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The difference between notice to reader, review and audit is how much a CPA checks before signing. A notice to reader, the older name for a compilation report, means no assurance at all. A review gives limited assurance. An audit gives the highest level. Which one you need usually depends on who’s asking for the statements, not on what you’d like to pay.
What does each report actually tell a reader?
Start with the lowest level. In a compilation, the accountant takes the numbers you give them and arranges them into financial statements. They don’t test the figures. The current Canadian standard for this work is CSRS 4200, and it requires the report to say that no assurance is provided. So a banker reading a notice to reader is reading your numbers in a tidier shape.
A review sits in the middle. Under CSRE 2400, the CPA asks management questions and runs analytical checks, then reports that nothing came to their attention showing the statements are materially wrong. That is “limited assurance”. It doesn’t test your bank balance against the bank, for example.
An audit goes furthest. The auditor collects evidence from outside the business and tests it, following the Canadian Auditing Standards, and gives an opinion on whether the statements are fairly presented. It takes longer and costs the most. Fees vary with the size and tidiness of the business, so ask for written quotes.
Side by side
| Engagement | Standard | Assurance | Independence of the CPA |
|---|---|---|---|
| Notice to reader (compilation) | CSRS 4200 | None | Not required, but the report must say whether the CPA is independent |
| Review | CSRE 2400 | Limited | Required |
| Audit | Canadian Auditing Standards | Reasonable | Required |
Who decides which one you need?
Usually somebody other than you. A lender may write the level into a loan agreement. An investor may ask for it in a shareholder agreement. A landlord or a grant program can do the same. The law that governs your corporation, and your own articles, may also say something about audits for some companies. The rules differ by province, so check your own statute.
Here’s a practical way to sort it. Get the request in writing and find the exact words. “Financial statements” alone doesn’t tell you the level. “Reviewed statements” or “audited statements” does. If the wording is vague, ask the requester what they’d accept. Many will take a review where you assumed you’d need an audit, and that can save you weeks.
Can you ask for a lower level than the bank wants?
You can ask, and it costs nothing. A lender who has dealt with your company for years may be happy with a review, or even a notice to reader, for a small credit line. A new lender with a big loan on the table usually won’t be. Start the conversation before year end, not after the statements are done, because switching level late means redoing work.
A worked example with your own numbers
Say your company earns $400,000 in revenue and has $340,000 of costs. That’s $60,000 of profit, a 15% margin, which you can check on the profit margin calculator. A compilation would present those figures as you gave them. A review would involve the CPA asking why costs moved against last year. An audit would look for invoices, contracts and third-party confirmations behind them.
Those statements then feed your tax return. Federally, the small business rate is 9% on the first $500,000 of active business income, so $60,000 would be $5,400 federally before any provincial tax. Add the provincial part with the corporate tax calculator. The level of assurance doesn’t change the tax.
What should you do next?
Three steps, in order. Find out in writing which level the lender, investor or landlord wants. Ask your accountant what that level means for your file: what they’ll need from you, and by when. Then check how tidy your books are. Bank reconciliations done monthly, receipts filed and a clean list of what customers owe you make every one of these engagements faster.
It’s also worth asking which standard your statements follow. A notice to reader, review or audit describes how much the CPA checked, while a separate framework such as ASPE or IFRS sets how the numbers are measured. Mixing those two up is a common source of confusion, and the confusion tends to show up at the worst moment, usually in a banker’s office.
Mistakes people make with these reports
First, reading more into a notice to reader than it says. It isn’t a clean bill of health. Second, buying an audit because it sounds safer when the requester only wanted a review. Third, forgetting that the level is a separate decision from the tax return, and the return is due whatever you choose.
Also, a CPA can decline to do a review if the books aren’t in shape. Decent bookkeeping up front is the cheapest way to avoid that. If you run payroll, the payroll remittance calculator is a quick way to see if your deductions line up with your records.
What this page is based on
The standards named here are published by the Auditing and Assurance Standards Board and CPA Canada in the CPA Canada Handbook, Assurance. The federal 9% small business rate comes from the Canada Revenue Agency‘s corporation tax guide and our 2026 data file. Nothing on this page is an engagement quote or professional advice on your own statements.
Frequently asked questions
What is a notice to reader?
It's the older name for the report on a compilation, where a CPA arranges your numbers into statements without testing them. The current standard is CSRS 4200, and the report states that no assurance is given.
Is a review the same as an audit?
No. A review uses questions and analytical checks and gives limited assurance. An audit collects outside evidence and gives an opinion on fair presentation.
Does my business have to be audited?
It depends on your corporate statute, your articles, any shareholder agreement and what lenders or investors require. We couldn't confirm a single rule for every province.
Does the type of report change my tax?
No. Tax is worked out from your income and the rules for your type of business. The report level affects only how much a reader can rely on the statements.
Do I need independence for a compilation?
A compilation doesn't require the CPA to be independent, but the report has to disclose whether they are.
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