Review Engagements (SSARS) M4

Question 1

What does a Review Report state?

Answer 1

• “I am not aware of any material modifications that should be made to the accompanying financial statements.” (negative or limited assurance)
• A review “includes primarily applying analytical procedures to management’s financial data and making inquiries of company management.”
• A review “is substantially less in scope than an audit in accordance with GAAS, the objective of which is the expression of an opinion.

Question 2

What should be flagged on each page of the f/s in a review engagement?

Answer 2

Each page should be marked “See Independent Accountant’s Review Report”.

Question 3

How should the practitioner handle a material departure from GAAP during the review of financial statements?

Answer 3

• The accountant should recommend that the financial statements be revised to conform to generally accepted accounting principles.
• If the financial statements are not revised, then the accountant might consider modifying the report,
  or, if modification is inadequate, withdrawing from the engagement.

Question 4

How should the practitioner handle a scope limitation during the review of financial statements?

Answer 4

Accountants must be able to perform whatever procedures they deem necessary, and if those procedures are not accomplished, the review is incomplete. A review that is incomplete will prevent the issuance of a review report.

Question 5

\What procedures are performed for a review?

Only available for non-issuers

Answer 5

• No audit procedures are done.
• A review engagement is based on inquiry and analytical procedures.
• Inquiring about related party transactions.
• Required to obtain a client representation letter from the owner, manager, or chief executive officer, and, if appropriate, the chief financial officer.
• When performing a review, inquiries should be made with members of management that have direct financial and accounting responsibilities. For example,
  the inquiries would include: the accounting principles/practices used by the entity and the
  method of applying them; any unusual or complex situations that may affect the financial
  statements; material subsequent events; and, significant journal entries or adjustments.