The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework (such as International Financial Reporting Standards or US GAAP). Auditors conduct their engagements in accordance with auditing standards issued by a standard setter such as the International Audit & Assurance Standards Board (IAASB).
The objective of a review engagement is to enable an auditor to state whether, on the basis of procedures which do not provide all the evidence that would be required in an audit, anything has come to the auditor’s attention that causes the auditor to believe that the financial statements are not prepared, in all material respects, in accordance with an applicable financial reporting framework.
A compilation engagement is an engagement in which accounting expertise, as opposed to auditing expertise, is used to collect, classify and summarise financial information. The experience of the accountant ensures that the financial information is presented in accordance with an applicable financial reporting framework. A report is presented which gives credibility to the presentation process.