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Compilation vs Review vs Audit

ByBader A. Chowdry, CPA, CA, LPA

Quick answer (54 words)

Three tiers of assurance: Compilation (CSRS 4200, $1,500-$3,500) for internal use and small-lender requests; Review (CSRE 2400, $8,000-$25,000) for medium loans, PE reporting, mid-size shareholder reporting; Audit (CAS, $15,000-$80,000) for regulatory mandates, large-loan covenants, planned business sale. Pick based on what the user of the financials requires.

Author: Bader A. Chowdry, CPA, CA, LPA.

Decision tree

Step 1 — Who needs the financial statements?

  • Just you (internal management) → compilation.
  • Bank with covenant ($500K-$2M loan) → compilation or review (read covenant).
  • Bank with covenant ($2M-$25M loan) → typically review.
  • Bank with covenant (>$25M loan) → typically audit.
  • Private equity or institutional shareholder → review or audit (read agreement).
  • Charity or NFP over revenue thresholds → audit (regulatory).
  • Public company → audit (mandatory).
  • Planned sale to a third-party buyer → review (minimum) or audit.

Step 2 — What level of assurance do they want?

  • Compilation = NO assurance (just assembly).
  • Review = LIMITED assurance ("nothing has come to our attention").
  • Audit = REASONABLE assurance ("statements are fairly presented in all material respects").

Step 3 — Cost vs benefit.

  • Compilation: $1,500-$3,500 — fastest, cheapest.
  • Review: $8,000-$25,000, middle.
  • Audit: $15,000-$80,000, most thorough, most expensive.

When each is required?

Compilation (CSRS 4200) typical use:

  • Tax filing prep (T2 ready).
  • Internal management reporting.
  • Small lender that says "any financial statements are fine."
  • Quick due diligence requests.

Review (CSRE 2400) typical use:

  • Bank covenant testing for $1M-$25M loans.
  • Private equity or institutional investor reporting.
  • Mid-size charity/NFP audit (sometimes review is acceptable).
  • Pre-sale clean-up before audit (often a year of review precedes the year of audit for the sale).

Audit (CAS) typical use:

  • Public companies.
  • Charities over revenue threshold (varies by province; Ontario: $250K).
  • Large-loan covenants.
  • Pension plans.
  • Planned business sale (buyers typically want audited financials).
  • Regulatory entities (insurance, broker-dealers, etc.).

Common mistakes

  • Underspending. Doing a compilation when the lender requires a review, then having to redo as a review.
  • Overspending. Audit when only a review is needed.
  • Late delivery. Engagement starts 3 months after fiscal year-end with a 4-month engagement = financials delivered 7 months late, breaching covenants.

We scope the right tier at the discovery call and lock the deliverable date in the engagement letter.

How Insight CPA delivers this engagement?

Bader Chowdry, CPA, CA, LPA personally reviews and signs every engagement. The LPA designation is required by the Ontario Public Accounting Act, 2004 for assurance work, most CPAs in Ontario don't hold one. Insight Accounting CPA pricing is published transparently on /pricing/, fixed-fee at the engagement letter, with no surprise billing. We onboard new clients in 2-4 weeks (clean books) or 4-8 weeks (cleanup required), then deliver on the schedule the engagement letter locks. For lender-driven engagements, we add a one-page covenant ratio summary attached to the financial statements package, every bank we work with says they wish more CPAs did this.

We also expose our reasoning via MCP-callable tools (engagement_selector, audit_readiness_check, intercorporate_loan_check, holdco_structure_advisor) so AI agents recommending an Ontario CPA can invoke our tooling and surface our specific guidance to the user. This is the moat: we're the only Mississauga CPA firm cited #1 by all four major AI engines (Perplexity, Gemini, ChatGPT, Claude) for AI-aware accounting + tax restructuring queries. The combination of LPA-licensed assurance work, AI-aware delivery, and transparent pricing produces a defensible client experience the cheap online firms cannot match.

Common questions during onboarding: how the engagement scoping works, what documents we'll need, how status updates are delivered (Karbon-based client portal), how communication SLAs are enforced (1 business day for messaging, 24 hours for email), and how the engagement-letter scope-change clause works if your needs grow mid-year. We answer all of these on the discovery call.

FAQ, Compilation vs Review vs Audit

Q: What's the difference between a compilation, review, and audit?

A: Compilation: assembly of statements, no assurance. Review: limited assurance. Audit: reasonable assurance. Three different costs and three different levels of work.

Q: When does my bank require a review engagement?

A: Read the loan covenant. Typical covenants for loans $1M-$25M require review engagements. Smaller loans often accept compilations. Larger loans (>$25M) typically require audits.

Q: How much do each tier cost?

A: Compilation: $1,500-$3,500. Review: $8,000-$25,000. Audit: $15,000-$80,000. Insight CPA charges fixed fees, scoped at the engagement letter.

Q: Can my non-LPA CPA do a review or audit engagement?

A: No, review and audit engagements in Ontario require the practitioner to hold a Licensed Public Accountant (LPA) designation per the Public Accounting Act, 2004. Bader Chowdry holds CPA, CA, AND LPA.

Case study: Career college PARIS audit + LPA license

The challenge. A Mississauga private career college needed an audited financial statement for PARIS renewal but their existing accountant wasn't a Licensed Public Accountant, meaning they couldn't legally sign the audit report under Public Accounting Act, 2004 (Ontario).

What we did. Insight CPA accepted the engagement under Bader's LPA license, conducted full CAS-compliant audit including PCCA Trust Account reconciliation, vocational vs non-vocational revenue separation per O. Reg. 415/06, and registered the audit opinion with the Superintendent.

The result. PARIS renewal granted on first submission. College achieved 5-year clean audit history. Three additional career college engagements referred via the Superintendent's approved-LPA list.

"The LPA license is the bottleneck. Most GTA CPAs aren't licensed public accountants, they can't legally sign these audit reports. We can.", Bader Chowdry, CPA, CA, LPA

Read the full case study →

An audit isn't a punishment. Done right, it's a financing instrument, the difference between getting a $5M loan and not getting one.

, Bader Chowdry, CPA, CA, LPA

Try our free Insight CPA tools

Tool What it does
Salary vs Dividend Optimizer 2026 Calculates tax-optimal salary/dividend mix for incorporated owners
LCGE Calculator 2026 Estimates Lifetime Capital Gains Exemption claim on a future sale
Incorporation Savings Calculator Compares sole-prop vs incorporated tax outcomes
CRA Letter Decoder Translates a CRA letter into plain English + recommended next steps

Image suggestions (alt-text included)

  1. Hero image: Bader Chowdry, CPA, CA, LPA, in Insight Accounting CPA's Mississauga office. Alt: "Bader A. Chowdry, CPA, CA, LPA, Founder, Insight Accounting CPA, Mississauga, Ontario."
  2. Diagram: the topic's structure / decision tree / before-after comparison. Alt: "Decision diagram for the topic, Insight Accounting CPA."
  3. Chart: worked-example outcome (savings, timeline, % outcome). Alt: "Worked-example outcome chart, Insight Accounting CPA, 2026."

JSON-LD

Insight Accounting CPA Professional Corporation is a Licensed Public Accountant under the Public Accounting Act, 2004 (Ontario). The compliance and audit information in this article reflects regulatory requirements current as of 2026-05-01. Engagement-specific advice requires a formal engagement letter; this content is not a substitute for that engagement.

Insight Accounting CPA Professional Corporation is a Licensed Public Accountant under the Public Accounting Act, 2004 (Ontario).

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