Which of the following should the auditor perform in a review engagement
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An independent review is a limited assurance report that is a mandatory requirement for non-owner-managed companies of a certain size. The size of a company refers to the public interest score attained by that particular company. This score is calculated by allocating one point to each of the following: average number of employees, number of shareholders, each million Rand of turnover, and each million Rand of debt. According to the Companies Regulations, 2011 an independent review is classified as a review engagement in terms of the International Standard on Review Engagements, ISRE 2400.
Typically, a practitioner evaluates for the benefit of shareholders whether a set of financial statements that are prepared by management, are prepared in accordance with IFRS (criteria). A practitioner may be asked to conduct a number of procedures with regard to a set of financial statements (subject matter) and issue a written conclusion on his work. In a review engagement the relationship may be depicted as follows:
The practitioner can only express a conclusion if appropriate documentation and working papers are available. ISRE 2400 (Revised), requires that the following information be documented: There are several key differences between an audit, a review, and compilation. Essentially, a compilation requires the auditor to simply present financial statements based on the representations made by management, with no effort to verify this information. In a review engagement, the auditor conducts analytical procedures and makes inquiries to ascertain whether the information contained within the financial statements is correct. The result is a limited level of assurance that the financial statements being presented do not require any material modifications. In an audit engagement, the auditor must corroborate the ending balances in the client's accounts and disclosures. This calls for the examination of source documents, third party confirmations, physical inspections, tests of internal controls, and other procedures as needed. Comparing an Audit, Review, and CompilationIn short, the differences between an audit, a review, and a compilation are as follows:
Another issue is the level of demand for each of these services. The users of financial statements, such as investors and lenders, nearly always demand an audit, since it provides the greatest assurance that what they are reading is a fair representation of the financial results, financial position, and cash flows of the reporting entity. Which of the following should a practitioner perform in a review engagement?Practitioner
The review procedures that the practitioner is required to perform include: Inquiries on the accounting practices used by the company. Representations from management on the accuracy of the financial statements. Management responsibility for internal control systems.
What are review engagements in audit?A review engagement provides a moderate level of assurance that the information subject to review is free of material misstatement, this is expressed in the form of negative assurance. engagement. The agreed terms would be recorded in an engagement letter or other suitable form such as a contract.
Which of the following procedures is usually performed by the accountant in a review engagement of a Nonissuer?In an engagement to review the financial statements of a nonissuer, the accountant most likely would perform which of the following procedures? Analysis of inventory turnover.
Which of the following procedures should an accountant perform during an engagement to review?Which of the following procedures should an accountant perform during an engagement to review the financial statements of a non issuer? An accountant performing a review should obtain a client representation letter from the owner, manager, or chief executive officer, and, if appropriate, the chief financial officer.
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