Senior Auditor Mock Interview
Master 25 Senior Auditor interview questions covering risk assessment, compliance standards, and audit methodology.
Question 5 of 25
What are the differences between an audit, a review and a compilation?
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Brian Schuchart is a CPA and Senior Finance Business Partner. His professional experience includes senior management roles with NBC Sports, Virtual Health, and the Children's Hospital of Philadephia.
Audits, reviews and compilations are the three main types of engagements an auditor will perform. Being able to articulate the differences between these services is essential. Conversely, not being able to state the differences could be a disqualifier from the role you are interviewing for.
Brian Schuchart is a CPA and Senior Finance Business Partner. His professional experience includes senior management roles with NBC Sports, Virtual Health, and the Children's Hospital of Philadephia.
"The main differences between the three types of engagements are the scope of services performed and the level of assurance provided. A compilation is simply financial statement preparation by the auditor based on representations from management. In a compilation, the auditor is not required to provide any assurance that the financial statements are accurate and free from errors/fraud. A review is more involved, and requires the auditor to perform analytical procedures and inquiries of management to ascertain that information contained in the financial statements is correct. In a review, the auditor provides limited assurance that the financial statements do not require any material modifications. In an audit, the auditor provides assurance that the financial statements are free of material misstatement or errors. This requires the auditor to expand the scope of the engagement to test ending balances, perform tests of internal controls, acquire third party confirmations and physically confirm assets, among other procedures."
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The audit gives a reasonable assurance on whether the financial statements are materially misstated as a whole. A review gives a limited assurance on financial statements without performing any audit procedures. A compilation does not give any form of assurance, While an independent CPA is required to perform an audit and review engagement, compilation can be performed by any practitioner, CPA or not.
Cindy's Feedback
Great! You sound extremely knowledgeable about the distinctions. The question presents an opportunity to show how you've conducted each. Can you expand by using an example to describe your work in each of these areas?
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