An audit report says the accounts give a true and fair view. A limited review report on quarterly results says something much weaker, and the weakness is stated in the report itself, usually in a sentence built around the words nothing has come to our attention.
How much work does a limited review involve?
The mechanical difference is the amount of work. A review consists principally of enquiry of company personnel and analytical procedures; it does not require the reviewer to test controls, confirm balances with third parties, observe an inventory count or gather the corroborating evidence an audit demands. The reviewer therefore cannot express an opinion, and does not. What is given instead is negative assurance: nothing was seen that suggests the statements are materially wrong.
Three consequences follow, and each is worth a habit.
A limited review will not find what an audit finds. Fraud that survives enquiry and analytics survives a review. When you see a restatement or an audit qualification appear at year end that contradicts three reviewed quarters, the quarters were not lying to you; they were reviewed, and the review was not designed to catch it.
The reviewer's modifications still travel. If the reviewer has a qualification, it appears in the review report, and the listing regulations require the results themselves to disclose whether the report is modified. A modified review report is a fire alarm at exactly the same volume as a modified audit opinion, and it arrives up to nine months earlier.
And the review covers the numbers, not the release. The press release, the deck and the call sit outside the assurance boundary entirely. The reviewed object is the results statement filed with the exchange, which is why you read that first and the release second.
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How does the US 10-Q review compare?
In the US, the interim report follows a different route to the same place: the interim financial statements in a 10-Q are unaudited, the independent accountant performs a review under the auditing standards before filing, and the filing is signed by officers under the certification rules rather than carrying an opinion. Different furniture, same instruction to the reader. Interim numbers are softer than annual numbers, in both countries, by design.