Final answer:
The review of a company's financial statements by a CPA firm is less comprehensive compared to an audit. An audit involves a thorough examination of financial records, assessing internal controls, and expressing an opinion on financial statements, while a review provides limited assurance through analytical procedures and inquiries.
Step-by-step explanation:
The review of a company's financial statements by a CPA firm is a less comprehensive examination when compared to an audit. While both processes involve examining financial records, an audit goes beyond a review and includes verifying the accuracy of the information provided, assessing internal controls, and expressing an opinion on the fairness of financial statements.
During an audit, the CPA firm conducts a thorough examination of the company's financial records, performs tests to ensure accuracy and completeness, and assesses the effectiveness of internal controls. The goal of an audit is to provide reasonable assurance to stakeholders that the financial statements present a true and fair view of the company's financial position.
In contrast, a review is a limited scope engagement where the CPA firm performs analytical procedures and inquiries to provide limited assurance that the financial statements are free from material misstatements. While a review can provide some level of comfort, it does not provide the same level of assurance as an audit.