True / False: The auditor performs limited substantive tests to verify the analytical procedures
False
This is not an audit. No additional tests or verification are performed
True / False: The accountant must be independent to perform a Review engagement.
True
The performance requirements applicable to a review include:
U—L-I-A-R—C-P-A
Understanding with the client (engagement letter)
Learn and or obtain sufficient knowledge of the entity’s business
Inquiries should be addressed to appropriate individuals
Analytical procedures should be performed
Review if other procedures should be performed
Client representation letter should be obtained
Professional judgment should be used to evaluate results
Accountant communicates the results
Who is responsible for selecting the appropriate accounting principles for a Review engagement?
Management
True / False: The accountant will perform analytical procedures sufficient to provide an opinion.
False
The analytical procedures and inquiries are sufficient to provide limited assurance but not an opinion.
"we didn't see anything wrong" (limited assurance) which is very different from "this is right" (audit)
Which sufficient piece of evidence is needed from management before providing a report when performing a Review engagement?
A management representation letter
What four specific activities is the accountant NOT required to perform during a Review engagement? Why are these not required?
Tests of internal controls
Audit tests
Fraud risk assessment
Communicate with the predecessor accountant
We are NOT performing an AUDIT
The following items are all examples of what – with regard to a Review engagement? Accounting principles used, significant transactions that occurred during the period, status of litigation, claims, and assessments; significant assumptions used for accting estimates, related party transactions.
These are topics of inquiry used during the Review engagement.
What are a few types of analytical procedures that can be used during a Review engagement?
Compare current to prior period FS
Compare actuals to budgets
Compare entity to industry ratios
Compare disaggregated revenue data
Compare financial to nonfinancial information
True / False: Analytical procedures may be performed at the FS level, or at the details account level.
True
During the performance of a Review engagement, the accountant becomes aware of information that is materially incorrect. What options are available to the accountant?
Request that management consider the effect the misinformation has on the FS
IF not addressed by management, possible change in limited assurance OR withdraw from the engagement
What date should be used on the management representation letter?
The same date as the accountant’s report
Management declines to provide a representation letter, and the accountant is concerned with management’s integrity. What options are available to the accountant?
Withdraw from the engagement
What is the definition of a material misstatement?
Information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person using the information would be changed or influenced by the omission or misstatement
The accountant is unable to perform whatever procedures they deem necessary during a Review engagement. What are the implications of this situation? What options are available to the accountant?
Implications: This is an incomplete review
Options: Prevent the issuance of a review report
What statement is made in a Review report when the accountant is pleased with the results of the engagement?
The accountant is not aware of any material modifications that should be made to the FS in order for them to be in conformity with the applicable financial reporting framework
True / False: The accountant should state that a Review is equivalent in scope to an audit and will provide limited assurance.
False
A Review is substantially less in scope compared to an audit
Limited assurance, but not an opinion, is provided
In a Review engagement, what moniker must be marked on each page of the FS?
See Independent Accountant’s Review Report
Which standards are used for a Review engagement?
SSARS: Statements on Standards for Accounting and Review Services
True / False: Inquiries may be made external to the customer, such as a client, when performing a Review engagement.
False
Inquiries are made only internal to the company
True / False: During a Review engagement the accountant inquired of management and is concerned their responses are not accurate. The accountant must now corroborate management's responses with other evidence.
False
That is performed during an audit, not during a Review
