Chapter 2 Section 4: Review of Interim Financial Information Flashcards
What procedures are needed for the review of an issuer?
Same as nonissuer - ULIARCPA
What standards apply to the audit of issuers?
PCAOB standards
What is management responsible for?
Financials and internal control
What should be included in the engagement letter?
Objectives and scope of the engagement Management's responsibility Auditor's responsibility (SAS or PCAOB - not SSARS) Limitations of engagement Financial reporting framework
What do you need to understand about their internal control?
Why misstatements may occur
The likelihood that they will occur
Inquiries and analytical procedures
Should you make inquiries of the client’s lawyer?
In regards to litigation and claims, you can, but it’s not necessary. Use your judgment
What analytical procedures should be performed?
Comparisons between periods and interim for trends
Ratios
Budget vs. actual
You may want to benchmark data and compare to industry standards
What other procedures should be done?
Read minutes
Obtain component auditor’s reports
Obtain evidence that interim information reconciles with records
Read interim financial information
Read other documents
Extend procedures to resolve outstanding questions
How important is the client rep letter?
It’s required
What is professional judgment needed to resolve?
Misstatements for materiality
Scope limitations - if severe, don’t issue a review report
Are MR DIM and REPPORTS CRAME used for the review report?
MR DIM is, REPPORTS CRAME is not. We don’t follow SSARS for review of interim info
What do you do if you find material misstatements?
Disclose or withdraw
What do you do if you find a going concern issue or lack of consistency?
Disclosure in financials or modify the review report
How do you mark interim information accompanying audited financials?
Mark unaudited or disclaim an opinion on the interim information
