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SECTION Assurance: source link what-is-an-audit.pdf (aicpa.org)

Audits Financial Statements Statutory US GAAP and IFRS Reporting Packaging.
The audit is the highest level of assurance service that a CPA performs and is intended to provide a user comfort on the accuracy of financial statements. The CPA performs procedures in order to obtain “reasonable assurance” (defined as a high but not absolute level of assurance) about whether the financial statements are free from material misstatement.

In an audit, a CPA is required to obtain an understanding of a business’s internal control and assess fraud risk. The CPA is also required to corroborate the amounts and disclosures included in the financial statements by obtaining audit evidence through inquiry, physical inspection, observation, third-party confirmations, examination, analytical procedures, and other procedures.

When performing an audit engagement, the CPA is required to determine whether his or her
independence has been impaired. If the CPA’s independence has been impaired, the CPA
cannot perform the audit engagement.
The CPA will issue a formal report that expresses an opinion on whether the financial
statements are presented fairly, in all material aspects, in accordance with the applicable financial reporting framework. In addition, the CPA is required to report any significant or material weaknesses in the organization’s system of internal control that are identified during the audit. By becoming aware of internal control weaknesses and discussing these with the CPA, an organization might be able to improve the way it does business.

As the highest level of assurance, an audit typically is appropriate – and often required – when a client is seeking complex or high levels of financing and credit. An audit also is appropriate if the client is seeking outside investors or preparing to sell or merge with another business.

Review Financial Statements Statutory US GAAP and IFRS Reporting Packaging.

In a review of financial statements, the accountant expresses a conclusion regarding the entity’s financial statements in accordance with an applicable financial reporting framework. The accountant’s conclusion is based on the accountant obtaining limited assurance. Limited assurance is a level of assurance that is less than that of a full audit, but more than that of a compilation.

The accountant performs primarily analytical procedures and inquiries to obtain sufficient appropriate review evidence as the basis for a conclusion on the financial statements as a whole, expressed in accordance with the requirements of the applicable financial reporting framework.