A funder’s application asks for “audited financial statements.” A lender mentions a “review.” Your treasurer wonders whether a “compilation” would do. Three different words, three very different price tags — and if you’re like most executive directors, no clear sense of which one you actually need or why they cost so differently.
Here’s the simple frame for audit vs review vs compilation: they’re three levels of assurance — how much independent checking a CPA does, and how strongly they vouch for your numbers. An audit is the most (and the most expensive), a compilation the least, a review in between. Think of it like a home inspection versus a knowledgeable walk-through versus simply putting your papers in order. The right choice usually isn’t the most thorough one — it’s whatever satisfies whoever is asking.
Key Takeaways
The difference is how much the CPA checks your numbers and how strongly they stand behind them. A compilation involves no verification, a review involves some, and an audit involves the most. All three are performed by a licensed CPA — the gap between them is the level of assurance, not who does the work.
| Compilation | Review | Audit | |
|---|---|---|---|
| Assurance | None | Limited | Highest (formal opinion) |
| What the CPA does | Organizes your data into proper financial statements | Inquiry + analytical procedures | Tests evidence, samples transactions, evaluates internal controls |
| Relative cost | Lowest | Middle | Highest |
| Common trigger | Internal use; small lenders | Some funders and lenders; mid-size orgs | Larger funders, state law, federal Single Audit |
An audit is the highest level of assurance: the CPA examines and tests your financial records, samples transactions, evaluates your internal controls, and issues a formal opinion on whether the statements are free of material misstatement. That opinion is what funders, banks, and regulators trust — it’s reasonable assurance, a high bar, though never an absolute guarantee.
Because it’s the most thorough, an audit is also the most expensive and time-consuming. Only a licensed CPA can perform one — a bookkeeper or accountant cannot, which is part of the difference between the three roles. Whether you’re actually required to have one depends on specific triggers, which we cover in does your nonprofit need an audit, and our audit preparation checklist helps you get ready if you are.
A review gives limited assurance — meaningfully less than an audit, but more than nothing. The CPA performs inquiry and analytical procedures (comparing numbers, asking questions, looking for things that don’t add up) and then states that nothing came to their attention suggesting the statements are materially misstated. There’s no testing of evidence or internal controls the way an audit requires.
Reviews are performed under the AICPA’s Statements on Standards for Accounting and Review Services (SSARS), and they’re a common middle ground: many funders and lenders accept a review for mid-size organizations that don’t yet trigger a full audit. It typically costs a fraction of an audit while still giving an outside party real comfort.
A compilation provides no assurance at all. The CPA takes your financial information and organizes it into properly formatted financial statements, without verifying or testing the underlying numbers. It’s essentially professional presentation: useful when you need clean, standardized statements but no one is requiring independent checking.
Compilations are the lowest-cost of the three and fit internal needs or low-stakes external requests — a small lender, a board that wants tidy statements, or a grant application that doesn’t demand a review or audit. If your books are solid, a compilation may be all you need; if they’re not, fixing the underlying statements matters more than the engagement level.
Not sure which one a funder is actually asking for?
We help nonprofits get audit-ready and coordinate the right CPA engagement — so you don’t pay for more assurance than you need.
Request a quote →You need whichever level the people asking for your financials require — not the most thorough one available. The driver is almost always external: a major funder, a bank or lender, your state’s charitable-registration rules, or your own bylaws. Read the actual requirement before you assume you need an audit, because paying for one when a review would satisfy everyone is a common and expensive mistake.
The one hard rule
If your nonprofit spends $1 million or more in federal funds in a year, you trigger a federal Single Audit — a stricter audit with extra compliance testing. Below that, the level you need is set by your funders, lenders, state, and bylaws.
State rules are the other common driver: many states require a review or audit once your annual revenue crosses a set threshold as part of charitable registration, and that threshold varies widely by state. Grant-funded organizations often face the strictest requirements, since funders want assurance their restricted dollars were spent as intended. The federal Single Audit rule (2 CFR 200.501) is the one bright-line threshold; everything else depends on your specific obligations.
So before you commit, ask each party that wants financials exactly what they require — audit, review, or compilation. Many nonprofits discover a review is enough for now, and grow into an audit later. The National Council of Nonprofits audit guide and our own audit requirements guide map out the common triggers.
As a rule of thumb, an audit costs the most, a review a fraction of an audit, and a compilation the least — often a small fraction of a review. Exact prices depend heavily on your size, the state of your books, and the complexity of your funding, so the only reliable number is a quote for your specific situation.
One thing that moves the price more than people expect: how clean your books are going in. Messy records turn any engagement — even a compilation — into a cleanup project first. Keeping accurate, reconciled books year-round is the cheapest way to control the cost of whatever assurance level you eventually need, which is exactly what good grant-ready accounting and solid recordkeeping are for. It’s also worth getting more than one quote — CPA firms price these engagements differently, and a firm that already knows nonprofit fund accounting will move through yours faster.
Find the actual requirement before you shop. Pull up your biggest grant agreement, your loan documents, and your bylaws, and look for the words “audit,” “review,” or “compilation.” Whatever the strictest one says is the level you need — and often it’s less than you feared.
Clean books make any engagement cheaper.
We provide nonprofit bookkeeping & accounting that keeps you audit-ready year-round — and coordinate the right CPA when assurance is required.
GivingArc provides bookkeeping, Form 990 preparation, and nonprofit-specialized accounting for small and mid-size 501(c)(3) organizations across the US. We are not your auditor; independent audits, reviews, and compilations must be performed by a separate licensed CPA. This article is general information, not accounting or legal advice for your specific situation. Reviewed by Min Kim, CPA.
Common questions about choosing an assurance level.
They’re three levels of assurance from a CPA. An audit gives the highest assurance through testing and a formal opinion; a review gives limited assurance through inquiry and analytical procedures; a compilation gives no assurance and simply organizes your numbers into proper statements. All three are performed by a licensed CPA.
An audit, by a wide margin, because it involves the most work. A review typically costs a fraction of an audit, and a compilation is the least expensive of the three. Exact pricing depends on your size, the complexity of your funding, and how clean your books are going in.
It depends on who’s asking. Check your major grant agreements, loan documents, state charitable-registration rules, and bylaws for the words audit, review, or compilation. The strictest requirement is the level you need — and for many mid-size nonprofits a review satisfies funders that don’t require a full audit.
A licensed CPA. A bookkeeper or accountant cannot issue an audit, review, or compilation report. Your in-house or outsourced bookkeeper prepares the records, and an independent CPA performs the engagement — they should be separate parties for independence.
A Single Audit is a stricter federal audit required when a nonprofit spends $1 million or more in federal funds in a year. It adds compliance testing of how federal money was used, on top of the regular financial statement audit, and must be performed by a CPA.
Yes. Many nonprofits use a compilation or review while they’re small and move up to an audit as funding and requirements grow. The best preparation either way is keeping clean, reconciled books year-round, which keeps every engagement faster and cheaper.
