New standard on review engagements issued

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02 Oct, 2012

The International Auditing and Assurance Standards Board (IAASB) has released revised International Standard on Review Engagements (ISRE) 2400 'Engagements to Review Historical Financial Statements'.

The revised ISRE is the result of a project commenced in March 2009 to explore standards for a range of services that are capable of meeting the unique needs of small- and medium-sized entities (SMEs) and the users of their financial information, particularly in response to legislative changes in some jurisdictions removing the requirement to prepare audited financial statements.  An exposure draft was issued in January 2011.

Accordingly, review engagements are of particular relevance for entities that are not required, or do not elect, to have an audit, but wish to enhance the credibility of, and confidence in, their unaudited financial statements among their users through practitioner involvement.

The practitioner’s report when a review engagement has been conducted in accordance with ISRE 2400 describes whether anything has come to the practitioner's attention that causes the practitioner to believe the financial statements are not prepared, in all material respects, in accordance with the applicable financial reporting framework.

A review is a limited assurance engagement, however, and the procedures performed are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing. Accordingly, the practitioner's review engagement report does not express an audit opinion on the financial statements.

The revised standard is effective for reviews of financial statements for periods ending on or after 31 December 2013.  Click for press release (link to IFAC website).

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