Which report goes on the statements?
How the engagement level chosen, whether audit, independent review, compilation or none, changes the practitioner's report printed with the statements.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Two sets of statements can contain identical figures and still say very different things to a reader, because of one page near the front: the practitioner's report. An audit report gives reasonable assurance. A review report gives limited assurance. A compilation report gives none, and says so. A set with no report at all tells the reader that no practitioner has reported on it.
Readers rarely grasp the difference, which makes it all the more important that the firm gets it right. This article explains the levels, the reports that go with them, how the level is set on an engagement in Achekam, and where the law makes the choice for you.
Three levels of assurance, and none
- Audit, under the ISAs: the auditor obtains reasonable assurance and expresses an opinion on whether the statements are fairly presented. It is the highest level and the most work.
- Independent review, under ISRE 2400 (Revised): the practitioner performs mainly enquiry and analytical procedures and expresses a limited-assurance conclusion, that nothing has come to their attention causing them to believe the statements are not fairly presented.
- Compilation, under ISRS 4410 (Revised): the accountant applies accounting and reporting expertise to help management prepare the statements. No assurance is expressed, and the report says so.
- None: statements issued without any practitioner's report, such as internally prepared statements for management use.
Which level applies depends on what the law requires, what users such as lenders ask for and what the owners want.
The audit report, the review report and the compilation report
Each report has a recognisable shape.
Audit report. In Achekam, the engagement team drafts the auditor's report on standard ISA 700, 705, 706 and 701 wording, for an unmodified, qualified or adverse opinion or a disclaimer, with emphasis-of-matter and key audit matter sections where they apply. Approval is refused while any bracketed placeholder remains, and only the engagement partner approves. The default wording is South African; the Nigerian and Kenyan packs supply their own.
Review report. It says that a review is substantially less in scope than an audit, describes the procedures in general terms and gives the limited-assurance conclusion. The IAASB's page on ISRE 2400 (Revised) describes the standard for reviewing historical financial statements when the practitioner is not the entity's auditor, including the form of the review report.
Compilation report. It describes what the accountant did, makes clear that management is responsible for the statements, and states that no audit or review was performed and no assurance is expressed.
Choosing the level on the engagement
In Achekam the level is chosen when the engagement is created. Staff pick its type, such as annual financial statements compilation, independent review or statutory audit, and a firm can add its own named types.
The Studio follows that choice. It builds a draft set from a mapped trial balance, and the practitioner's report follows the level chosen: audit, independent review, compilation or none. That makes the engagement type a decision with consequences. An engagement created as a compilation produces a compilation report, however much work the team did.
Two variations are worth knowing:
- Another firm's practitioner signs the report. A firm can send a frozen set of statements to another firm on Achekam, or to an outside practitioner by e-mailed link, for an independent review under ISRE 2400 (Revised) or an audit, and the reviewer's signed report is bound to that version. An audit report needs a partner whom the reviewing firm records as an IRBA registered auditor, and Achekam does not check this with IRBA.
- An external officer compiles or signs. A firm can have another firm's officer compile its prepared statements under ISRS 4410 (Revised), or act as accounting officer and sign them, and the statements are issued only in the version that officer released.
When the law decides the level: South Africa's public interest score
For South African companies, the Companies Regulations decide much of this. Regulation 26(2) scores one point per average employee, one per R1 million or part of third-party liabilities and of turnover, and one per individual with a beneficial interest. Regulation 28(1) sets audit thresholds of 350 and 100, the lower one applying to companies whose statements were compiled internally.
Achekam supports that calculation. For a South African client, staff prepare a public interest score for a financial year from the client's records, a different person reviews it, and Achekam then says whether an audit or an independent review is required. Missing inputs are named rather than assumed, and a partner records the engagement type. The detail is in when a South African company must be audited.
For Nigerian and Kenyan clients, Achekam cannot yet say whether a company is exempt from audit, because the small-company thresholds ship awaiting approval by Achekam's platform administrators. Until then, the firm decides from the law directly.
Who may sign, and what Achekam checks
For a South African firm, Achekam checks that the person signing has the Partner role; it does not check the practitioner credentials register when a partner approves an audit report or signs financial statements. The firm stays responsible for making sure the signer is registered and eligible for the level of engagement. Nigerian and Kenyan packs, by contrast, do block signing on unverified registrations.
Before any report is drafted, confirm three things: the level the law or the users require, that the engagement was created with that type, and that the signer is eligible to sign at that level. Compilations in particular are covered in compilation engagements under ISRS 4410.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
