An audit gives the highest level of assurance, a review gives limited assurance and a compilation gives none. Which one you need depends on the law, on what your lender or investor expects and on your budget.
What an audit is
A licensed auditor independently examines the financial statements for accuracy and fairness. The work includes reviewing supporting documents, examining records, testing internal controls, confirming balances with banks and suppliers, checking IFRS and UAE law compliance and issuing an opinion. Banks, investors and regulators rely on audited statements. Many free zone companies, regulated sectors, firms seeking large loans or government contracts and firms seeking investors need them.
What a review is
A middle option. The accountant runs trend and ratio analysis, compares periods, checks the relationships between accounts and questions management about unusual changes. There is no physical verification and no testing of controls. The accountant reports whether anything came to their attention that suggests a problem, which may satisfy many banks and investors. It suits SMEs with no legal audit requirement.
What a compilation is
The accountant organises management's data into financial statements. They collect information, categorise it and format it, but they do not verify transactions or balances. A compilation gives no assurance, so banks and investors should not rely on it. It suits startups, freelancers and small family businesses for internal tracking.
Key differences
| Audit | Review | Compilation | |
|---|---|---|---|
| Assurance | High | Limited | None |
| Procedures | Detailed testing | Analytics and inquiry | Formatting only |
| Cost and time | Highest | Medium | Lowest |
| Regulation | Mandatory for many companies, especially in several free zones | Optional | Optional |
How to decide
1. Check the legal requirements first. 2. Consider what banks, investors and partners need. 3. Assess your size and goals. 4. Weigh the assurance against the cost.
Examples
A Dubai startup seeking seed funding may need an audit. A trading company seeking a moderate loan may be able to use reviewed statements. A small family shop may be fine with compilations.
Misconceptions
- Audits are not mainly for finding fraud. A forensic audit serves that purpose.
- A compilation is prepared by a professional accountant and is not simple data entry.
- A review has real value as a lower-cost source of limited assurance.
FAQs
- Do all UAE companies need an audit? No, but many free zones and regulated sectors do. Reviews and compilations are optional unless stakeholders ask for them.
- Can compiled statements support a loan? No. They give no assurance and are best for internal use.
- Which is cheapest? A compilation, though outside parties may insist on a review or an audit.
See our audit services and our article on what an audit is.
Key takeaways
- Audit = high assurance, review = limited, compilation = none.
- Check legal requirements first, then what lenders and investors want.
- Compiled statements are not suitable for external reliance.
Frequently asked questions
What is the main difference?
The level of assurance and the work behind it.
When should I choose a review?
When you have no audit requirement but need limited assurance for a bank or partner.
Can compiled statements support a loan?
No.
Talk to a chartered accountant
Questions about your own situation? Reach us directly and we will reply with clear next steps.
This article is general information and not advice for your specific circumstances. Rules and thresholds change, so confirm the current position before you act.
