Post on 19-Dec-2015
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Engagements to Review Financial Statements
PSRE 2400
Inquiry
Analytical Procedur
es
Reasonable basis Negative Assurance
Objective of a Review Engagement
To enable an auditor to state whether anything has come to the auditor’s attention that causes the auditor to believe that the financial statements are not prepared, in all material respects, in accordance with PFRS
General Principles of a Review Engagement
independence
integrity
objectivity
professional competence and due care
confidentiality
professional behavior
technical standards
Code of Ethics
Scope of a ReviewPSRE 2400
relevant professional bodies
regulation
terms of the review engagement
reporting requirements
Bases in determining the scope of a review
Compilation Report
Review of Financial Statements
Audit Report
Assurance Provided: Negative Assurance
Terms of Engagement• The objective of the service being performed.
• Management's responsibility for the financial statements.
• The scope of the review, including reference to PSRE
• Unrestricted access to whatever records, documentation and other information requested in connection with the review.
• A sample of the report expected to be rendered.
• The fact that the engagement cannot be relied upon to disclose errors, illegal acts or other irregularities, for example, fraud or defalcations that may exist.
• A statement that an audit is not being performed and that an audit opinion will not be expressed.
Objective
Management’s Responsibility
The fact that the engagement cannot be relied upon to disclose errors, etc.
A statement that an audit is not being performed
Scope
Planning and Using the Work of Others
• In planning a review of financial statements, the auditor should obtain or update the knowledge of the business including consideration of the entity's organization, accounting systems, operating characteristics and the nature of its assets, liabilities, revenues and expenses.
• When using work performed by another auditor or an expert, the auditor should be satisfied that such work is adequate for the purposes of the review.
Procedures and Evidence
Obtaining an Understanding of the Entity’s Business and the Industry
Inquiries
Accounting principles and practices, material assertions, Actions taken at meetings
Analytical procedures
Comparison of the FS with prior periods and anticipated results; relationship of the elements of the FS
Reading the Financial Statements
Other auditors and responsible persons
Conclusions and Reporting
TitleThe AddresseeIntroductory paragraphScope paragraphStatement of a Negative AssuranceAuditor’s signatureDate of reportAuditor’s Address
Report Issued
When to be Issued
Unmodified Review Report (Negative Assurance)
The auditor believes that there are no material modifications that should be made to the financial statements so these will conform to the PFRS
Modified Review Report
Material Misstatements• Express a qualification of the negative assurance• When the effect of the matter is material and pervasive to the financial statements
that the auditor concludes that a qualification is not adequate to disclose the misleading or incomplete nature of the FS, an adverse statement is issued.
Scope Limitation – If there has been a material scope limitation, the report should describe the limitation and either:• Express a qualification of the negative assurance• When the possible effect is material and pervasive, no assurance is provided.