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Learning Objectives

Learning Objectives. LO1 Prepare reports for review and compilation of unaudited financial statements, given specific facts. LO2 Write a report on a review of interim financial information.

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Learning Objectives

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  1. Learning Objectives LO1 Prepare reports for review and compilation of unaudited financial statements, given specific facts. LO2 Write a report on a review of interim financial information. LO3 Describe the various reports on internal control and their connection with public reporting and reporting to a client’s audit committee.

  2. Interim Financial Information Accounting principles do not require interim financial information as a basic and necessary element of financial statements conforming to GAAP. • When interim information is presented it should, however, conform to GAAP. • Interim financial statements that might be prepared include buy/sell situations for a business, or to fulfill reporting requirements of regulatory authorities. LO2

  3. Interim Financial Information A common review engagement is the review of interim financial statements. • Assess whether accounting principles have been applied on a consistent basis. • Ensure statements are not misleading relative to the annual statements. • Procedures presume that the accountant has knowledge of the business from the annual audit. LO2

  4. Nature of Review Procedures Review procedures consist mainly of enquiry and analytical procedures. • TheHandbook, paragraph 8200.23 and ISRE 2400.20 suggests checklists including several procedures. Timing of review procedures: • Review procedures should be performed at or near the date of the interim information. LO2

  5. Nature of Review Procedures Extent of review procedures: • The accountant needs to acquire a sufficient knowledge of the client’s business, just as if the engagement were a regular audit. Reporting on a review of interim information: • Only negative assurance is provided. • Interim financial statements should be marked “Unaudited.” LO2

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