What are the differences between compilation, review and audit engagements? What role does the CPA play? Here’s what you need to know to navigate the engagement landscape. Most entities, whether corporations, NFPOs or government agencies, are legally required to present annual financial statements to their shareholders, members or the government, as the case may be. The law also requires certain entities to have their financial statements audited. In most cases, an entity’s management, with oversight from those charged with governance, is responsible for preparing financial statements. The scope of the CPA’s mandate depends on the entity’s needs and the requirements it must satisfy. Chartered professional accountants provide three levels of service with respect to communications (reporting) on financial statements—an audit, a review or a compilation. CPAs perform these services in accordance with their code of ethics and assurance standards established by the Canadian Auditing and Assurance Standards Board (AASB). Assurance standards (which include audit, review and compilation standards) are contained in the CPA Canada Handbook – Assurance. The nature and extent of the work performed by CPAs has a direct impact on the level of assurance or credibility given to the financial statements and the cost of audit, review and compilation services. For each service, the CPA provides a different communication (i.e. “Independent Auditor’s Report,” “Review Engagement Report,” or “Notice to Reader”), which sets out the extent of work performed and the level of assurance expressed by the CPA.