![]() The company’s auditor will have obtained a sound understanding of these matters and conducted recent tests of controls and substantive procedures as part of the annual audit. The half-year review is a defined concept in relation to a clearly defined subject matter, ie the financial statements, and for which there is an expectation of a strongly defined internal control environment appropriate for the size and complexity of the client, structure through accounting practices, double entry book-keeping and other checks and balances required by company law and regulation. While there are certain parallels between half-year reviews and other limited assurance engagements conducted under ISAE 3000 (Revised), there are also differences. The limited nature of the work is justified because the practitioner has a base of history with the client’s previous financial statement audit and an understanding of the client’s control environment which generally helps the practitioner to determine the reliability of the information produced by management. Analytical procedures typically involve the comparison of actual information against the expectations formed based on the prior year and industry average. These reviews are ordinarily based on inquiry of management and analytical procedures. The half-year review is an example of a limited assurance engagement that is conducted by the company’s auditor under ISRE 2410. Practitioners may be familiar with the limited nature of the work performed in relation to a published review opinion for listed company half-year financial statements. The conclusion in a limited assurance engagement is accordingly framed in a negative sense: "Based on the procedures performed, nothing came to our attention to indicate that the management assertion on XYZ is materially misstated." In contrast with a reasonable assurance conclusion which would be formed in a positive sense, ie: "Based on the procedures performed, in our opinion, the management assertion on XYZ is reasonably stated." Hence, the practitioner is not in a position to express the same degree of confidence as in a reasonable assurance engagement. ![]() Since the extent of evidence collected for a limited assurance engagement may be limited due to the reduced sample sizes and test coverage adopted, the level of risk of material misstatement remaining is potentially higher than in a reasonable assurance engagement. The practitioner uses the same risk basis for planning their work and the same levels of materiality in evaluating the outcome of tests for reasonable and limited assurance engagements. The practitioner achieves this ordinarily by performing different or fewer tests than those required for reasonable assurance or using smaller sample sizes for the tests performed. Buyer's guide to assurance on non-financial information Find out moreFor a limited assurance engagement the practitioner collects less evidence than for a reasonable assurance engagement but sufficient for a negative form of expression of the practitioner’s conclusion.
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