Vinu: Manu! I’ve heard terms like unaudited and informal audit a lot lately. Can you explain the difference between them?

Manu: Vinu! Sure, let me break it down for you. Unaudited refers to financial statements or reports that haven’t been reviewed by an independent auditor.

Vinu: So, does that mean they aren’t reliable?

Manu: Not necessarily unreliable, but they lack the assurance of accuracy and compliance with accounting standards that an audit provides. These are usually prepared internally by the company’s finance team and are often used for internal purposes or preliminary analysis.

Vinu: Got it! Then what’s an informal audit?

Manu: An informal audit is more like a casual or less structured review. It doesn’t follow formal audit guidelines or regulatory standards.

Vinu: Who conducts these informal audits?

Manu: It could be anyone—internal teams, consultants, or even external parties. The focus is more on identifying specific issues or areas for improvement rather than issuing an official audit opinion.

Vinu: Sounds less formal than a proper audit. Is there any example you can give?

Manu: Sure! If a business owner asks their accountant to “look over the books” to check for discrepancies without conducting a full audit, that would be an informal audit.

Vinu: Ah, I see now! So, unaudited is about the financial statements being untouched by an auditor, and an informal audit is more like a casual review without strict processes.

Manu: Exactly, Vinu! You summed it up well. Let me know if you have more questions.

Vinu: Thanks, Manu! That was really helpful.