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Published byChristine Harrington Modified over 6 years ago
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Learning Objectives LO1 Prepare reports for review and compilation of unaudited financial statements, given specific facts. LO2 Write a report on a review of interim financial information. LO3 Describe the various reports on internal control and their connection with public reporting and reporting to a client’s audit committee.
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Interim Financial Information
Accounting principles do not require interim financial information as a basic and necessary element of financial statements conforming to GAAP. When interim information is presented it should, however, conform to GAAP. Interim financial statements that might be prepared include buy/sell situations for a business, or to fulfill reporting requirements of regulatory authorities. LO2
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Interim Financial Information
A common review engagement is the review of interim financial statements. Assess whether accounting principles have been applied on a consistent basis. Ensure statements are not misleading relative to the annual statements. Procedures presume that the accountant has knowledge of the business from the annual audit. LO2
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Nature of Review Procedures
Review procedures consist mainly of enquiry and analytical procedures. The Handbook, paragraph and ISRE suggests checklists including several procedures. Timing of review procedures: Review procedures should be performed at or near the date of the interim information. LO2
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Nature of Review Procedures
Extent of review procedures: The accountant needs to acquire a sufficient knowledge of the client’s business, just as if the engagement were a regular audit. Reporting on a review of interim information: Only negative assurance is provided. Interim financial statements should be marked “Unaudited.” LO2
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