Apple iPhone 3GS

Does anyone know why the compass does not give the right reading? When I first got the 3GS, I tested it by aiming it toward the North but got a reading it was West. At the time, I thought I might be wrong so I dismissed it. However, when I got in my car and compared the reading to my navigational system compass and showed that the 3GS was way off. Went home and tested it with an old fashion compass and it too verified my findings...