Reviews & Compilations

These three engagements differ in the level of assurance the practitioner provides. A statutory audit gives reasonable assurance through examination, testing and verification, and ends in a positive opinion on whether the financial statements are true and fair. A review gives limited assurance using inquiry and analytical procedures, and ends in a negative conclusion stating that nothing has come to the practitioner's attention to suggest material misstatement. A compilation gives no assurance, as the practitioner assembles management's figures into financial statement format and reports on that basis. We help you identify which engagement fits the requirement of the users who will rely on the statements.

Assurance is the level of confidence a practitioner can offer about financial information. Reasonable assurance, provided in an audit, is a high though not absolute level reached through detailed testing and verification, and it supports a positive opinion. Limited assurance, provided in a review, is a lower level reached through inquiry and analytical procedures, and it supports a negative conclusion phrased as nothing having come to the practitioner's attention. Limited assurance is sometimes called negative assurance for this reason. A compilation provides no assurance at all.

A review is a limited assurance engagement on historical financial statements, governed in India by SRE 2400 (Revised), Engagements to Review Historical Financial Statements, issued by the ICAI. The practitioner performs inquiry and analytical procedures rather than the testing and verification of an audit, then concludes whether anything indicates that the statements are materially misstated. A review suits entities that want practitioner involvement and a measure of credibility without a full statutory audit, where the law permits.

A compilation is an engagement in which the practitioner assists management in preparing and presenting financial information, without obtaining assurance on it. In India it is governed by SRS 4410 (Revised), Compilation Engagements, issued by the ICAI and applicable to compilation engagements undertaken after 31 March 2016. The practitioner applies accounting and financial reporting knowledge to assemble management's data into financial statement format, and issues a compilation report that states no assurance is expressed.

Management is responsible for the financial information and for the accounting framework used. In a compilation the practitioner assembles and presents that information but does not verify it and does not express assurance on its accuracy or completeness. The compilation report makes this division of responsibility clear, so that any user understands the practitioner has not audited or reviewed the figures.

These engagements suit situations where a statutory audit is not required by law but a user still wants a practitioner involved. Common reasons include a lender or investor seeking a measure of credibility, partners or owners wanting independently presented statements, group reporting to a parent entity, or internal management use. A review adds limited assurance, while a compilation adds professional presentation without assurance. We assess the users and their needs before recommending either.

For a company, no. Under the Companies Act 2013 every company, whether private or public, must have a statutory audit each financial year regardless of its turnover or profit, so a review or compilation cannot substitute for it. Reviews and compilations apply to entities and situations where a statutory audit is not mandated, or to interim and special purpose information that sits alongside the annual audit rather than replacing it.

Often, yes. A Limited Liability Partnership must have its accounts audited only if its annual turnover exceeds Rs 40 lakh or its capital contribution exceeds Rs 25 lakh, under Rule 24 of the LLP Rules 2009, with professional-service LLPs audited in any case. Partnerships and proprietorships are likewise not always required to undergo a statutory audit. Where no audit under these laws is mandated, a review or compilation can give partners, lenders or owners a practitioner-prepared set of statements, with limited assurance or with none, as the users require. Such entities may still need a separate tax audit under the income tax law if their turnover or receipts cross the prescribed limits, and a review or compilation does not remove that requirement.

No. A tax audit is a separate requirement under the income tax law and is itself an audit, not a review or compilation, so a review or compilation cannot satisfy it. A tax audit examines the books to confirm income, deductions and compliance, and it applies where prescribed thresholds are crossed: business turnover above Rs 1 crore, rising to Rs 10 crore only where cash receipts and cash payments each do not exceed 5% of their respective totals, and professional gross receipts above Rs 50 lakh. For the financial year 2025-26, the audit is conducted under Section 44AB [ITA 2025: s. 63] and reported under Rule 6G [ITR 2026: r. 47] in Form 3CA [ITR 2026: Form 26, Part A] or Form 3CB [ITR 2026: Form 26, Part B] together with Form 3CD [ITR 2026: Form 26, Parts C and D]. The report is generally due by 30 September 2026, or by 31 October 2026 where a report under Section 92E [ITA 2025: s. 172] is also required. The Income Tax Act 2025 provisions and Income-tax Rules 2026 Form 26 apply from tax year 2026-27. A business can require a tax audit even where no statutory audit applies.

A listed company must have its quarterly financial results either audited or subjected to a limited review before it submits them, under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The limited review is carried out by the entity's own statutory auditor under SRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. It provides limited assurance through inquiry and analytical procedures and concludes in the negative form, and the report is placed before the board before the results are filed.

Yes. Both can be applied to statements prepared under a special purpose framework, such as a cash basis, a tax basis, or a basis set out in a contract or by a regulator, rather than a general purpose framework. The report identifies the framework used and the purpose for which the statements were prepared, and restricts use to the intended users where appropriate. This is common when a lender, grantor or contracting party specifies the basis it needs.

The applicable framework depends on the entity and its users, and the engagement does not change it. A review or compilation may be carried out on statements prepared under Indian Accounting Standards (Ind AS) or the Accounting Standards (AS) issued by the ICAI, or under a special purpose framework where that is appropriate. The review or compilation addresses the level of practitioner involvement and assurance, while the underlying accounting framework remains management's choice within what the law and the users allow.

No. A true and fair opinion comes only from a statutory audit, which reaches reasonable assurance through testing and verification. A review provides limited assurance and concludes in the negative form, stating that nothing has come to the practitioner's attention to suggest material misstatement, which is not a positive opinion. A compilation provides no assurance and expresses no opinion at all. Users should read the practitioner's report to understand exactly what level of assurance has been given.

In a review, the practitioner's report describes the engagement and the standard, the inquiry and analytical procedures performed, and a limited assurance conclusion in the negative form. In a compilation, the report identifies the compiled information, states that the engagement was performed under SRS 4410 (Revised), records that management is responsible for the information, and states that the practitioner has not audited or reviewed it and therefore expresses no assurance. Each report makes the nature and the limits of the work explicit.