You are working for a public accounting firm in Melbourne and were the auditor of Avalon Company Ltd (Avalon) for the financial year ending 30 June 2019. Avalon had been operating in the Melbourne market for several years before having its shares listed on the Australian Securities Exchange (ASX) since 1 July 2018.

Avalon has just prepared its half-yearly financial statement for the period ending 31 December 2020. Avalons Board of Directors (BOD) has just been aware that as per regulations set out in the Corporations Act 2001, Avalon needs to get its half-yearly financial statements either audited or reviewed by a public accounting firm. The BOD of Avalon has approached you with a view to getting to know more about the similarities and differences between a review and an audit service and to receiving advice on what type of service would best suit it. The audit partner in your firm requests you to prepare a letter addressing Avalons BOD regarding this issue.

Required: Write a letter to the BOD of Avalon advising them of the similarities and differences between a review of financial statement and an audit of financial statement, and of the type of service that suits the client. Your discussion should focus on: the similarities and differences in the level of assurance, audit procedures, benchmark or criteria, types of opinion, applicable standards, audit fees etc.