Interim financial
information or statement as defined in ISAs’ is “Financial information
(which may be less than a complete set of financial statements) issued at
interim dates (usually half-yearly or quarterly) in respect of a financial
period”. IAS 34 Interim Financial Reporting outlines the recognition,
measurement and disclosure requirements for interim reports.
The International Standards on Review Engagements (ISRES) 2400
and 2410
govern the interim review procedures. A review engagement is a limited assurance engagement
that provides a moderate level of assurance that the information subject to
review is free of material misstatement; this is expressed in the form of
negative assurance. The difference between the report issued by auditor for a
yearly audit and the report issued for quarterly or half yearly review is as
follows.
Audit Report: The
Auditor give an opinion as to whether the financial statements, taken as a
whole, are fairly presented. This opinion is made after detailed tests are
conducted of the accounting records. These tests include but are not limited to
confirmation with outside parties, analytical procedures, inquiry of client
personnel and a detailed study of the accounting records.
Review Engagement Report: In a review engagement for quarterly or half
yearly period, the auditors’ express a limited assurance that they have not
noted any items that would require adjustments that should be made to the
statements in order for them to be in conformity with the accepted standards.
The auditor must conduct a review and be satisfied as to the reasonableness of
the statements through inquiry and analytical procedures.
In some
circumstances, the auditor may determine that it is effective to perform
substantive procedures at an interim date, and to compare and reconcile
information concerning the balance at the period end with the comparable
information at the interim date to:
(a) Identify
amounts that appear unusual;
(b) Investigate
any such amounts; and
(c) Perform substantive analytical
procedures or tests of details to test the intervening period.
Practice
The Auditor while
conducting a review engagement should still practice professional skepticism
and should follow the fundamental ethical principles of integrity, objectivity,
professional competence and due care, confidentiality and professional behavior.
