AUD 6.6 - Interim Reviews

Question 1

Nonissuers may receive a interim review of financial statements if:

Answer 1

The latest financial statements have been audited
Th auditor either had been engaged to audit or audited the entity’s latest financials
The same financial reporting framework is used for the interim financial statements

Question 2

Who governs the interim review for nonissuers?

Answer 2

SAS

Question 3

Who governs interim review of financial statements for issuers?

Answer 3

PCAOB

Question 4

If it is a first review of interim financial statements, the auditor should:

Answer 4

Make inquiries of the predecessor auditor
If allowed, review the predecessors documentation
Perform procedures to obtain knowledge about the entity’s internal controls

Question 5

If there are significant deficiencies in internal control that make performing an interim review impractical, what is that restriction?

Answer 5

A scope limiation

Question 6

What are some of the significant areas for inquiry during an interim review?

Answer 6

Fraud, suspected fraud or allegations of fraud
Significant deficiencies and material weaknesses in internal control
Ability to continue as a going concern

Question 7

This is not required in an interim review, but may be appropriate in certain circumstances

Answer 7

Inquiry of the entity’s lawyer regarding litigation

Question 8

If conditions or events raise substantial doubt about the entity’s ability to continue as a going concern come to the auditors attention during an interim review, the auditor should

Answer 8

Make appropriate inquiries and consider the adequacy of disclosures but is not required to corroborate mitigating factors

Question 9

If the auditor is unable to perform necessary procedures or management does not provide a representation letter, what should the auditor do?

Answer 9

No review report should be issued

Question 10

Communications with those charged with governance are required in an interim review when:

Answer 10

Fraud or noncompliance occurs
Significant deficiencies or material weaknesses in internal control discovered

Question 11

Each page of the interim financial statements should be marked:

Answer 11

Unaudited

Question 12

If the auditor becomes aware of a departure from the applicable framework, the auditor should

Answer 12

Include a description of the departure and if determinable the effects of the departure in a basis for modification paragraph

Question 13

If for nonissuers, a going concern section was included in the prior years auditors report and the conditions that give rise to the substantial doubt still exist, the auditor should do what?

Answer 13

Include an emphasis-of-matter paragraph in the current year interim review report

Question 14

If for nonissuers, a going concern section was not included in the prior years auditors report and management has included a statement that substantial doubt exists in its financial statements, the auditor should

Answer 14

Include an emphasis-of-matter paragraph in the current year interim review report

Question 15

When should issuers add an explanatory paragraph in the interim review report?

Answer 15

1. When quarterly information required by the SEC has not been reviewed
2. When quarterly information required by the SEC is omitted

Question 16

For interim financial information presented in a registration statement, the prospectus that includes a statements about the independent auditor’s involvement should:

Answer 16

Clarify that the report is not considered to be a report or part of the registration statement within its context

If reviewed, ok to use the name of the CPA as long as marked unaudited