Review Engagements (SSARS) M4 Flashcards
1
Q
What does a Review Report state?
A
- “I am not aware of any material modifications that should be made to the accompanying financial statements.” (negative or limited assurance)
- A review “includes primarily applying analytical procedures to management’s financial data and making inquiries of company management.”
- A review “is substantially less in scope than an audit in accordance with GAAS, the objective of which is the expression of an opinion.
2
Q
What should be flagged on each page of the f/s in a review engagement?
A
Each page should be marked “See Independent Accountant’s Review Report”.
3
Q
How should the practitioner handle a material departure from GAAP during the review of financial statements?
A
- The accountant should recommend that the financial statements be revised to conform to generally accepted accounting principles.
- If the financial statements are not revised, then the accountant might consider modifying the report,
or, if modification is inadequate, withdrawing from the engagement.
4
Q
How should the practitioner handle a scope limitation during the review of financial statements?
A
Accountants must be able to perform whatever procedures they deem necessary, and if those procedures are not accomplished, the review is incomplete. A review that is incomplete will prevent the issuance of a review report.
5
Q
\What procedures are performed for a review?
Only available for non-issuers
A
- No audit procedures are done.
- A review engagement is based on inquiry and analytical procedures.
- Inquiring about related party transactions.
- Required to obtain a client representation letter from the owner, manager, or chief executive officer, and, if appropriate, the chief financial officer.
- When performing a review, inquiries should be made with members of management that have direct financial and accounting responsibilities. For example,
the inquiries would include: the accounting principles/practices used by the entity and the
method of applying them; any unusual or complex situations that may affect the financial
statements; material subsequent events; and, significant journal entries or adjustments.