A6/M4 Review Engagements

Question 1

what is a review engagement?

Answer 1

• limited insurance: “ we are not aware of any material modifications…”
• independence required
• private/nonissuer
  + SSARS
  + SAS
• public/issuer: PCAOB
• perform inquiry and analytical procedures
• not required to obtain an understanding of internal control or assess control risk
• each page of the reviewed FS should included “ See independent accountant’s review report”

Question 2

what are the performance requirements for review engagement?

Answer 2

U LIAR CPA
- Understanding with client should be established (documentation in engagement letter)
- Learn/obtain sufficient knowledge of the entity’s business
- Inquiries should be addressed to appropriate internal personnel (INSIDE the company, not outside)
- Analytical procedures should be performed (developing expectations and comparing)
- Review if other procedures should be performed
- Client representation letter should be obtained
- Professional judgements should be used to evaluate results
- Accountant should communicate results

Question 3

what is the special understanding with client under review engagement? (besides other special understandings

Answer 3

the limitations of the engagement, including a statement that a review is substantially less in scope than an audit, from which the accountant will not express an opinion on the FS, but issue a conclusion instead

Question 4

what are tasks that NOT required by the accountant?

Answer 4

• test of internal control
• perform audit procedures
• assess fraud risk
• communication with the predecessor accountant: not required not may
• corroborate (support with evidence) management’s responses