Difference Between A Review And An Audit

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ZZZZ Best Case 1. Difference between a Review and an Audit. The review is much less in scope than an audit, it mostly involves inquiries of client’s personnel and analytical procedures and is usually performed on a quarterly basis, whereas audits are done annually. However, the main difference is in the level of assurance that the reports are providing. While both required to perform inquiry and analytical procedures, the review produces limited assurance, that there are no material modifications that should be made to the financial statements and that the statements have been prepared in conformity with GAAP; an auditor, on the other hand, obtains a high, but not absolute, level of assurance whether the financial statements are free from…show more content…
Due to aforementioned risk, the auditors vouch to provide reasonable, however, not an absolute level of assurance. As we see in this case, the auditors of Ernst & Whinney did perform most of the steps to collect sufficient level of evidence: reviewed available documentations, performed analytical procedures, obtained third-party confirmations and visited restoration sites. However, the auditors must use a combination of analytical skills and appropriate level of professional skepticism to determine whether given information is accurate, relevant and reliable, by verifying third-party assertions and performing an internal control. Therefore, Ernst & Whinney auditors failed to meet “particularly crucial” principal of management assertions - the occurrence, and failed to support the reliability and relevance of events and transactions. Next limitation is the auditors’ lack of competence in the particular field and deficiency of industry testing. In order to complete an effective audit, engagement group must understand the nature of the company, and be able to contrast it with competitors. If that was done, quite a few of “Ten Red Flags that ZZZZ Best’s Auditors Allegedly Overlooked” could have been avoided. If the correlation analogy was performed, the auditors would have discovered that Minkow’s multimillion contracts significantly exceeded national total; that all insurance
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