Table of Contents
What is Audit?
Audit is a commonly spoken word in the field of accounting and finance. Conceptually, it refers to the impartial analysis of an entity’s transactions and records. Auditing is a critical component of the finance structure of large-sized enterprises.
Auditing ensures that the transactions and financial operations conducted within a company during a certain period of time are fair and legitimate. It carefully examines each and every financial activity and checks for its authenticity and validity.
Mainly there are two forms of audit: internal audit and external audit. External audits are conducted to ensure the fairness of transactions, whereas internal audits serve as a managerial process to improve processes and performance. At times, both types are simultaneously involved.
Audits are done by a professional auditor. He can either be an individual in a regular position in a firm or a person hired by the company. In the latter case, there is the possibility of a more transparent audit. Business experts consider Audit the key to success in any industry.
What is Review?
Review in financial management is a crucial process to evaluate different financial factors, e.g., errors in transactions, financial deviations, budget variations, and financial grievances. A review specifically checks that the allocated budget is successfully utilized.
A financial reviewer performs his duty once a month in any organization. He is responsible for identifying, correcting, and reporting errors in financial matters of the organization. He is entitled to reach out to the concerned individual/department for a quick resolution.
There is an array of things that are done in a financial review. For example, in Personnel Expenses, it is checked that the payroll is working in compliance with the rules and policies of the organization. It also checked whether transactions were in line with the budget policy or not.
Reviews are limited in their scope and objectives. Reviewers are affordable and can be hired by small-sized businesses as well. Moreover, it does not take an enormous amount of time to prepare and present a financial review report.
Difference Between Audit and Review
- Audit and Review are closely related, yet there are significant differences in their scope, aims, affordability, and time requirement.
- Audit is a more comprehensive financial evaluation of a large organization or business.
- Review is limited in its approach to assessing the financial operation of an enterprise.
- Audit is not quickly done; it is carried out by expert auditors and takes more time.
- An expert can do a review once a month, and it costs less.
- Audit provides a complete balance analysis – a vital component of every business.
- Review does not include a balance analysis.
- Audit delivers higher assurance, whereas Review is less assuring.
Comparison Table Between Audit and Review
|Parameters of Comparison
|Audit is more comprehensive, impartial, and detailed
|Review is limited to fewer things in its scope
|Audit takes a considerable amount to be undertaken by an auditor
|Review is a relatively less expensive way of analysis
|Since Audit is multifaceted, it takes more time to complete
|Review can be done once a month and is a quick way
|The assurance level of Audit is higher
|The assurance level of Review is lower
|Audit is only acceptable if done by a registered CPA
|Review can be conducted by anyone having expertise in it