confirmations | Analytics and inquiries only |
| Cost | Higher | Lower |
| Time Required | Longer | Shorter |
| Common Users | Banks, investors, regulators | Banks, owners, management |
Audit & Review Engagement Services in Ontario
At PodolskyAccounting, we provide full-service assurance engagements across Ontario. Related services include:
- Corporate Tax Return Preparation
- Financial Statement Preparation
- Audit & Review Engagement Consultations
Serving clients in Vaughan, Toronto, Richmond Hill, Markham, Mississauga, Oakville, and all of Ontario—both remotely and in person.
Book a free consultation today.
Frequently Asked Questions
Is a review engagement enough for a bank loan?
Yes, for most small to mid-sized loans. Larger financing may require an audit.
Which costs more: an audit or a review?
An audit costs more due to detailed testing and verification.
Does every Ontario corporation need an audit?
No. Most private corporations do not require one unless shareholders or lenders ask for it.
Can a review be upgraded to an audit later?
Yes. A CPA can expand a review engagement into a full audit if needed.