Review is distinguished with audit in following respects:
1. The objective of review of interim financial information is to form an opinion whether anything has come to the auditor’s attention that causes the auditor to believe that the interim financial information is not prepared, in all material respects, in accordance with IAS A review is not adequate to express an opinion whether the financial information gives a true and fair VIew.
In contrast with audit, a review is not designed to obtain reasonable assurance that the financial information is free from material misstatement. Only a moderate assurance is provided. A review is limited to making inquiries, and applying procedures and other review procedures.
Review does not involve tests of controls.
Review ordinarily does not involve inspection, observation or confirmation.
Inquiries are made primarily from persons responsible for financial accounting matters.
A review of interim financial information does not ordinarily require conformations about litigation and claims. In case of audit, the auditor obtains understanding of entity, its environment and internal controls to design tests of controls and bstantive procedures, a review the auditor obtains understanding of entity and its environment including its internal cantrols to enable focus on inquiries JO be made, and the analytical and other review procedures to-be applied.
PROCEDER FOR REVIEW OF INTERIM FINANCIAL INFORMATION
1 Understanding of entity, its environment and internal controls
2 Reading minutes of the meetings.
3. Considering any significant risks.
4. Reading last year’s financial statements.
5. Considering results of internal audit work.
6. Inquires from persons responsible for financial accounting,
functions. Such inquiries include:
• Whether compliance has been made of IFRS.
• Management’s assessment of the risk that interim
• Financial information may be misstated.
• Changes in internal controls.
• Process with which interim financial information has been prepared and reliability of accounting records.
• Any changes in accounting policies.
• Any errors which have not been corrected.
• Assumption regarding fair value adjustments.
• Disclosures regarding related parties.
• Contingent liabilities.
• Compliance with debt covenants.
• Any frauds or suspected frauds.
• Significant transactions recorded in the last several day before and after year end.
• Non compliance with laws and regulations.
7. Applying analytical procedure:
• Comparison of interim financial information with preceding interim period and with most recent audited fainancial statements.
• Comparison of actual results with budget.
• Ratio analysis
• Comparison of desegregated data for example by products, locations.
8. Agree interim financial information with underlying accounting records.
9. Inquire whether management has considered subsequent events.
10. Consider validity of going concern.
11. Obtain representation letter.
12. Issue review report.
13. Document all significant matters relating to rewiev.