Understanding Reviews and Audits

Understanding the difference between a Review and an Audit for community organisations

Many community groups, sporting clubs and local charities in Queensland must prepare financial statements each year. But not everyone needs the same level of checking. Two common types of independent checks are called a Review and an Audit. Both help the committee show members, funders and regulators that the accounts are reliable. The difference is in how much assurance each provides and who must have one.

1. What is a Review?

A Review gives limited assurance.

The accountant performing the review reviews your records, asks questions, and compares the results. They check whether anything looks unusual or inconsistent — but they don’t test every transaction.

At the end of the review, the accountant reports:

“Nothing has come to our attention that causes us to believe the financial statements do not present fairly.”

This means no problems were found based on the limited work done. A review is usually enough for smaller incorporated associations under the Associations Incorporation Act 1981 (Qld) that fall below the audit threshold set by the Office of Fair Trading.

2. What is an Audit?

An Audit gives reasonable assurance — a much higher level of checking. The auditor tests transactions, confirms balances with banks or other parties, and reviews internal controls. This work is required to follow the Australian Auditing Standards (ASAs) and the APES 110 Code of Ethics for Professional Accountants, which require independence and objectivity.

An audit report states:

“In our opinion, the financial report presents fairly, in all material respects…”

Audits are required when:

• Revenue or assets exceed the Office of Fair Trading thresholds.

• A constitution or grant agreement demands an audit.

• The organisation is a Parents and Citizens’ Association, which must be audited each year under section 137 of the Education (General Provisions) Act 2006 (Qld).

• The entity is registered as a charity with the ACNC and classed as medium or large based on its annual revenue.

3. Why it matters

The Australian Charities and Not-for-profits Commission explains that reviews and audits build public confidence by confirming that charity reports are reliable and transparent. In 2021 the Australian Treasury and the ACNC raised charity reporting thresholds so smaller charities could save time and costs. The ACNC said this change would “reduce red tape while maintaining transparency.”

4. Summary of the key differences

A review provides limited assurance, while an audit provides reasonable assurance. In a review, the accountant mainly asks questions and performs simple analytical checks to see if the figures make sense. In an audit, the auditor performs detailed testing, confirms balances with banks or other parties, and checks internal controls.

• A review report usually says “Nothing has come to our attention…” — meaning no problems were found during limited checks.

• An audit report usually says “In our opinion…” — meaning the auditor has gathered enough evidence to express a stronger conclusion.

Because an audit involves more work, it usually takes longer and costs more than a review. Smaller associations and charities under certain thresholds can have a review, but larger or grant-funded entities — including P&C Associations — must be audited.

5. Ethics and independence

The APES 110 Code of Ethics strictly prohibits auditors and reviewers from preparing accounts or tax returns for the same client. This protects independence — the foundation of professional assurance work. An auditor must never take part in management decisions or bookkeeping for an audit client.

6. In summary

Whether your association needs a review or an audit depends on:

• The law that applies to your organisation.

• The size of your income and assets.

• Any special conditions in your constitution or funding agreement.

Understanding the difference helps your committee stay compliant, transparent and focused on its real purpose — serving your community.

Educational content only. This information is provided to help Queensland community organisations understand their financial reporting obligations. It is not legal or professional advice.