(Posted June 2026)
This post walks through how to compare audit, review, and compilation engagements on the CPA Common Final Examination (CFE). This is one of the more common and examinable requirements. The goal is to help you approach these requireds clearly and confidently.
When do you see this type of requirement?
You usually see this when a user, often an external one like a lender, wants some level of assurance over financial statements. Your role is to compare engagement options and help determine what makes sense based on their needs.
Sometimes the case will tell you exactly which options to compare (e.g., audit vs. review). Other times, it is more open-ended, and you need to decide which options are relevant.
Most often, you will compare two options, but occasionally all three (audit, review, compilation) come into play.
Quick Refresher – What are the engagements?
- Audit → Provides reasonable assurance that the financial statements are free of material misstatement
- Review → Provides limited (negative) assurance that nothing suggests the statements are misstated
- Compilation → Provides no assurance; the practitioner helps prepare financial statements using management’s information
How should you compare them?
The easiest way to stay organized is to compare engagements using a few key parameters. You do not need to cover everything. Focus on the ones that matter most for the situation. Common parameters include:
- Level of assurance
- Type of work performed
- Type of report
- Time and cost
- Independence
Level of assurance
This is usually the most important starting point.
- Audit: Reasonable (high) assurance
- Review: Limited / negative assurance (statements are “plausible”)
- Compilation: No assurance
Be precise. Avoid vague phrases like “higher” or “lower” assurance, especially with compilations since they provide none.
Type of work
This is where you explain what work the practitioner performs.
- Audit: Substantive procedures such as inspection, confirmation, recalculation, etc.), with a focus on independent evidence
- Review: Mainly inquiry and analytical procedures, using internal information; limited testing if needed
- Compilation: No testing, just organizes financial information provided by management
You do not need to list every procedure. Give a few clear examples to show you understand the difference.
Report / opinion
Each engagement results in a different type of report:
- Audit: Auditor’s Report with an opinion (“present fairly”)
- Review: Review Report with a conclusion (“nothing has come to our attention…”)
- Compilation: Compilation Report stating no assurance is provided
Time and cost
This is a quick and easy comparison:
- Audit: Most amount of work → highest cost
- Review: Moderate amount of work → mid-level cost
- Compilation: Least amount of work work → lowest cost
Keep this concise—no need to over-explain.
Independence
- Audit and Review: Independence required (in fact and in appearance)
- Compilation: Independence not required (but may need disclosure if impaired)
Do you need a conclusion?
In most cases, yes. If the question asks you to recommend an option, you must conclude. If it does not explicitly ask which engagement should be performed, use your judgment. Generally, a brief recommendation strengthens your response.
This is also where case facts matter most. Tie your conclusion to what the user needs:
- Do they want assurance?
- Are they cost-sensitive?
- Are they an external lender or an internal user? Typically, an external user would require more assurance.
Tips for writing strong comparisons
- Focus your scope. If the case specifies which options to compare, stick to those. If not, think about what the user needs (e.g., don’t discuss compilations if assurance is required).
- Plan your breadth. You do not need every parameter. Pick a few key ones (usually level of assurance, type of work, and cost) and explain them well.
- Use a parameter-based structure. Organize your response by parameter (not by engagement). This helps ensure you compare options directly.
- Be efficient. Avoid repeating yourself. For example, if you say an audit is more expensive than a review, you do not need to restate that a review is cheaper than an audit.
Key takeaway
Comparing engagements is not about memorizing long definitions, it is about clearly showing the differences in a structured way. You will score well if you:
- Use a few key parameters
- Explain each engagement clearly
- Tie your conclusion to user needs