Compilation, Review, or Audit — what’s the difference?
Three different engagements, three very different deliverables and costs. Banks, shareholders, and the CRA each want different things — this guide tells you exactly what each engagement gives you, and when you actually need one.
Compilation
Your CPA compiles your books into financial statements — no opinion, no testing.
Review
Your CPA performs inquiry & analytical procedures and issues limited (negative) assurance.
Audit
Your CPA performs detailed testing & evidence-gathering and issues a positive opinion.
Side-by-side comparison
The 10 factors that actually differ between the three engagements.
| Factor | Compilation | Review | Audit |
|---|---|---|---|
| Level of assurance | None | Limited (“negative”) | Reasonable (positive) |
| Standard followed | CSRS 4200 | CSRE 2400 | CAS 200–700 |
| Report issued | Compilation Engagement Report (replaces “Notice to Reader”) | Review Engagement Report | Independent Auditor’s Report |
| What the CPA does | Assembles client-provided info into financial statements; performs basic arithmetic checks; does not verify. | Inquiry, analytical procedures, and discussion with management to identify items that appear materially misstated. | Detailed testing, third-party confirmations, physical inspection, and evidence-gathering sufficient to express a positive opinion. |
| Independence required? | No (must disclose if not independent) | Yes | Yes |
| Reporting framework disclosed | Yes — basis of accounting (e.g., cash, accrual, ASPE) must be on the financial statements | Recognized framework (e.g., ASPE, IFRS) | Recognized framework (e.g., ASPE, IFRS) |
| Typical cost (CAD, SME) | $1,500 – $5,000 | $5,000 – $20,000 | $15,000 – $75,000+ |
| Typical timeline | Days | 2 – 6 weeks | 6 – 16 weeks |
| Notes & supporting schedules required | Minimal — no full disclosure notes required | Full notes per the reporting framework | Full notes plus extensive working papers |
| Common requestor | Owner & tax filings; some smaller lenders | Banks & lenders for mid-sized credit; shareholder reporting | Larger lenders, regulators, government, public companies, non-profits with funder requirements |
When you’d actually need each.
The right engagement depends on who’s asking and what for. Start here, then talk to us.
When you need clean financials for tax & basic credit.
- You’re an owner-managed business filing T2 corporate tax
- Your bank request is for a small operating line or small mortgage
- Internal management reporting where you trust your own numbers
- You want presentable year-end statements at the lowest cost
When a lender or shareholder wants extra comfort.
- Your bank covenant or larger lender requires a review
- You have outside shareholders who aren’t in the day-to-day
- You’re raising capital or preparing for sale due-diligence
- You need a recognized framework (ASPE) but don’t need a full audit
When the law, a regulator, or a large funder requires it.
- You’re a public company or a reporting issuer
- You’re a not-for-profit or charity with funder audit requirements
- A government grant or contribution agreement requires it
- Your bylaws / shareholder agreement mandate an annual audit
Let’s figure it out together.
A 30-minute chat is usually enough to land on the right engagement for your business, your lender, and your budget — with no obligation either way.
Book a 30-min chat