A6 Interim Reports Flashcards
Registration Statements
When an independent accountant’s report based on a review of interim financial information is presented in a registration statement, the prospectus should include a statement clarifying that the accountant’s review report is not a part of the statement within the securities Act 1933
Interim Financials Review
A review of the interim financial information of an issuer (publicly held company) is conducted in accordance with PCAOB standards.
Nonissuers apply SSARS
No requirement to obtain understanding of internal control in a compilation & review
No requirement to include interim reports in audited reports
Objective of Review Report on Interim
A review report on the interim financial information for issuers do not provide an opinion on the FS.
Its objective of the review is to provide the accountant with a reasonable basis for expressing limited assurance that are no material modifications that should be made to the accompanying FS for them to be in conformity with GAAP.
Interim Period
Interim period does not include year end (Dec. 31st), maybe other periods such as quarterly.
SEC Requirements
Interim reviews are mandatory for filing with the SEC which requires quarterly review of the FS of issuers, or include quarterly financial data in their annual reports/other SEC filings. This is also required by lenders.
The auditor must review the interim financial information.
Statement of Auditing Standard
SAS is followed if auditors conduct interim reviews with an audit. If the interim reviews are conducted quarterly by the auditor without an audit, then SSARS is followed.
Written Reports
These are not required on a review of interim financial information. However, if a client states that an auditor has reviewed the interim financial information, then the auditor must include a written report.
Procedures Performed For Interim Reviews
These include U LIAR CPA
Representation Letter
A written representation letter is required from mgmt to ensure everyone knows who is responsible for what
Accompanying Audited Financial Statements
When interim financials included in a note to the FS is not marked unaudited, the auditor disclaims an opinion on the interim financials.
However, when the interim financials do accompany the audited FS, the auditor should include an Other matter paragraph in the auditors report when all of the conditions exist (included in a document with the audited FS, does appear in accordance with the applicable framework, etc.)
