Review, Compilation, AUP and Other Assurance — Understanding the Report

An AUP report does not express an audit opinion merely because a practitioner signed it. A compilation does not certify completeness or accuracy. Forecast assurance does not guarantee the future result.

A donor wants specific checks on twenty project payments. If AUP is appropriate, agree the exact procedures, population, evidence and reporting of exceptions. “Verify all expenses” is not a precise procedure. A factual finding might identify an invoice or approval exception; the user interprets its consequence within the agreed purpose.

For a lender's forecast request, distinguish assumptions from historical facts and confirm the intended report. A projection based on hypothetical expansion is different from a forecast based on expected conditions.

Document acceptance, competence, ethical requirements, independence where required, criteria and limitations. State management responsibility and the practitioner's work. Preserve the report and underlying evidence consistently with the applicable standard.

Read the conclusion and procedures, not just the letterhead. If a statutory audit is required, an AUP or compilation cannot automatically replace it. Choose the engagement that answers the actual question and communicate its limits plainly. Exact report wording and professional acceptance remain matters for the authorised practitioner using current Nepal standards.

An audit provides reasonable assurance through an opinion under auditing standards. A review provides a different, limited level of assurance under its applicable standard. A compilation assists with presenting financial information without providing an audit opinion. Agreed-upon procedures report the findings of specified procedures; the users draw conclusions from those findings.

The engagement terms should therefore identify the objective, subject matter, framework or criteria, intended users and report. A bank asking for audited financial statements is not necessarily satisfied by a compilation or AUP report. Clarify the receiving party's requirement before agreeing an engagement so that the final report serves its actual purpose.

An AUP instruction such as “check whether expenses are proper” does not describe a reproducible procedure. Identify the population, documents, selection and comparison to perform, together with how exceptions will be reported. The agreed criteria should be understandable to the users who will interpret the findings.

For example, a donor asks a practitioner to compare 25 listed payments with approved invoices and bank records and report any difference in date, payee or amount. The report states the procedures and factual results. A finding that three invoices were missing is not converted into a conclusion that all programme expenditure was legitimate. Additional procedures need agreement rather than an implied assurance promise.

ICAN's NSA 2024 table identifies the main review, assurance and compilation standards and distinguishes the revised AUP standard. NSRS 4400 (Revised), alongside the listed quality-management and other revised standards, has mandatory compliance from 1 Shrawan 2083 under the published timetable. Use the applicable standard and period when preparing the engagement and report.

A compilation report should not use the language of an audit opinion. A review report should reflect the limited-assurance engagement actually performed. Where an assurance engagement uses criteria outside ordinary financial-statement reporting, determine whether those criteria are suitable and the practitioner has the competence and evidence required. The signed terms, performed work and delivered report should describe the same engagement.