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What is the difference between audit and compliance?

Audit is an independent examination of business financial statements so as to issue opinion on whether the financial statement are prepared in accordance with acceptable financial reporting framework and show true performance and position of the business. Audit is conducted according to the requirements of countries laws and regulations and international standard on auditing. The auditor when conducting audit aim at issuing opinion which give reasonable assurance that the financial statement show true and fair position and performance of the business. Auditor can not guarantee or give absolute assurance about client financial statement due to the fact that evidence used for auditing purpose are persuasive rather than conclusive.

Compliance in other hand is an independent activity which aim to ensure that business complies with laws and regulations together with company’s own policies and procedures. Compliance review are usually done by internal auditors while audit or external audit are always done by chartered accountants.

Compliance aim at making sure that the organization does not breach contracts, go against country’s laws and regulations and comply with internal policies so as to reduce business risk and enhance business operations.

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