Want to help clients understand the difference between an audit and a review? Here's how.
Many clients might not understand that the entity they manage may or may not require an audit.
These days there are options, and clients have the choice of a review rather than an audit in some circumstances - which may be more cost effective for the organisation.
Of course, the option of whether to do an audit or a review depends on the entity's constitution. If you are assisting your clients to choose between an audit or a review you should consider the relevant legislation and whether the company's management needs to change the constitution to allow for a review.
Exploring the option of a review
Customers will usually opt for a review due to the significant cost savings in comparison to an audit.
Entities that may benefit from a review include:
- Companies limited by guarantee with revenue of at least $250,000 up to $1 million
- Medium-sized charities with income of at least $250,000 up to $1 million
- Level 2 incorporated associations in Queensland with revenue and current assets between $20,000 and $100,000
- Public ancillary funds with revenue and assets less than $1 million
Next time you're speaking with your clients, it's important to provide both options should their situation fit into one of the areas above.
The standards for review engagements have been issued by the Auditing and Assurance Standards Board (AUASB) and outline the review process in detail.
If you're looking for an economical option for an SME that qualifies for a review, it makes sense to offer this option as reviews become common practice throughout the industry more auditors embrace the concept as a viable assurance option.