Compilation, review and audit engagements

CPA Québec, the regulator of the accounting profession in Quebec, says CPAs provide three levels of service on financial statements, and that the work done affects the assurance given and the cost. Each level ends in its own report: an independent auditor’s report, an independent practitioner’s review engagement report, or a compilation engagement report.

What each level gives

• Audit: CPA Québec says it provides reasonable assurance that the statements as a whole are free from material misstatement, whether from fraud or error
• Review: a limited assurance engagement, built mainly on inquiry and analytical procedures
• Compilation: provides no assurance; BDC says the accountant usually relies entirely on the company’s information and does not audit or validate the figures

What to check

Ask which level the seller’s statements carry and read the report itself. The CRA’s Schedule 141 also asks, on a corporation’s tax return, what type of involvement the preparer had, including whether an auditor’s or review engagement report was completed. See the quality of earnings vs audit comparison, notice to reader and review engagement report.