A review engagement and an audit both produce a practitioner's report on a set of financial statements, but they answer a different question at a different level of rigour, and the two are not interchangeable just because both come with a signature at the bottom. An audit gives reasonable assurance; a review gives limited assurance. The gap between those two words is the whole point of this comparison.
This guide breaks down exactly what differs — the procedures, the standards, the report wording, and how to know which one your business actually needs. For the assurance service itself, see review & compilation engagements and audit & assurance; for the tier below a review, see Notice to Reader / compilation engagements explained.
The assurance ladder, in one table
| Audit | Review engagement | Compilation (Notice to Reader) | |
|---|---|---|---|
| Level of assurance | Reasonable assurance (highest) | Limited assurance | No assurance |
| Governing standard | Canadian Auditing Standards (CASs) | CSRE 2400 | CSRS 4200 |
| Core procedures | Extensive testing of transactions, balances and external confirmations | Inquiry of management and analytical procedures | Assembling management's information into statement form, without verification |
| Report form | Positive opinion the statements are fairly presented, in all material respects | Negative-form conclusion — nothing came to attention suggesting material misstatement | Explicit statement that no assurance is expressed |
What an audit actually does that a review does not
The difference is not paperwork volume for its own sake — it is what evidence the practitioner gathers before saying anything. An audit under the Canadian Auditing Standards (CASs) involves testing transactions and account balances, confirming material amounts with third parties where appropriate, examining supporting documentation, and assessing internal controls, all aimed at supporting a positive opinion: the statements are presented fairly, in all material respects, in accordance with the applicable framework.
A review under CSRE 2400, Engagements to Review Historical Financial Statements, relies mainly on inquiry of management and analytical procedures — checking whether relationships in the numbers make sense, comparing period over period, and asking questions about anything that does not. It does not include the transaction testing, third-party confirmations or control assessment an audit does. The resulting conclusion is deliberately phrased in the negative form: nothing came to the practitioner's attention to suggest the statements are materially misstated. That is a real conclusion, but it is a lower bar than an audit's positive opinion, and readers of the two reports should understand they are reading different things.
Why the wording of the conclusion matters
The negative-form wording of a review conclusion is not a hedge or a weaker version of an audit opinion — it is the accurate description of what limited-assurance procedures can support. A practitioner who has performed inquiry and analysis, rather than substantive testing, cannot honestly claim the same level of comfort an audit provides, and CSRE 2400 requires the report to say exactly that. Readers relying on a reviewed statement — a lender assessing a covenant, a shareholder checking a distribution — should understand precisely what level of comfort they are getting, which is why the standard is specific about the wording.
Choosing between them
The decision is rarely about which engagement the business itself would prefer — it is about what the people relying on the statements actually require:
- Loan covenants and lending agreements frequently specify the required tier explicitly; read the agreement before assuming a review is sufficient.
- Shareholder or partnership agreements may set their own requirement, independent of any lender.
- Investors evaluating the business may have their own expectations, which are worth confirming before an engagement is commissioned rather than after.
- Corporate statutes in most Canadian jurisdictions allow private-company shareholders to waive the audit requirement, typically by unanimous resolution renewed annually — but whether that waiver is actually available and advisable for your company depends on your specific structure and agreements.
Committing to a higher tier than anyone actually requires spends money and time without buying anything the stakeholders needed; committing to a lower tier than a covenant or agreement requires creates a compliance problem that surfaces at the worst possible moment.
How RN Canada helps
RN Canada performs review engagements to CSRE 2400 and audits to the Canadian Auditing Standards for Alberta and BC businesses, and helps you read exactly what your lender, shareholders or investors require before committing to a tier. Where a business initially expects a review but the facts point to an audit requirement, we move the engagement into our audit & assurance service rather than stretch a review beyond what the standard allows. Our founder, Ozgur Duymaz, holds a Ph.D. in accounting and finance and is a CPA (Canada), ACCA (UK) and CMA (US). To confirm which tier your business actually needs, see review & compilation engagements or talk to us.
This page is general information, not personalized advice. Speak to us about your specific situation.
Frequently asked questions
The level of assurance the practitioner provides. An audit gives reasonable assurance — the highest level available — through extensive testing of transactions and balances, resulting in a positive opinion that the statements are fairly presented. A review gives limited assurance, based mainly on inquiry and analytical procedures, and is expressed as a negative-form conclusion: nothing came to the practitioner's attention to suggest the statements are materially misstated.
Review engagements are performed under CSRE 2400, Engagements to Review Historical Financial Statements. Audits are performed under the Canadian Auditing Standards (CASs). Both sit within the broader CPA Canada Handbook framework alongside the compilation standard used for lower-assurance engagements.
Usually because the people relying on the statements — a lender, a shareholder group, or an investor — do not require audit-level assurance, and a review meets their needs at meaningfully less cost and disruption than a full audit. Loan covenants and shareholder agreements often specify the required tier explicitly, so the starting point is confirming what your stakeholders actually require rather than defaulting to the more expensive option.
Corporate statutes in most Canadian jurisdictions allow the shareholders of a private company to waive the requirement to appoint an auditor, typically by unanimous resolution renewed annually. Whether that waiver is available, and whether it is actually advisable given your lenders or other stakeholders, depends on your specific corporate structure and agreements — confirm this with your advisor rather than assuming it applies.
No. An audit involves testing transactions and balances, confirming external evidence, and other substantive procedures that examine the numbers directly. A review relies primarily on inquiry of management and analytical procedures — comparing figures for relationships and trends that make sense — which is why it takes considerably less time but also provides a lower level of assurance.