Of the three types of engagements, the audit engagement provides the highest level of assurance on the financial statements. The financial statements give a true and fair view of the company’s financial position and results of operations as at a specific date in accordance with the relevant accounting standards (IFRS, ASPE and ASNPO).
The review engagement provides a limited level of assurance on the financial statements. The review is performed in accordance with the relevant accounting standards. However, the public accountant reviews the information obtained from the client and is limited to assessing whether the information is plausible.
The compilation engagement uses the company’s data made available to the public accountant. However, this type of engagement does not provide any assurance to the reader and the public accountant does not express any opinion.
The purpose of due diligence is to ensure that a business purchase/sale transaction is carried out according to the rules of the trade. A buyer must have various elements relating to the target business verified by its own experts to ensure that the representations made by the seller are in compliance. Due diligence usually covers the following aspects: operations, intellectual property, property, human resources, legal, accounting, tax and environmental aspects.