Syllabus F. Other Assignments F2. Review of interim financial information

Review of Interim Financial Information 1 / 1


a) Define and describe the purpose of each type of assignment and analyse the appropriate level of assurance that may be offered by a professional firm in relation to these assignments.

b) Evaluate the matters to be considered before accepting the engagement, including any ethical and
professional considerations.

c) Plan the assignment to gather suitable evidence and provide an appropriate level of assurance in line with the objectives of the assignment.

d) Discuss the level of assurance that the auditor may provide and explain the other factors to be considered in determining the nature, timing and extent of examination procedures.

e) Describe and recommend appropriate substantive, examination or investigative procedures which can be used to gather sufficient appropriate evidence in the circumstances.

Some companies are required to report interim results after six months of their financial year

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