Review of financial statements

Abstract

This chapter focuses on review of financial statements. According to AR-C section 90, Review of Financial Statements,1 applies when the accountant is engaged to perform a review of financial statements. When performing a review of financial statements, the accountant's objective is to obtain limited assurance as a basis for reporting whether the accountant is aware of any material modifications that should be made to the financial statements for them to be in accordance with the applicable financial reporting framework, primarily through the performance of inquiry and analytical procedures. ARC section 90 also applies to engagements to review other historical financial information, excluding pro forma financial information. A review engagement is substantially less in scope than an audit engagement, the objective of which is the expression of an opinion regarding the financial statements as a whole. A review engagement does not contemplate obtaining an understanding of the entity's internal control; assessing fraud risk; testing accounting records by obtaining sufficient appropriate audit evidence through inspection, observation, confirmation, or the examination of source documents; or other procedures ordinarily performed in an audit engagement. Therefore, the accountant does not express an opinion in the accountant's review report regarding the financial statements.