ACCA AAA ^UK Syllabus F. Other Assignments - Review of Interim Financial Information - Notes ^{1 / 1}

This will usually be an income statement and certain balance sheet items

Level of Assurance Given:

• Negative

The objective is to see if anything has come to the  auditor's attention that suggests that the information is not  in accordance with an identified financial reporting framework

The auditor:

1) Makes inquiries
2) Performs analytical and other review procedures

The review will NOT include:

• Tests of accounting records through inspection, observation or confirmation

• Obtaining corroborative evidence in response to enquiries

• Other typical audit tests (e.g. test of controls)

Planning an Interim Review

1. Create an Engagement Letter

   • Objective and scope of the review

   • Management's responsibility for:

     1) Internal Controls
     2) Making records available
     3) Written representations

   • Level of Assurance (Negative)

   • Style of Report

2. Understanding the Entity

   As the review will be carried out by the auditor, this means updating the understanding from the year-end audit and the last interim review

   • Identify potential material misstatement

   • Identify their likelihood

   • Select the inquiries, analytical and other review procedures

3. Procedures:

   • Read minutes

   • Consider effect of any past report modifications

   • In group audits, communicate with component auditors

4. Inquire about..

   • Changes in accounting policy

   • Any relevant unusual circumstances

   • Assumptions relating to FV valuations

   • Related Party Transactions

   • Contingent liability details

   • Fraud / Non-compliance events

5. Analytical procedures including..

   • Actual interim to expected and prior interim results

   • Actual interim to budget and actual financial results

   • Comparison to similar company's interim results

   • Compare key items (e.g. revenue, expenses) by month, by product line, by source of revenue, by location

6. Going Concern

   • Management assessment of GC changed?

   • Any significant factors since Y/E to affect GC?

   • Discuss with management if GC doubts

   • Consider adequacy of GC disclosures