Tuesday, March 17, 2015
Jul13_Compiled_Auditing_Standard_ASRE_2410
Compiled Auditing Standard ASRE 2410
(July 2013)
Auditing Standard on Review
Engagements ASRE 2410
Review of a Financial Report Performed by
the Independent Auditor of the Entity
This compilation was prepared on 1 July 2013 taking into account amendments made by ASRE 2013-3
Prepared by the Auditing and Assurance Standards Board
ASRE 2410 - compiled - 2 - AUDITING STANDARD
Obtaining a Copy of this Auditing Standard on Review Engagements
The most recently compiled versions of Auditing Standards on Review Engagements, original
Standards and amending Standards (see Compilation Details) are available on the AUASB website:
www.auasb.gov.au
Contact Details
Auditing and Assurance Standards Board
Level 7, 600 Bourke Street
Melbourne Victoria 3000
AUSTRALIA
Phone: (03) 8080 7400
Fax: (03) 8080 7450
E-mail: enquiries@auasb.gov.au
Postal Address:
PO Box 204
Collins Street West
Melbourne Victoria 8007
AUSTRALIA
COPYRIGHT
© 2013 Auditing and Assurance Standards Board. The text, graphics and layout of this compiled
Auditing Standard on Review Engagements are protected by Australian copyright law and the
comparable law of other countries. Reproduction within Australia in unaltered form (retaining this
notice) is permitted for personal and non-commercial use subject to the inclusion of an
acknowledgment of the source. Requests and enquiries concerning reproduction and rights for
commercial purposes within Australia should be addressed to the Executive Director, Auditing and
Assurance Standards Board, PO Box 204, Collins Street West, Melbourne Victoria 8007. Otherwise,
no part of this compiled Auditing Standard on Review Engagements may be reproduced, stored or
transmitted in any form or by any means without the prior written permission of the AUASB except as
permitted by law.
ISSN 1833-4393
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity
ASRE 2410 - compiled - 3 - AUDITING STANDARD
CONTENTS
COMPILATION DETAILS
AUTHORITY STATEMENT
Paragraphs
Application..............................................................................................................................................1
Operative Date........................................................................................................................................2
Introduction
Scope of this Auditing Standard on Review Engagements......................................................................3
Objective .................................................................................................................................................4
Definitions...............................................................................................................................................5
Requirements
Performing a Review............................................................................................................................ 6-7
General Principles of a Review of a Financial Report ....................................................................... 8-10
Agreeing the Terms of the Engagement........................................................................................... 11-12
Procedures for a Review of a Financial Report................................................................................ 13-14
Materiality ..............................................................................................................................................15
Enquiries, Analytical and Other Review Procedures....................................................................... 16-20
Comparatives – First Financial Report...................................................................................................21
Evaluation of Misstatements..................................................................................................................22
Written Representations................................................................................................................... 23-24
Auditor‟s Responsibility for Accompanying Information ............................................................... 25-26
Communication ................................................................................................................................ 27-31
Reporting the Nature, Extent and Results of the Review of a Financial Report ....................................32
Departure from the Applicable Financial Reporting Framework..................................................... 33-34
Limitation on Scope ...............................................................................................................................35
Limitation on Scope Imposed by Management................................................................................ 36-38
Other Limitations on Scope Not Imposed by Management ...................................................................39
Going Concern and Significant Uncertainties.................................................................................. 40-43
Documentation .......................................................................................................................................44
Application and Other Explanatory Material
Objective ........................................................................................................................................ A1-A3
Performing a Review.............................................................................................................................A4
General Principles of a Review of a Financial Report ................................................................... A5-A7
Agreeing the Terms of the Engagement................................................................................................A8
Procedures for a Review of a Financial Report.............................................................................A9-A13
Materiality ...................................................................................................................................A14-A18
Enquiries, Analytical and Other Review Procedures..................................................................A19-A27
Auditing Standard on Review Engagements ASRE 2410
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Comparatives – First Financial Report ........................................................................................A28-A31
Evaluation of Misstatements .......................................................................................................A32-A34
Written Representations ...................................................................................................................... A35
Auditor‟s Responsibility for Accompanying Information ..........................................................A36-A37
Communication ...........................................................................................................................A38-A40
Reporting the Nature, Extent and Results of the Review of a Financial Report ................................. A41
Departure from the Applicable Financial Reporting Framework ................................................A42-A43
Limitation on Scope ............................................................................................................................ A44
Limitation on Scope Imposed by Management ...........................................................................A45-A47
Other Limitations on Scope Not Imposed by Management ........................................................A48-A49
Going Concern and Significant Uncertainties .............................................................................A50-A54
Other Considerations ...................................................................................................................A55-A59
Documentation .................................................................................................................................... A60
Conformity with International Standards on Review Engagements
Appendix 1: Example of an Engagement Letter for a Review of a Financial Report
Example of a Representation Letter
Appendix 2: Analytical Procedures the Auditor May Consider When Performing a Review of a
Financial Report
Illustrative Detailed Procedures that may be Performed in an Engagement to Review a
Financial Report
Appendix 3: An Auditor‟s Review Report under the Corporations Act 2001
Financial Report for a Half-Year
Example of an Unmodified Auditor‟s Review Report on a Half-Year Financial Report
– Single Disclosing Entity
Appendix 4: Example of an Unmodified Auditor‟s Review Report on a Financial Report
Financial Report Prepared in Accordance with a Financial Reporting Framework
Designed to Achieve Fair Presentation
Example of an Auditor‟s Review Report with a Qualified Conclusion (Except For) for
a Departure from the Applicable Financial Reporting Framework
Financial Report Prepared in Accordance with a Financial Reporting Framework
Designed to Achieve Fair Presentation
Example of an Auditor‟s Review Report with a Qualified Conclusion for a Limitation
On Scope Not Imposed by Management
Financial Report Prepared in Accordance with a Financial Reporting Framework
Designed to Achieve Fair Presentation
Example of An Auditor‟s Review Report with an Adverse Conclusion for a Departure
from the Applicable Financial Reporting Framework
Financial Report Prepared in Accordance with a Financial Reporting Framework
Designed to Achieve Fair Presentation
Example of an Auditor‟s Review Report with a Qualified Conclusion (Except for) on
the Basis that Comparatives have not been Reviewed or Audited
Financial Report Prepared in Accordance with a Financial Reporting Framework
Designed to Achieve Fair Presentation
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity
ASRE 2410 - compiled - 5 - AUDITING STANDARD
COMPILATION DETAILS
Auditing Standard on Review Engagements ASRE 2410 Review of a
Financial Report Performed by the Independent Auditor
of the Entity (as Amended)
This compilation takes into account amendments made up to and including 1 July 2013 and was
prepared on 1 July 2013 by the Auditing and Assurance Standards Board (AUASB).
This compilation is not a separate Auditing Standard on Review Engagements made by the AUASB.
Instead, it is a representation of ASRE 2410 (October 2009) as amended by another Auditing Standard
on Review Engagements which is listed in the Table below.
Table of Standards
Standard Date made Operative Date
ASRE 2410 [A] 27 October 2009 1 January 2010
ASA 2011-1 [B] 27 June 2011 1 July 2011
ASA 2013-3 [C] 1 July 2013 1 July 2013
Table of Amendments
Paragraph affected How affected By … [paragraph]
39 Amended ASA 2011-1 [87]
Appendix 1: Example
Engagement Letter Amended ASA 2011-1 [88]
Appendix 1: Example
Engagement Letter Amended ASA 2011-1 [89]
Appendix 1: Example
Representation Letter Amended ASA 2011-1 [90]
Appendix 3: Example
Auditor‟s Report Amended ASA 2011-1 [91]
Appendix 3: Example
Auditor‟s Report Amended ASA 2011-1 [92]
Appendix 3: Example
Auditor‟s Report Amended ASA 2011-1 [93]
Appendix 4: Example
Auditor‟s Report Amended ASA 2011-1 [94]
Appendix 4: Example
Auditor‟s Report Amended ASA 2011-1 [95]
Appendix 4: Example
Auditor‟s Report Amended ASA 2011-1 [96]
Appendix 4: Example
Auditor‟s Report Amended ASA 2011-1 [97]
Appendix 4: Example
Auditor‟s Report Amended ASA 2011-1 [98]
Appendix 4: Example
Auditor‟s Report Amended ASA 2011-1 [99]
Appendix 1: Example
Engagement Letter Amended ASA 2013-3 [17]
Appendix 3: Example
Auditor‟s Report Amended ASA 2013-3 [18]
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity
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[A] Federal Register of Legislative Instruments – registration number F2009L04107,
27 October 2009
[B] Federal Register of Legislative Instruments – registration number F2011L01379,
27 June 2011
[C] Federal Register of Legislative Instruments – registration number [insert],
1 July 2013
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AUTHORITY STATEMENT
Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed
by the Independent Auditor of the Entity (as amended to 1 July 2013) is set out in paragraphs
Aus 0.1 to A60 and Appendices 1 to 4.
This Auditing Standard on Review Engagements is to be read in conjunction with ASA 101
Preamble to Australian Auditing Standards, which sets out the intentions of the AUASB on how
the Australian Auditing Standards, operative for financial reporting periods commencing on or
after 1 January 2010, are to be understood, interpreted and applied.
Dated: 1 July 2013
ASRE 2410 - compiled - 8 - AUDITING STANDARD
AUDITING STANDARD ON REVIEW ENGAGEMENTS ASRE 2410
The Auditing and Assurance Standards Board (AUASB) made Auditing Standard on Review
Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the
Entity, pursuant to section 227B of the Australian Securities and Investments Commission Act 2001
and section 336 of the Corporations Act 2001, on 27 October 2009.
This compiled version of ASRE 2410 incorporates subsequent amendments contained in other
Auditing Standards made by the AUASB up to and including 1 July 2013 (see Compilation Details).
AUDITING STANDARD ON REVIEW ENGAGEMENTS ASRE 2410
Review of a Financial Report Performed by the Independent
Auditor of the Entity
Application
1. This Auditing Standard on Review Engagements applies to:
(a) a review by the independent auditor of the entity, of a financial report for a half-year,
in accordance with the Corporations Act 2001; and
(b) a review, by the independent auditor of the entity, of a financial report, or a complete
set of financial statements, comprising historical financial information, for any other
purpose.
Operative Date
2. This Auditing Standard on Review Engagements is operative for financial reporting periods
commencing on or after 27 October 2009. [Note: For operative dates of paragraphs changed or added by
an Amending Standard, see Compilation Details.]
Introduction
Scope of this Auditing Standard on Review Engagements
3. This Auditing Standard on Review Engagements (Auditing Standard) deals with the auditor‟s
responsibilities when an auditor undertakes an engagement to review a financial report of an
audit client, and on the form and content of the auditor‟s review report. The term “auditor” is
used throughout this Auditing Standard, not because the auditor is performing an audit
function but because the scope of this Auditing Standard is limited to a review of a financial
report performed by the independent auditor of the financial report of the entity.
Objective
4. The objective of the auditor is to plan and perform the review to enable the auditor to express
a conclusion whether, on the basis of the review, anything has come to the auditor‟s attention
that causes the auditor to believe that the financial report, or complete set of financial
statements, is (are) not prepared, in all material respects, in accordance with the applicable
financial reporting framework. (Ref: Para. A1-A3)
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Definitions
5. For the purposes of this Auditing Standard, the following terms have the meanings attributed
below:
(a) An interim financial report means a financial report that is prepared in accordance
with an applicable financial reporting framework1
for a period that is shorter than the
entity‟s financial year.
(b) A financial report means a complete set of financial statements including the related
notes and an assertion statement by those responsible for the financial report. The
related notes ordinarily comprise a summary of significant accounting policies and
other explanatory information. The requirements of the applicable financial reporting
framework determine the form and content of the financial report. For example, a
financial report, as defined under section 303 of the Corporations Act 2001 consists of
financial statements for the half-year, notes to the financial statements and the
directors‟ declaration about the statements and notes.
(c) An applicable financial reporting framework means a financial reporting framework
that is designed to achieve fair presentation.
Requirements
Performing a Review
6. The auditor who is engaged to perform a review of a financial report shall perform the review
in accordance with this Auditing Standard. (Ref: Para. A4)
7. Where in rare and exceptional circumstances, factors outside the auditor‟s control prevent the
auditor from complying with an essential procedure contained within a relevant requirement in
this Auditing Standard, the auditor shall:
(a) if possible, perform appropriate alternative procedures; and
(b) document in the working papers:
(i) the circumstances surrounding the inability to comply;
(ii) the reasons for the inability to comply; and
(iii) justification of how alternative procedures achieve the objectives of the
requirement.
When the auditor is unable to perform appropriate alternative procedures, the auditor shall
consider the implications for the auditor‟s review report.
General Principles of a Review of a Financial Report
8. The auditor shall comply with relevant ethical requirements relating to the audit of the annual
financial report of the entity. (Ref: Para. A5)
9. The auditor shall implement quality control procedures that are applicable to the individual
engagement. (Ref: Para. A6)
10. The auditor shall plan and perform the review by exercising professional judgement and with
an attitude of professional scepticism, recognising that circumstances may exist that cause the
1
See, for example, Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.
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financial report to require a material adjustment for it to be prepared, in all material respects,
in accordance with the applicable financial reporting framework. (Ref: Para. A7)
Agreeing the Terms of the Engagement (Ref: Para. A8, A55 and A57)
Preconditions for a Review
11. The auditor shall, prior to agreeing the terms of the engagement, determine whether the
financial reporting framework is acceptable and obtain agreement from management and,
where appropriate, those charged with governance, that it acknowledges and understands its
responsibility:
(a) for the preparation and fair presentation of the financial report;
(b) for such internal controls as management and, where appropriate, those charged with
governance, deems necessary to enable the preparation of the financial report that is
free from material misstatement; and
(c) to provide the auditor with:
access to information relevant to the preparation of the financial report;
additional information that the auditor may request for the purposes of the
review engagement; and
unrestricted access to persons from whom the auditor determines it necessary
to obtain evidence.
Agreement on Review Engagement Terms
12. The auditor shall agree the terms of the engagement with the entity, which shall be recorded in
writing by the auditor and forwarded to the entity. When the review engagement is
undertaken pursuant to legislation, the minimum applicable terms are those contained in the
legislation.
Procedures for a Review of a Financial Report
Understanding the Entity and its Environment, Including its Internal Control
13. The auditor shall obtain an understanding of the entity and its environment, including its
internal control, as it relates to the preparation of both the annual and interim or other financial
reports, sufficient to plan and conduct the engagement so as to be able to:
(a) identify the types of potential material misstatements and consider the likelihood of
their occurrence; and
(b) select the enquiries, analytical and other review procedures that will provide the
auditor with a basis for reporting whether anything has come to the auditor‟s attention
that causes the auditor to believe that the financial report is not prepared, in all
material respects, in accordance with the applicable financial reporting framework.
(Ref: Para. A9-A12)
14. In order to plan and conduct a review of a financial report, a recently appointed auditor, who
has not yet performed an audit of the annual financial report in accordance with Australian
Auditing Standards, shall obtain an understanding of the entity and its environment, including
its internal control, as it relates to the preparation of both the annual and interim or other
financial reports. (Ref: Para. A13)
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity
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Materiality (Ref: Para. A14-A18)
15. The auditor shall consider materiality, using professional judgement, when:
(a) determining the nature, timing and extent of review procedures; and
(b) evaluating the effect of misstatements.
Enquiries, Analytical and Other Review Procedures
16. The auditor shall make enquiries, primarily of persons responsible for financial and
accounting matters, and perform analytical and other review procedures to enable the auditor
to conclude whether, on the basis of the procedures performed, anything has come to the
auditor‟s attention that causes the auditor to believe that the financial report is not prepared, in
all material respects, in accordance with the applicable financial reporting framework.
(Ref: Para. A19-A23)
17. The auditor shall obtain evidence that the financial report agrees or reconciles with the
underlying accounting records. (Ref: Para. A24)
18. The auditor shall enquire whether management has identified all events up to the date of the
review report that may require adjustment to or disclosure in the financial report.
(Ref: Para. A25)
19. The auditor shall enquire whether those charged with governance have changed their
assessment of the entity‟s ability to continue as a going concern. When, as the result of this
enquiry or other review procedures, the auditor becomes aware of events or conditions that
may cast significant doubt on the entity‟s ability to continue as a going concern, the auditor
shall:
(a) enquire of those charged with governance as to their plans for future actions based on
their going concern assessment, the feasibility of these plans, and whether they believe
that the outcome of these plans will improve the situation; and
(b) consider the adequacy of the disclosure about such matters in the financial report.
(Ref: Para. A26)
20. When a matter comes to the auditor‟s attention that leads the auditor to question whether a
material adjustment should be made for the financial report to be prepared, in all material
respects, in accordance with the applicable financial reporting framework, the auditor shall
make additional enquiries or perform other procedures to enable the auditor to express a
conclusion in the review report. (Ref: Para. A27)
Comparatives – First Financial Report (Ref: Para. A28-A31)
21. When comparative information is included for the first time in a financial report, an auditor
shall perform similar procedures on the comparative information as applied to the current
period financial report.
Evaluation of Misstatements (Ref: Para. A32-A34)
22. The auditor shall evaluate, individually and in the aggregate, whether uncorrected
misstatements that have come to the auditor‟s attention are material to the financial report.
Written Representations
23. The auditor shall endeavour to obtain written representations from management and, where
appropriate, those charged with governance, that:
Auditing Standard on Review Engagements ASRE 2410
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(a) they acknowledge their responsibility for the design and implementation of internal
control to prevent and detect fraud and error;
(b) the financial report is prepared and presented in accordance with the applicable
financial reporting framework;
(c) they believe the effect of those uncorrected misstatements aggregated by the auditor
during the review are immaterial, both individually and in the aggregate, to the
financial report taken as a whole. A summary of such items is included in or attached
to the written representations;
(d) they have disclosed to the auditor all significant facts relating to any frauds or
suspected frauds known to them that may have affected the entity;
(e) they have disclosed to the auditor the results of their assessment of the risk that the
financial report may be materially misstated as a result of fraud;
(f) they have disclosed to the auditor all known actual or possible non-compliance with
laws and regulations, the effects of which are to be considered when preparing the
financial report; and
(g) they have disclosed to the auditor all significant events that have occurred subsequent
to the balance sheet date and through to the date of the review report that may require
adjustment to or disclosure in the financial report. (Ref: Para. A35)
24. If management and, where appropriate, those charged with governance refuse to provide a
written representation that the auditor considers necessary, this constitutes a limitation on the
scope of the auditor‟s work and the auditor shall express a qualified conclusion or a disclaimer
of conclusion, as appropriate.
Auditor’s Responsibility for Accompanying Information
25. The auditor shall read the other information that accompanies the financial report to consider
whether any such information is materially inconsistent with the financial report.
(Ref: Para. A36)
26. If a matter comes to the auditor‟s attention that causes the auditor to believe that the other
information appears to include a material misstatement of fact, the auditor shall discuss the
matter with the entity‟s management, and where appropriate, those charged with governance.
(Ref: Para. A37)
Communication
27. When, as a result of performing a review of a financial report, a matter comes to the auditor‟s
attention that causes the auditor to believe that it is necessary to make a material adjustment to
the financial report for it to be prepared, in all material respects, in accordance with the
applicable financial reporting framework, the auditor shall communicate this matter as soon as
practicable to the appropriate level of management.
28. When, in the auditor‟s judgement, management does not respond appropriately within a
reasonable period of time, the auditor shall inform those charged with governance.
(Ref: Para. A38)
29. When, in the auditor‟s judgement, those charged with governance do not respond
appropriately within a reasonable period of time, the auditor shall consider:
(a) whether to modify the review report; or
(b) the possibility of withdrawing from the engagement; and
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(c) the possibility of resigning from the appointment to audit the annual financial report.
(Ref: Para. Aus A36.1 and A58)
30. When, as a result of performing the review of a financial report, a matter comes to the
auditor‟s attention that causes the auditor to believe in the existence of fraud or
non-compliance by the entity with laws and regulations, the auditor shall communicate the
matter as soon as practicable to those charged with governance and shall consider the
implications for the review. (Ref: Para. A39)
31. The auditor shall communicate relevant matters of governance interest arising from the review
of the financial report to those charged with governance. (Ref: Para. A40 and A59)
Reporting the Nature, Extent and Results of the Review of a Financial Report
32. The auditor shall issue a written report that contains the following:
(a) An appropriate title clearly identifying it as a review report of the independent auditor
of the entity.
(b) An addressee, as required by the circumstances of the engagement.
(c) Identification of the financial report reviewed, including identification of the title of
each of the statements contained in the financial report and the date and period
covered by the financial report.
(d) A statement that those charged with governance are responsible for the preparation
and fair presentation of the financial report in accordance with the applicable financial
reporting framework.
(e) A statement that the auditor is responsible for expressing a conclusion on the financial
report based on the review.
(f) A statement that the review of the financial report was conducted in accordance with
Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report
Performed by the Independent Auditor of the Entity, and that that Auditing Standard
requires the auditor to comply with ethical requirements relevant to the audit of the
annual financial report.
(g) A statement that a review consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other
review procedures.
(h) A statement that a review is substantially less in scope than an audit conducted in
accordance with Australian Auditing Standards and consequently does not enable the
auditor to obtain assurance that the auditor would become aware of all significant
matters that might be identified in an audit, and that accordingly no audit opinion is
expressed.
(i) A conclusion as to whether anything has come to the auditor‟s attention that causes the
auditor to believe that the financial report does not present fairly, or if applicable, is
not true and fair, in all material respects, in accordance with the applicable financial
reporting framework (including a reference to the jurisdiction or country of origin of
the financial reporting framework when Australia is not the origin of the financial
reporting framework used).
(j) The date of the auditor‟s review report.
(k) The location in the country or jurisdiction where the auditor practices.
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(l) The auditor‟s signature. (Ref: Para. A41)
Departure from the Applicable Financial Reporting Framework
33. The auditor shall express a qualified or adverse conclusion when a matter has come to the
auditor‟s attention that causes the auditor to believe that a material adjustment should be made
to the financial report for it to be prepared, in all material respects, in accordance with the
applicable financial reporting framework. The auditor shall include a basis for modification
paragraph in the report, that describes the nature of the departure and, if practicable, states the
effects on the financial report. If the effects or possible effects are incapable of being
measured reliably, a statement to that effect and the reasons therefor shall be included in the
basis for modification paragraph. The conclusion paragraph shall be headed “Qualified
Conclusion” or “Adverse Conclusion”, whichever is relevant. (Ref: Para. A42)
34. When the effect of the departure is so material and pervasive to the financial report that the
auditor concludes a qualified conclusion is not adequate to disclose the misleading or
incomplete nature of the financial report, the auditor shall express an adverse conclusion.
(Ref: Para. A43)
Limitation on Scope (Ref: Para. A44)
35. When the auditor is unable to complete the review, the auditor shall communicate, in writing,
to the appropriate level of management and to those charged with governance the reason why
the review cannot be completed, and consider whether it is appropriate to issue a review
report.
Limitation on Scope Imposed by Management
36. Unless required by law or regulation, an auditor shall not accept an engagement to review a
financial report when management has imposed a limitation on the scope of the auditor‟s
review. (Ref: Para. A45 and A58)
37. If, after accepting the engagement, management imposes a limitation on the scope of the
review, the auditor shall request management to remove the limitation. If management refuses
the auditor‟s request to remove the limitation, the auditor shall communicate, in writing, to the
appropriate level of management and those charged with governance, the reason(s) why the
review cannot be completed. (Ref: Para. A46)
38. If management and, where appropriate, those charged with governance, refuses the auditor‟s
request to remove a limitation that has been imposed on the scope of the review, but there is a
legal or regulatory requirement for the auditor to issue a report, the auditor shall issue a
disclaimer of conclusion or qualified conclusion report, as appropriate, containing the
reason(s) why the review cannot be completed. (Ref: Para. A47)
Other Limitations on Scope Not Imposed by Management (Ref: Para. A48-A49)
39. The auditor shall express a qualified conclusion when, in rare circumstances, there is a
limitation on the scope of the auditor‟s work that is confined to one or more specific matters,
which while material, is not in the auditor‟s judgement pervasive to the financial report, and
when the auditor concludes that an unqualified opinion cannot be expressed. A qualified
conclusion shall be expressed as being “except for” the effects of the matter to which the
qualification relates. The conclusion paragraph shall be headed “Qualified Conclusion”.
Going Concern and Significant Uncertainties (Ref: Para. A50-A54)
40. If adequate disclosure is made in the financial report, the auditor shall add an emphasis of
matter paragraph to the review report to highlight a material uncertainty relating to an event or
condition that casts significant doubt on the entity‟s ability to continue as a going concern.
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41. If a material uncertainty that casts significant doubt on the entity‟s ability to continue as a
going concern is not adequately disclosed in the financial report, the auditor shall express a
qualified or adverse conclusion, as appropriate. The report shall include specific reference to
the fact that there is such a material uncertainty.
42. In circumstances other than a going concern problem, the auditor shall consider adding an
emphasis of matter paragraph to highlight a significant uncertainty that is adequately disclosed
in the financial report, that came to the auditor‟s attention, the resolution of which is
dependent upon future events and which may materially affect the financial report.
43. If a significant uncertainty (other than a going concern problem) is not adequately disclosed in
the financial report, the auditor shall express a qualified or adverse conclusion, as appropriate.
The report shall include specific reference to the fact that there is such a significant
uncertainty.
Documentation (Ref: Para. A60)
44. The auditor shall prepare review documentation that is sufficient and appropriate to provide a
basis for the auditor‟s conclusion, and to provide evidence that the review was performed in
accordance with this Auditing Standard and applicable legal and regulatory requirements.
* * *
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Application and Other Explanatory Material
Objective (Ref: Para. 4)
A1. Under paragraph 13, the auditor needs to make enquiries, and perform analytical and other
review procedures in order to reduce to a limited level the risk of expressing an inappropriate
conclusion when the financial report is materially misstated.
A2. The objective of a review of a financial report differs significantly from that of an audit
conducted in accordance with Australian Auditing Standards. A review of a financial report
does not provide a basis for expressing an opinion whether the financial report gives a true and
fair view, or is presented fairly, in all material respects, in accordance with the applicable
financial reporting framework.
A3. A review, in contrast to an audit, is not designed to obtain reasonable assurance that the
financial report is free from material misstatement. A review consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical
and other review procedures. A review may bring significant matters affecting the financial
report to the auditor‟s attention, but it does not provide all of the evidence that would be
required in an audit.
Performing a Review (Ref: Para 6)
A4. Through performing the audit of the annual financial report, the auditor obtains an
understanding of the entity and its environment, including its internal control. When the
auditor is engaged to review the financial report, under paragraph 13, the auditor needs to
update this understanding through enquiries made in the course of the review, to assist the
auditor in focusing the enquiries to be made and the analytical and other review procedures to
be applied. A practitioner who is engaged to perform a review of a financial report, and who
is not the auditor of the entity, does not perform the review in accordance with ASRE 2410
,
as the practitioner ordinarily does not have the same understanding of the entity and its
environment, including its internal control, as the auditor of the entity.
Although other Auditing Standards do not apply to review engagements, they include
guidance which may be helpful to auditors performing reviews covered by this Auditing
Standard.
General Principles of a Review of a Financial Report
A5. Relevant ethical requirements2 govern the auditor‟s professional responsibilities in the
following areas: independence, integrity, objectivity, professional competence and due care,
confidentiality, professional behaviour, and technical standards. (Ref: Para. 8)
A6. The elements of quality control that are relevant to an individual engagement include
leadership responsibilities for quality on the engagement, ethical requirements, acceptance and
continuance of client relationships and specific engagements, assignment of engagement
teams, engagement performance, and monitoring. ASQC 1 and ASA 2203
include guidance
that may be helpful. (Ref: Para. 9)
A7. An attitude of professional scepticism denotes that the auditor makes a critical assessment,
with a questioning mind, of the validity of evidence obtained and is alert to evidence that
See ASRE 2400 Review of a Financial Report Performed by an Assurance Practitioner Who is Not the Auditor of the Entity.
2
See ASA 102 Compliance with Ethical Requirements when Performing Audits, Reviews and Other Assurance Engagements.
3
See ASQC 1 Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, and
Other Assurance Engagements and ASA 220 Quality Control for an Audit of a Financial Report and Other Historical Financial
Information.
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contradicts or brings into question the reliability of documents or representations by
management of the entity. ASA 200 includes guidance which may be helpful.
(Ref: Para. 10)
Agreeing the Terms of the Engagement
A8. Written agreement of the terms of the engagement helps to avoid misunderstandings regarding
the nature of the engagement and, in particular, the objective and scope of the review, the
responsibilities of management and, where appropriate, those charged with governance, the
extent of the auditor‟s responsibilities, the assurance obtained, and the nature and form of the
report. The communication ordinarily covers the following matters:
(a) the objective of a review of a financial report;
(b) the scope of the review;
(c) the responsibilities of management and, where appropriate, those charged with
governance for:
(i) the financial report;
(ii) establishing and maintaining effective internal control relevant to the
preparation of the financial report; and
(iii) making all financial records and related information available to the auditor;
(d) agreement from management and, where appropriate, those charged with governance:
(i) to provide written representations to the auditor to confirm representations
made orally during the review, as well as representations that are implicit in
the entity‟s records; and
(ii) that where any document containing the financial report indicates that the
financial report has been reviewed by the entity‟s auditor, the review report
also will be included in the document; and
(e) the anticipated form and content of the report to be issued, including the identity of the
addressee of the report.
An illustrative engagement letter is set out in Appendix 1. The terms of engagement to review
a financial report can also be combined with the terms of engagement to audit the annual
financial report. ASA 210 includes guidance which may be helpful.
(Ref: Para. 12)
Procedures for a Review of a Financial Report
Understanding the Entity and its Environment, Including its Internal Control
A9. Under ASA 315 Identifying and Assessing the Risks of Material Misstatement through
Understanding the Entity and Its Environment, the auditor who has audited the entity‟s
financial report for one or more annual periods has obtained an understanding of the entity and
its environment, including its internal control, as it relates to the preparation of the annual
financial report, that was sufficient to conduct the audit. In planning a review of a financial
report, the auditor needs to update this understanding. The auditor also needs to obtain a
sufficient understanding of internal control as it relates to the preparation of the financial
report subject to review, as it may differ from internal control as it relates to the preparation of
the annual financial report. (Ref: Para. 13)
See ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing
Standards.
See ASA 210 Agreeing the Terms of Audit Engagements.
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A10. The auditor needs to use the understanding of the entity and its environment, including its
internal control, to determine the enquiries to be made and the analytical and other review
procedures to be applied, and to identify the particular events, transactions or assertions to
which enquiries may be directed or analytical or other review procedures applied. (Ref: Para. 13)
A11. The procedures performed by the auditor to update the understanding of the entity and its
environment, including its internal control, ordinarily include the following:
(a) reading the documentation, to the extent necessary, of the preceding year‟s audit,
reviews of prior period(s) of the current year, and corresponding period(s) of the prior
year, to enable the auditor to identify matters that may affect the current-period
financial report;
(b) considering any significant risks, including the risk of management override of
controls, that were identified in the audit of the prior year‟s financial report;
(c) reading the most recent annual and comparable prior period financial report;
(d) considering materiality with reference to the applicable financial reporting framework
as it relates to the financial report, to assist in determining the nature and extent of the
procedures to be performed and evaluating the effect of misstatements;
(e) considering the nature of any corrected material misstatements and any identified
uncorrected immaterial misstatements in the prior year‟s financial report;
(f) considering significant financial accounting and reporting matters that may be of
continuing significance, such as material weaknesses in internal control;
(g) considering the results of any audit procedures performed with respect to the current
year‟s financial report;
(h) considering the results of any internal audit performed and the subsequent actions
taken by management;
(i) enquiring of management about the results of management‟s assessment of the risk
that the financial report may be materially misstated as a result of fraud;
(j) enquiring of management about the effect of changes in the entity‟s business
activities;
(k) enquiring of management about any significant changes in internal control and the
potential effect of any such changes on the preparation of the financial report; and
(l) enquiring of management of the process by which the financial report has been
prepared and the reliability of the underlying accounting records to which the financial
report is agreed or reconciled. (Ref: Para. 13)
A12. The auditor needs to determine the nature of the review procedures, if any, to be performed for
components and, where applicable, communicate these matters to other auditors involved in
the review. Factors considered ordinarily include the materiality of, and risk of misstatement
in, the financial report components, and the auditor‟s understanding of the extent to which
internal control over the preparation of such reports is centralised or decentralised.
(Ref: Para. 13)
A13. Obtaining an understanding of the entity and its environment enables the auditor to focus the
enquiries made, and the analytical and other review procedures applied in performing a review
of the financial report in accordance with this Auditing Standard. As part of obtaining this
understanding, ordinarily the auditor makes enquiries of the predecessor auditor and, where
practicable, reviews the predecessor auditor‟s documentation for the preceding annual audit
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and for any prior periods in the current year that have been reviewed by the predecessor
auditor. In doing so, ordinarily the auditor considers the nature of any corrected
misstatements, and any uncorrected misstatements aggregated by the auditor, any significant
risks, including the risk of management override of controls, and significant accounting and
any reporting matters that may be of continuing significance, such as material weaknesses in
internal control. (Ref: Para. 14)
Materiality (Ref: Para. 15)
A14. The auditor needs to use professional judgement and consider qualitative and quantitative
factors in determining materiality.
A15. Ordinarily, the auditor‟s consideration of materiality for a review of a financial report is based
on the period financial data and accordingly, materiality based on interim period financial data
may be less than materiality for annual financial data. If the entity‟s business is subject to
cyclical variations or if the financial results for the current period show an exceptional
decrease or increase compared to prior periods and expected results for the current year, the
auditor may, for example, conclude that materiality is more appropriately determined using a
normalised figure for the period.
A16. The auditor‟s consideration of materiality, in evaluating the effects of misstatements, is a
matter of professional judgement and is affected by the auditor‟s perception of the financial
information needs of users of the financial report.
A17. If the applicable financial reporting framework contains a definition of materiality, it will
ordinarily provide a frame of reference to the auditor when determining materiality for
planning and performing the review.
A18. The auditor needs, when relevant, to consider materiality from the perspective of both the
entity and the consolidated entity.
Enquiries, Analytical and Other Review Procedures
A19. A review ordinarily does not require tests of the accounting records through inspection,
observation or confirmation. Procedures for performing a review of a financial report
ordinarily are limited to making enquiries, primarily of persons responsible for financial and
accounting matters and applying analytical and other review procedures, rather than
corroborating information obtained concerning matters relating to the financial report. The
auditor‟s understanding of the entity and its environment, including its internal control, the
results of the risk assessments relating to the preceding audit and the auditor‟s consideration of
materiality as it relates to the financial report, affects the nature and extent of the enquiries
made, and analytical and other review procedures applied. (Ref: Para. 16)
A20. The auditor ordinarily performs the following procedures:
(a) Reading the minutes of the meetings of shareholders, those charged with governance
and other appropriate committees to identify matters that may affect the financial
report, and enquiring about matters dealt with at meetings for which minutes are not
available that may affect the financial report.
(b) Considering the effect, if any, of matters giving rise to a modification of the audit or
review report, accounting adjustments or unadjusted misstatements, at the time of the
previous audit or reviews.
(c) Communicating, where appropriate, with other auditors who are performing a review
of the financial report of the entity‟s significant components.
(d) Enquiring of members of management responsible for financial and accounting
matters, and others as appropriate, about the following:
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(i) whether the financial report has been prepared and presented in accordance
with the applicable financial reporting framework;
(ii) whether there have been any changes in accounting principles or in the
methods of applying them;
(iii) whether any new transactions have necessitated the application of a new
accounting principle;
(iv) whether the financial report contains any known uncorrected misstatements;
(v) unusual or complex situations that may have affected the financial report, such
as a business combination or disposal of a segment of the business;
(vi) significant assumptions that are relevant to the fair value measurement or
disclosures and management‟s intention and ability to carry out specific
courses of action on behalf of the entity;
(vii) whether related party transactions have been appropriately accounted for and
disclosed in the financial report;
(viii) significant changes in commitments and contractual obligations;
(ix) significant changes in contingent assets and contingent liabilities including
litigation or claims;
(x) compliance with debt covenants;
(xi) matters about which questions have arisen in the course of applying the review
procedures;
(xii) significant transactions occurring in the last several days of the period or the
first several days of the next period;
(xiii) knowledge of any fraud or suspected fraud affecting the entity involving:
management;
employees who have significant roles in internal control; or
others where the fraud could have a material effect on the financial
report; and
(xiv) knowledge of any allegations of fraud, or suspected fraud, affecting the
entity‟s financial information communicated by employees, former
employees, analysts, regulators or others; and
(xv) knowledge of any actual or possible non-compliance with laws and
regulations that could have a material effect on the financial report.
(e) Applying analytical procedures to the financial report designed to identify
relationships and individual items that appear to be unusual and that may reflect a
material misstatement in the financial report. Analytical procedures may include ratio
analysis and statistical techniques such as trend analysis or regression analysis and
may be performed manually or with the use of computer-assisted auditing techniques.
Appendix 2 to this Auditing Standard contains examples of analytical procedures the
auditor may consider when performing a review of a financial report.
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(f) Reading the financial report and considering whether anything has come to the
auditor‟s attention that causes the auditor to believe that the financial report is not in
accordance with the applicable financial reporting framework. (Ref: Para. 16)
A21. The auditor may perform many of the review procedures before or simultaneously with the
entity‟s preparation of the financial report. For example, it may be practicable to update the
understanding of the entity and its environment, including its internal control, and begin
reading applicable minutes before the end of the period. Performing some of the review
procedures earlier in the period also permits early identification and consideration of
significant accounting matters affecting the financial report. (Ref: Para. 16)
A22. The auditor performing a review of the financial report is also the auditor of the annual
financial report of the entity. For convenience and efficiency, the auditor may decide to
perform certain audit procedures concurrently with the review of the financial report. For
example, information gained from reading the minutes of meetings of the board of directors in
connection with the review of the financial report may also be used for the annual audit. The
auditor may decide also to perform, at the time of the review, auditing procedures that would
need to be performed for the purpose of the audit of the annual financial report, for example,
performing auditing procedures on:
(a) significant or unusual transactions that occurred during the period, such as business
combinations, restructurings, or significant revenue transactions, or
(b) opening balances (when applicable). (Ref: Para. 16)
A23. A review of a financial report ordinarily does not require corroborating the enquiries about
litigation or claims. It is, therefore, ordinarily not necessary to send an enquiry letter to the
entity‟s lawyer. Direct communication with the entity‟s lawyer with respect to litigation or
claims, or alternative procedures, may, however, be appropriate if a matter comes to the
auditor‟s attention that causes the auditor to question whether the financial report is in
accordance with the applicable financial reporting framework. (Ref: Para. 16)
A24. The auditor may obtain evidence that the financial report agrees or reconciles with the
underlying accounting records by tracing the financial report to:
(a) the accounting records, such as the general ledger, or a consolidating schedule that
agrees or reconciles with the accounting records; and
(b) other supporting data in the entity‟s records as necessary. (Ref: Para. 17)
A25. The auditor need not perform procedures to identify events occurring after the date of the
review report. (Ref: Para. 18)
A26. Events or conditions which may cast significant doubt on the entity‟s ability to continue as a
going concern may have existed at the date of the annual financial report, or may be identified
as a result of enquiries of management or in the course of performing other review procedures.
When such events or conditions come to the auditor‟s attention, the auditor needs to enquire of
those charged with governance as to their plans for future action, such as their plans to
liquidate assets, borrow money or restructure debt, reduce or delay expenditures, or increase
capital. The auditor needs to enquire also as to the feasibility of the plans of those charged
with governance and whether they believe that the outcome of these plans will improve the
situation. Ordinarily, the auditor considers, based on procedures performed, whether it is
necessary to corroborate the feasibility of the plans of those charged with governance and
whether the outcome of these plans will improve the situation. (Ref: Para. 19)
A27. For example, if the auditor‟s review procedures lead the auditor to question whether a
significant sales transaction is recorded in accordance with the applicable financial reporting
framework, the auditor performs additional procedures sufficient to resolve the auditor‟s
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questions, such as discussing the terms of the transaction with senior marketing and
accounting personnel or reading the sales contract. (Ref: Para. 20)
Comparatives – First Financial Report (Ref: Para. 21)
A28. When comparative information is included in the first financial report and the auditor is unable
to obtain sufficient appropriate review evidence to achieve the review objective, a limitation
on the scope of the review exists and the auditor needs to modify the review report.
Ordinarily, a restriction on the scope of the auditor‟s work will result in a qualified (“except
for”) conclusion. In such cases, ordinarily an auditor encourages clear disclosure in the
financial report, that the auditor has been unable to review the comparatives. An example of a
modified review report is included in Appendix 4.
A29. When comparative information is included in the first financial report and the auditor believes
a material adjustment should be made to the financial report, under paragraph 33, the auditor
needs to modify the review report.
A30. When an entity has come into existence only within the first financial reporting period,
comparative information will not be provided in the first financial report and no modified
review report is required.
A31. Accounting Standard AASB 101 Presentation of Financial Statements provides requirements
and explanatory guidance relating to comparative information included in a financial report
prepared in accordance with Australian Accounting Standards. Accounting Standard AASB 1
First-time Adoption of Australian Accounting Standards provides requirements and guidance
relating to comparative information when an entity adopts Australian Accounting Standards
for the first time.
Evaluation of Misstatements (Ref: Para. 22)
A32. A review of a financial report, in contrast to an audit engagement, is not designed to obtain
reasonable assurance that the financial report is free from material misstatement. However,
misstatements which come to the auditor‟s attention, including inadequate disclosures, need to
be evaluated individually and in the aggregate to determine whether a material adjustment is
required to be made to the financial report for it to be prepared, in all material respects, in
accordance with the applicable financial reporting framework.
A33. The auditor needs to exercise professional judgement in evaluating the materiality of any
misstatements that the entity has not corrected. Ordinarily, the auditor considers matters such
as the nature, cause and amount of the misstatements, whether the misstatements originated in
the preceding year or current year, and the potential effect of the misstatements on future
interim or annual periods.
A34. The auditor may designate an amount below which misstatements need not be aggregated,
because the auditor expects that the aggregation of such amounts clearly would not have a
material effect on the financial report. In so doing, under paragraph 15, the auditor needs to
consider the fact that the determination of materiality involves quantitative as well as
qualitative considerations and that misstatements of a relatively small amount could
nevertheless have a material effect on the financial report.
Written Representations
A35. The auditor needs to endeavour to obtain additional representations as are appropriate to
matters specific to the entity‟s business or industry. An illustrative representation letter is set
out in Appendix 1. (Ref: Para. 23)
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Auditor’s Responsibility for Accompanying Information
A36. If the auditor identifies a material inconsistency, the auditor needs to consider whether the
financial report or the other information needs to be amended. If an amendment is necessary
in the financial report and those charged with governance refuse to make the amendment,
under paragraph 29, the auditor needs to consider the implications for the review report. If an
amendment is necessary in the other information and those charged with governance refuse to
make the amendment, the auditor may, for example, consider including in the review report an
Other Matter Paragraph describing the material inconsistency (ASA 720 and ASA 706 include
guidance which may be helpful4
) or taking other actions, such as withholding the issuance of
the review report or withdrawing from the engagement . For example, those charged with
governance may present alternative measures of earnings that more positively portray
financial performance than the financial report, and such alternative measures are given
excessive prominence, or are not clearly defined, or not clearly reconciled to the financial
report such that they are confusing and potentially misleading. (Ref: Para. 25)
Aus A36.1 For a review of a half-year financial report under the Corporations Act 2001 (Act),
withholding the issuance of the review report and/or withdrawing from the review
engagement are not options available under the Act. (Ref: Para. 29)
A37. While reading the other information for the purpose of identifying material inconsistencies, an
apparent material misstatement of fact may come to the auditor‟s attention (that is,
information, not related to matters appearing in the financial report, that is incorrectly stated or
presented). When discussing the matter with the entity‟s management, ordinarily the auditor
considers the validity of the other information and management‟s responses to the auditor‟s
enquiries, whether valid differences of judgement or opinion exist and whether to request
management to consult with a qualified third party to resolve the apparent misstatement of
fact. If an amendment is necessary to correct a material misstatement of fact and management
refuses to make the amendment, ordinarily the auditor considers taking further action as
appropriate, such as notifying those charged with governance and, if necessary, obtaining legal
advice. (Ref: Para. 26)
Communication
A38. Communications with management and/or those charged with governance are made as soon as
practicable, either orally or in writing. The auditor‟s decision whether to communicate orally
or in writing ordinarily is affected by factors such as the nature, sensitivity and significance of
the matter to be communicated and the timing of the communications. If the information is
communicated orally, under paragraph 44, the auditor needs to document the communication.
(Ref: Para. 28)
A39. The determination of which level of management may also be informed is affected by the
likelihood of collusion or the involvement of a member of management. (Ref: Para. 30)
A40. As a result of performing a review of a financial report, the auditor may become aware of
matters that in the opinion of the auditor are both important and relevant to those charged with
governance in overseeing the financial reporting and disclosure process. (Ref: Para. 31)
Reporting the Nature, Extent and Results of the Review of a Financial Report (Ref: Para. 32)
A41. In some cases, law or regulation governing the review of a financial report may prescribe
wording for the auditor‟s conclusion that is different from the wording described in
paragraph 32(i). Although the auditor may be obliged to use the prescribed wording, the
auditor‟s responsibilities as described in this Auditing Standard for coming to the conclusion
4
See ASA 720 The Auditor’s Responsibilities Relating to Other Information in Documents Containing an Audited Financial Report; and
ASA 706 Emphasis of Matter Paragraphs or Other Matter Paragraphs in the Independent Auditor’s Report.
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remain the same. ASA 700 includes guidance which may be helpful.5
Illustrative review
reports are set out in Appendices 3 and 4.
Departure from the Applicable Financial Reporting Framework (Ref: Para. 33–34)
A42. If matters have come to the auditor‟s attention that cause the auditor to believe that the
financial report is or may be materially affected by a departure from the applicable financial
reporting framework, and those charged with governance do not correct the financial report,
the auditor needs to modify the review report. If the information that the auditor believes is
necessary for adequate disclosure is not included in the financial report, the auditor needs to
modify the review report and, if practicable, include the necessary information in the review
report. Illustrative review reports with a qualified conclusion are set out in Appendix 4.
A43. Departures from the applicable financial reporting framework, may result in an adverse
conclusion. An illustrative review report with an adverse conclusion is set out in Appendix 4.
Limitation on Scope (Ref: Para. 35)
A44. Ordinarily, a limitation on scope prevents the auditor from completing the review.
Limitation on Scope Imposed by Management
A45. The auditor needs to refuse to accept an engagement to review a financial report if the
auditor‟s preliminary knowledge of the engagement circumstances indicates that the auditor
would be unable to complete the review because there will be a limitation on the scope of the
auditor‟s review imposed by management of the entity. (Ref: Para. 36)
A46. If, after accepting the engagement, management imposes a limitation on the scope of the
review, the auditor needs to request the removal of that limitation. If management refuses to
do so, the auditor is unable to complete the review and express a conclusion. In such cases,
the auditor needs to communicate, in writing, to the appropriate level of management and
those charged with governance, the reason(s) why the review cannot be completed.
Nevertheless, if a matter comes to the auditor‟s attention that causes the auditor to believe that
a material adjustment to the financial report is necessary for it to be prepared, in all material
respects, in accordance with the applicable financial reporting framework, under
paragraphs 27, 28 and 30, the auditor needs to communicate such matters to the appropriate
level of management and, where appropriate, those charged with governance. (Ref: Para. 37)
A47. The auditor needs to consider the legal and regulatory requirements, including whether there is
a legal requirement for the auditor to issue a report. If there is such a requirement, the auditor
needs to disclaim a conclusion and provide in the review report the reason why the review
cannot be completed. However, if a matter comes to the auditor‟s attention that causes the
auditor to believe that a material adjustment to the financial report is necessary for it to be
prepared, in all material respects, in accordance with the applicable financial reporting
framework the auditor needs to communicate such a matter in the report. (Ref: Para. 38)
Other Limitations on Scope Not Imposed by Management (Ref: Para. 39)
A48. A limitation on scope may occur due to circumstances other than a limitation on scope
imposed by management or those charged with governance. In such circumstances, the
auditor is ordinarily unable to complete the review and express a conclusion, and is guided by
paragraphs 38 and 39. There may be, however, some rare circumstances where the limitation
on the scope of the auditor‟s work is clearly confined to one or more specific matters that,
while material, are not in the auditor‟s judgement pervasive to the financial report. In such
circumstances, the auditor needs to modify the review report by indicating that, except for the
matter which is described in an explanatory paragraph to the review report, the review was
5
See ASA 700 Forming an Opinion and Reporting on a Financial Report.
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conducted in accordance with this Auditing Standard, and by qualifying the conclusion.
Illustrative review reports with a qualified conclusion are set out in Appendix 4.
A49. The auditor may have expressed a qualified opinion on the audit of the latest annual financial
report because of a limitation on the scope of that audit. The auditor needs to consider
whether that limitation on scope still exists and, if so, the implications for the review report.
Going Concern and Significant Uncertainties (Ref: Para. 40-43)
A50. In certain circumstances, an emphasis of matter paragraph may be added to a review report,
without affecting the auditor‟s conclusion, to highlight a matter that is included in a note to the
financial report that more extensively discusses the matter. The paragraph would preferably
be included after the conclusion paragraph and ordinarily refers to the fact that the conclusion
is not qualified in this respect.
A51. The auditor may have modified a prior audit or review report by adding an emphasis of matter
paragraph to highlight a material uncertainty relating to an event or condition that casts
significant doubt on the entity‟s ability to continue as a going concern. If the material
uncertainty still exists and adequate disclosure is made in the financial report, the auditor
needs to modify the review report on the current financial report by adding a paragraph to
highlight the continued material uncertainty.
A52. If, as a result of enquiries or other review procedures, a material uncertainty relating to an
event or condition comes to the auditor‟s attention that casts significant doubt on the entity‟s
ability to continue as a going concern, and adequate disclosure is made in the financial report,
the auditor needs to modify the review report by adding an emphasis of matter paragraph.
A53. ASA 570 Going Concern provides information that the auditor may find helpful in
considering going concern in the context of the review engagement.
A54. Ordinarily, a significant uncertainty in relation to any other matter, the resolution of which
may materially affect the financial report, would warrant an emphasis of matter paragraph in
the auditor‟s review report.
Other Considerations
A55. The terms of the engagement include agreement by those charged with governance that, where
any document containing a financial report indicates that the report has been reviewed by the
entity‟s auditor, the review report will be also included in the document. If those charged with
governance have not included the review report in the document, ordinarily the auditor
considers seeking legal advice to assist in determining the appropriate course of action in the
circumstances. (Ref: Para. 12)
A56. If the auditor has issued a modified review report and those charged with governance issue the
financial report without including the modified review report in the document containing the
financial report, ordinarily the auditor considers seeking legal advice to assist in determining
the appropriate course of action in the circumstances, and the possibility of resigning from the
appointment to audit the annual financial report.
Considerations Specific to Public Sector Entities
A57. The auditor needs to agree with the client the terms of engagement. When agreeing the terms
of engagement, an engagement letter helps to avoid misunderstandings regarding the nature of
the engagement and, in particular, the objective and scope of the review, management‟s
responsibilities, the extent of the auditor‟s responsibilities, the assurance obtained, and the
nature and form of the report. Law or regulation governing review engagements in the public
sector ordinarily mandates the appointment of the auditor. Nevertheless, an engagement letter
setting out the matters referred to in paragraph A8 may be useful to both the public sector
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auditor and the client. Public sector auditors, therefore, consider agreeing with the client the
terms of a review engagement by way of an engagement letter. (Ref: Para. 12)
A58. In the public sector, the auditor‟s statutory audit obligation may extend to other work, such as
a review of interim financial information. Where this is the case, the public sector auditor
cannot avoid such an obligation and, consequently, may not be in a position not to accept, or
to withdraw from a review engagement. The public sector auditor also may not be in the
position to resign from the appointment to audit the annual financial report.
(Ref: Para. 29(b)-29(c) and 36)
A59. The auditor needs to communicate to those charged with governance and consider the
implications for the review when a matter comes to the auditor‟s attention that causes the
auditor to believe in the existence of fraud or non-compliance by the entity with laws and
regulations. In the public sector, the auditor may be subject to statutory or other regulatory
requirements to report such a matter to regulatory or other public authorities. (Ref: Para. 31)
Documentation (Ref: Para. 44)
A60. The auditor needs to prepare documentation that enables an experienced auditor having no
previous connection with the engagement to understand the nature, timing and extent of the
enquiries made and analytical and other review procedures applied, information obtained, and
any significant matters considered during the performance of the review, including the
disposition of such matters.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity
ASRE 2410 - compiled - 27 - AUDITING STANDARD
Conformity with International Standards on Review Engagements
This Auditing Standard on Review Engagements conforms with International Standard on Review
Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent
Auditor of the Entity, issued by the International Auditing and Assurance Standards Board (IAASB),
an independent standard-setting board of the International Federation of Accountants (IFAC).
The underlying standard is extant ASRE 2410 Review of Interim and Other Financial Reports
Performed by the Independent Auditor of the Entity. The underlying standard to extant ASRE 2410 is
ISRE 2410 which has not been drafted in “clarity” format by the IAASB.
Following consultation with constituents in Australia in accordance with normal exposure draft
processes, the AUASB has decided that:
due to the nature of reviews of other historical financial information, a separate Standard is
more appropriate than ASRE 2410 being adapted by the auditor for this purpose; and
ASRE 2405 Review of Historical Financial Information Other than a Financial Report,
developed by the AUASB, deals with reviews of other historical financial information.
Accordingly, ASRE 2410 is intended to conform, with the exceptions listed below, to ISRE 2410 to
the extent that ISRE 2410 deals with the review of financial statements by the auditor of the entity.
Except as noted below, this Auditing Standard conforms, to the extent described above, with
International Standard ISRE 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity issued by the IAASB. The main differences between this Auditing
Standard and ISRE 2410 are:
1. This Auditing Standard contains the following requirements that are not contained in
ISRE 2410:
This Auditing Standard applies to:
(a) a review, by the independent auditor of the entity, of a financial report for a
half-year in accordance with the Corporations Act 2001; and
(b) a review, by the independent auditor of the entity, of a financial report, or a
complete set of financial statements, comprising historical financial
information, for any other purpose (Ref: Para. 1(a) and (b)).
Where in rare and exceptional circumstances, factors outside the auditor‟s control
prevent the auditor from complying with an essential procedure contained within a
relevant requirement, the auditor shall:
if possible, perform appropriate alternative procedures; and
document in the working papers:
o the circumstances surrounding the inability to comply;
o the reasons for the inability to comply; and
o justification of how alternative procedures achieve the objectives of
the requirement.
When the auditor is unable to perform appropriate alternative procedures, the auditor
shall consider the implications for the auditor‟s review report (Ref: Para. 7).
The auditor shall, prior to agreeing the terms of the engagement, determine whether
the financial reporting framework is acceptable and obtain agreement from
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity
ASRE 2410 - compiled - 28 - AUDITING STANDARD
management and, where appropriate, those charged with governance, that it
acknowledges and understands its responsibility:
for the preparation and fair presentation of the financial report;
for such internal controls as management and, where appropriate, those
charged with governance, deems necessary to enable the preparation of the
financial report that is free from material misstatement; and
to provide the auditor with:
o access to information relevant to the preparation of the financial
report;
o additional information that the auditor may request for the purposes of
the review engagement; and
o unrestricted access to persons from whom the auditor determines it
necessary to obtain evidence (Ref: Para. 11).
The auditor shall agree the terms of the engagement with the entity, which shall be
recorded in writing by the auditor and forwarded to the entity. When the review
engagement is undertaken pursuant to legislation, the minimum applicable terms are
those contained in the legislation (Ref: Para. 12).
The auditor shall consider materiality, using professional judgement, when:
determining the nature, timing and extent of review procedures; and
evaluating the effect of misstatements (Ref: Para. 15).
When comparative information is included for the first time in a financial report, an
auditor shall perform similar procedures on the comparative information as applied to
the current period financial report (Ref: Para. 21).
If management and, where appropriate, those charged with governance refuse to
provide a written representation that the auditor considers necessary, this constitutes a
limitation of the scope of the auditor‟s work and the auditor shall express a qualified
conclusion or a disclaimer of conclusion, as appropriate (Ref: Para. 24).
When, as a result of performing the review of a financial report, a matter comes to the
auditor‟s attention that causes the auditor to believe in the existence of fraud or
non-compliance by the entity with laws and regulations, the auditor shall communicate
the matter as soon as practicable to those charged with governance and shall consider
the implications for the review (Ref: Para. 30).
The auditor shall express a qualified or adverse conclusion when a matter has come to
the auditor‟s attention that causes the auditor to believe a material adjustment should
be made to the financial report for it to be prepared, in all material respects, in
accordance with the applicable financial reporting framework. The auditor shall
include a basis for modification paragraph in the report, that describes the nature of
the departure and, if practicable, states the effects on the financial report. If the effects
or possible effects are incapable of being measured reliably, a statement to that effect
and the reasons therefor shall be included in the basis for modification paragraph. The
conclusion paragraph shall be headed “Qualified Conclusion” or “Adverse
Conclusion”, whichever is relevant (Ref: Para. 33).
When the effect of the departure is so material and pervasive to the financial report
that the auditor concludes a qualified conclusion is not adequate to disclose the
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity
ASRE 2410 - compiled - 29 - AUDITING STANDARD
misleading or incomplete nature of the financial report, the auditor shall express an
adverse conclusion (Ref: Para. 34).
Unless required by law or regulation, an auditor shall not accept an engagement to
review a financial report when management has imposed a limitation on the scope of
the auditor‟s review (Ref: Para. 36).
If, after accepting the engagement, management imposes a limitation on the scope of
the review, the auditor shall request management to remove the limitation. If
management refuses the auditor‟s request to remove the limitation, the auditor shall
communicate, in writing, to the appropriate level of management and those charged
with governance, the reasons why the review cannot be completed (Ref: Para. 37).
If management and, where appropriate, those charged with governance, refuses the
auditor‟s request to remove a limitation that has been imposed on the scope of the
review, but there is a legal or regulatory requirement for the auditor to issue a report,
the auditor shall issue a disclaimer of conclusion or qualified conclusion report, as
appropriate, containing the reason(s) why the review cannot be completed
(Ref: Para. 38).
The auditor shall express a qualified conclusion when, in rare circumstances, there is a
limitation on the scope of the auditor‟s work that is confined to one or more specific
matters, which while material, is not in the auditor‟s judgement pervasive to the
financial report, and when the auditor concludes that an unqualified opinion cannot be
expressed. A qualified conclusion shall be expressed as being “except for” the effects
of the matter to which the qualification relates. The conclusion paragraph shall be
headed “Qualified Conclusion” (Ref: Para. 39).
2. The following requirements in ISRE 2410, paragraph 43(e) and paragraph 43(j), are not
contained in this Auditing Standard:
Paragraph 43(e)
“In other circumstances, a statement that management is responsible for the preparation and
presentation of the interim financial information in accordance with the applicable financial
reporting framework”.
Paragraph 43(j)
“In other circumstances, a conclusion as to 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 the applicable financial reporting
framework (including a reference to the jurisdiction or country of origin of the financial
reporting framework when the financial reporting framework used is not International
Financial Reporting Standards).”
Requirements and guidance on the review of financial statements that are prepared in
accordance with a financial reporting framework that is not designed to achieve fair
presentation are included in ASRE 2405 Review of Historical Financial Information Other
than a Financial Report.
3. This Auditing Standard includes explanatory guidance not contained within ISRE 2410 on:
Materiality (Ref: Para. A14 to A18); and
Comparatives (Ref: Para. A28 to A31).
4. This Auditing Standard provides illustrative examples that differ in form and content from
those contained in ISRE 2410, namely:
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity
ASRE 2410 - compiled - 30 - AUDITING STANDARD
An engagement letter (Appendix 1).
A written representation letter (Appendix 1).
The auditor‟s unmodified review reports
(Appendices 3 and 4).
The auditor‟s modified review reports (Appendix 4).
5. This Auditing Standard provides illustrative detailed procedures that may be performed in an
engagement to review a financial report that are not contained in ISRE 2410 (Appendix 2).
Compliance with this Auditing Standard on Review Engagements enables compliance with ISRE 2410
to the extent described above.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
ASRE 2410 - compiled - 31 - AUDITING STANDARD
Appendix 1
(Ref: Para. A8)
EXAMPLE OF AN ENGAGEMENT LETTER FOR A REVIEW OF A
FINANCIAL REPORT
The following letter is not intended to be a standard letter. It is to be used as a guide only and will
need to be adapted according to individual requirements and circumstances. This illustrative letter is
written in the context of a half-year financial report under the Corporations Act 2001.
To [those charged with governance:6
]
Scope
You have requested that we review the half-year financial report7
of [name of entity], which comprises
the statement of financial position as at 31 December 20XX, and the statement of comprehensive
income, statement of changes in equity and statement of cash flows for the six-month8 period ended on
that date, and notes comprising a summary of significant accounting policies and other explanatory
information and the directors‟ declaration. We are pleased to confirm our acceptance and our
understanding of the terms and objectives of our engagement by means of this letter.
Our review will be conducted in accordance with Auditing Standard on Review Engagements
ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, issued
by the Auditing and Assurance Standards Board, with the objective of providing us with a basis for
reporting whether we have become aware of any matter [anything has come to our attention9
] that
makes [causes] us [to] believe that the half-year financial report is not prepared, in all material
respects, in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the
Corporations Act 2001 [indicate applicable financial reporting framework]. Such a review consists of
making enquiries, primarily of persons responsible for financial and accounting matters, and applying
analytical and other review procedures and does not, ordinarily, require corroboration of the
information obtained. The scope of a review of a financial report is substantially less than the scope of
an audit conducted in accordance with Auditing Standards whose objective is the expression of an
opinion regarding the financial report and accordingly, we shall express no such opinion. ASRE 2410
requires us to also comply with the ethical requirements relevant to the audit of the annual financial
report of the entity.
We expect to report on the half-year financial report10 as follows:
[Include text of sample review report - see Appendix 3 or 4 as appropriate.]
The directors [those charged with governance11] of the [company/registered scheme/disclosing entity]
are responsible for the preparation of the half-year financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors [those charged with governance] determine is necessary to enable the
preparation of the half-year financial report that is free from material misstatement, whether due to
fraud or error. As part of our review, we shall request written representations from management
concerning assertions made in connection with the review. We shall also request that where any
document containing the half-year financial report indicates that the half-year financial report has been
reviewed, our review report will also be included in the document.
6
Insert the appropriate term, such as “Directors‟ or „Board of Management”.
7
If the term “half-year financial report” is not appropriate, then this term should be changed to reflect the report being reviewed.
8
If the period being reviewed is other than six months, then this should be amended as appropriate.
9 Use in a review of a half-year financial report prepared other than in accordance with the Corporations Act 2001.
10 If the term “half-year financial report” is not appropriate, then this term should be changed to reflect the report being reviewed.
11 Insert the appropriate term, such as “Directors or Board of Management”.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 1 (continued)
ASRE 2410 - compiled - 32 - AUDITING STANDARD
The directors [those charged with governance] of the [company/registered scheme/disclosing entity]
acknowledge and understand they have responsibility to provide us with:
(i) access to information relevant to the preparation of the half-year financial report;
(ii) additional information that we may request for the purposes of the review engagement; and
(iii) unrestricted access to persons from whom we determine it is necessary to obtain evidence.
A review of the half-year financial report does not provide assurance that we shall become aware of all
significant matters that might be identified in an audit. Further, our engagement cannot be relied upon
to disclose whether fraud or errors, or illegal acts exist. However, we shall inform you of any material
matters that come to our attention.
Independence
We confirm that, to the best of our knowledge and belief, we currently meet the independence
requirements of the Corporations Act 2001 in relation to the review of the half-year financial report.
In conducting our review of the half-year financial report, should we become aware that we have
contravened the independence requirements of the Corporations Act 2001, we shall notify you on a
timely basis. As part of our review process, we shall also provide you with a written independence
declaration as required by the Corporations Act 2001.
The Corporations Act 2001 includes specific restrictions on the employment relationships that can
exist between the reviewed entity and its auditors. To assist us in meeting the independence
requirements of the Corporations Act 2001, and to the extent permitted by law and regulation, we
request you discuss with us:
The provision of services offered to you by [insert firm name] prior to engaging or accepting
the service; and
The prospective employment opportunities of any current or former partner or professional
employee of [insert firm name] prior to the commencement of formal employment discussions
with the current or former partner or professional employee.
Presentation of the reviewed half-year financial report in electronic format
It is our understanding that [the entity] intends to publish a hard copy of the reviewed half-year
financial report and the auditor‟s review report for members, and to electronically present the
reviewed half-year financial report and the auditor‟s review report on its internet web site. When
information is presented electronically on a web site, the security and controls over information on the
web site should be addressed by [the entity] to maintain the integrity of the data presented. The
examination of the controls over the electronic presentation of reviewed financial information on the
entity‟s web site is beyond the scope of the review of the half-year financial report. Responsibility for
the electronic presentation of the half-year financial report on the entity‟s web site is that of the
[governing body of the entity].
Fees
[Insert additional information here regarding fee arrangements and billings, as appropriate.]
We look forward to full co-operation with your staff and we trust that they will make available to us
whatever records, documentation and other information are requested in connection with our review.
[This letter will be effective for future years unless it is terminated, amended or superseded.12]
Please sign and return the attached copy of this letter to indicate that it is in accordance with your
understanding of the arrangements for our review of the half-year financial report.
12 Use if applicable.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 1 (continued)
ASRE 2410 - compiled - 33 - AUDITING STANDARD
Yours faithfully,
(signed)
……………………….
Name and Title
Date
Acknowledged on behalf of [entity] by
(signed)
……………………….
Name and Title
Date
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 1 (continued)
ASRE 2410 - compiled - 34 - AUDITING STANDARD
EXAMPLE OF A REPRESENTATION LETTER
The following letter is not intended to be a standard letter. It is to be used as a guide only and will
need to be adapted according to individual requirements and circumstances. This illustrative letter is
written in the context of a half-year financial report under the Corporations Act 2001.
Representations by management will vary from one entity to another and from one period to the next.
Representation letters are ordinarily useful where evidence, other than that obtained by enquiry, may
not be reasonably expected to be available or when management have made oral representations which
the auditor wishes to confirm in writing.
[Entity Letterhead]
[Addressee – Auditor]
[Date]
This representation letter is provided in connection with your review of the half-year13 financial
report14 of [name of entity] for the [period] ended [date], for the purpose of you expressing a
conclusion as to whether you became aware of any matter in the course of the review that makes you
believe that the half-year financial report is not in accordance with the Corporations Act 2001.
We acknowledge our responsibility for ensuring that the half-year financial report is in accordance
with the Corporations Act 2001, including:
(i) giving a true and fair view of the [company/entity]‟s financial position as at [date] and of its
performance for the half-year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001.
We confirm that the half-year financial report is prepared and presented in accordance with the
Corporations Act 2001 and is free of material misstatements, including omissions.
OR
[This representation letter is provided in connection with your review of the financial report15 of [name
of entity] for the [period] ended [date], for the purpose of you expressing a conclusion as to whether
anything has come to your attention that causes you to believe that the financial report is not, in all
material respects, presented fairly in accordance with [applicable financial reporting framework16].
We acknowledge our responsibility for ensuring that the financial report is in accordance with
[applicable financial reporting framework].
We confirm that the financial report is prepared and presented fairly in accordance with [applicable
financial reporting framework] and is free of material misstatements, including omissions].
We confirm, to the best of our knowledge and belief, the following representations made to you during
your review.
[Include representations required by this Auditing Standard (paragraph 23) and those relevant to the
entity. Such representations may include the following examples.]
13 If the period being reviewed is other than six months, then this should be amended as appropriate.
14
If the term “half-year financial report” is not appropriate, then this term should be changed to reflect the type of report being reviewed.
15
The term “financial report” should be changed to reflect the type of report being reviewed, as appropriate.
16 Specify the applicable financial reporting framework/requirements.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 1 (continued)
ASRE 2410 - compiled - 35 - AUDITING STANDARD
1. We have made available to you:
(a) all financial records and related data, other information, explanations and assistance
necessary for the conduct of the review; and
(b) minutes of all meetings of [shareholders, directors, committees of directors, Boards of
Management].
2. We have disclosed to you the results of our assessment of the risk that the [financial report]
may be materially misstated as a result of fraud.
3. There:
(a) has been no fraud or suspected fraud, error or
non-compliance with laws and regulations involving management or employees who
have a significant role in the internal control structure;
(b) has been no fraud or suspected fraud, error or
non-compliance with laws and regulations that could have a material effect on the
financial report; and
(c) have been no communications from regulatory agencies concerning non-compliance
with, or deficiencies in, financial reporting practices that could have a material effect
on the financial report.
4. We are responsible for an adequate internal control structure to prevent and detect fraud and
error and to facilitate the preparation of a reliable financial report, and adequate financial
records have been maintained. There are no material transactions that have not been recorded
properly in the accounting records underlying the financial report.
5. We have no plans or intentions that may affect materially the carrying values, or classification,
of assets and liabilities.
6. We have considered the requirements of Accounting Standard AASB 136 Impairment of
Assets, when assessing the impairment of assets and in ensuring that no assets are stated in
excess of their recoverable amount.
7. We believe the effects of uncorrected misstatements summarised in the accompanying
schedule are immaterial, both individually and in the aggregate, to the [half-year] financial
report taken as a whole.
8. The following have been recorded and/or disclosed properly in the [half-year] financial report:
(a) related party transactions and related amounts receivable or payable, including sales,
purchases, loans, transfers, leasing arrangements and guarantees (written or oral);
(b) share options, warrants, conversions or other requirements;
(c) arrangements involving restrictions on cash balances, compensating balances and
line-of-credit or similar arrangements;
(d) agreements to repurchase assets previously sold;
(e) material liabilities or contingent liabilities or assets including those arising under
derivative financial instruments;
(f) unasserted claims or assessments that our lawyer(s) has advised us are probable of
assertion; and
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 1 (continued)
ASRE 2410 - compiled - 36 - AUDITING STANDARD
(g) losses arising from the fulfilment of, or an inability to fulfil, any sale commitments or
as a result of purchase commitments for inventory quantities in excess of normal
requirements or at prices in excess of prevailing market prices.
9. There are no violations or possible violations of laws or regulations the effects of which
should be considered for disclosure in the financial report or as a basis for recording an
expense.
10. The entity has satisfactory title to all assets, and there are no liens or encumbrances on such
assets that have not been disclosed nor has any asset been pledged as collateral. Allowances
for depreciation have been adjusted for all important items of property, plant and equipment
that have been abandoned or are otherwise unusable.
11. The entity has complied with all aspects of contractual agreements that would have a material
effect on the financial report in the event of non-compliance.
12. There were no material commitments for construction or acquisition of property, plant and
equipment or to acquire other non-current assets, such as investments or intangibles, other
than those disclosed in the financial report.
13. We have no plans to abandon lines of product or other plans or intentions that will result in
any excess or obsolete inventory, and no inventory is stated at an amount in excess of net
realisable value.
14. No events have occurred subsequent to the balance sheet date through to the date of this letter
that would require adjustment to, or disclosure in, the [financial report].
We understand that your examination was made in accordance with Auditing Standard on Review
Engagements ASRE 2410 and was, therefore, designed primarily for the purpose of expressing a
conclusion on the financial report of [the entity], and that your procedures were limited to those which
you considered necessary for that purpose.
Yours faithfully
[Name of signing officer and title]
Notes:
[The above example representation letter may need to be amended in certain circumstances. The
following illustrate some of those situations.]
(a) Exceptions
Where matters are disclosed in the financial report, the associated representation needs to be
amended, for example:
If a subsequent event has been disclosed, Item 14 (above) could be modified to read:
“Except as discussed in Note X to the financial report, no events have occurred .….”
If the entity has plans that impact the carrying values of assets and liabilities, Item 5
(above) could be modified to read:
“The entity has no plans or intentions that may materially affect the carrying value or
classification of assets and liabilities, except for our plan to dispose of segment X, as
disclosed in note Y in the financial report, which is discussed in the minutes of the
meeting of the governing body17 held on [date]”.
17 Insert the appropriate term, such as “Directors or Board of Management”.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 1 (continued)
ASRE 2410 - compiled - 37 - AUDITING STANDARD
(b) Other Required Information
Certain entities may be required to include other information in the financial report, for
example, performance indicators for government entities. In addition to identifying this
information and the applicable financial reporting framework in paragraphs 1 and 2 of the
example management representation letter, an additional paragraph similar to the following
may be appropriate:
“The disclosures of key performance indicators have been prepared and presented in
conformity with [relevant statutory requirements] and we consider the indicators
reported to be relevant to the stated objectives of the [entity]”.
(c) Management‟s Opinions and Representation in the Notes to the Financial Statements
Where the notes to the financial statements include opinions and representations by
management, such matters may be addressed in the representation letter. For example, notes
relating to the anticipated outcome of litigation, the intent and ability to hold long-term
securities to maturity and plans necessary to support the going concern basis.
(d) Environmental Matters
In situations where there are environmental matters that may, but probably will not, require an
outflow of resources, this may be reflected in an addition to Item 9 (above), for example:
“However, the [entity] has received a notice from the Environmental Protection
Agency that it may be required to share in the cost of cleanup of the [name] waste
disposal site. This matter has been disclosed in Note A in the financial report and we
believe that the disclosure and estimated contingent loss is reasonable based on
available information.”
(e) Compliance
If, as part of the review, the auditor is required also to report on the entity‟s compliance with
laws and regulations, a representation may be appropriate acknowledging that management is
responsible for the entity‟s compliance with applicable laws and regulations and that the
requirements have been met. For example, for reviews under the Corporations Act 2001, the
following paragraph may be added:
“The financial records of the [company, registered scheme or disclosing entity] have
been kept so as to be sufficient to enable a financial report to be prepared and
reviewed, and other records and registers required by the Corporations Act 2001 have
been kept properly and are up-to-date.”
(f) Other Matters
Additional representations that may be appropriate in specific situations may include the
following:
Justification for a change in accounting policy.
The work of a management expert has been used.
Arrangements for controlling the dissemination of the financial report and auditor‟s
review report on the Internet.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
ASRE 2410 - compiled - 38 - AUDITING STANDARD
Appendix 2
(Ref: Para. A20)
ANALYTICAL PROCEDURES THE AUDITOR MAY CONSIDER WHEN
PERFORMING A REVIEW OF A FINANCIAL REPORT
The analytical procedures carried out in a review of a financial report are determined by the auditor‟s
judgement. The procedures listed below are for illustrative purposes only. It is not intended that all
the procedures suggested apply to every review engagement. This Appendix is not intended to serve
as a program or checklist in the conduct of a review.
Examples of analytical procedures the auditor may consider when performing a review of a financial
report include the following:
Comparing the financial report with the financial report of the immediately preceding period,
with the financial report of the corresponding period of the preceding financial year, with the
financial report that was expected by management for the current period, and with the most
recent audited annual financial report.
Comparing the current financial report with anticipated results, such as budgets or forecasts.
For example, comparing sources of revenue and the and the cost of sales in the current
financial report with corresponding information in:
budgets, including expected gross margin(s); and
financial information for prior periods.
Comparing the current financial report with relevant non-financial information.
Comparing the recorded amounts, or ratios developed from recorded amounts, to expectations
developed by the auditor. The auditor develops such expectations by identifying and applying
relationships that reasonably are expected to exist based on the auditor‟s understanding of the
entity and of the industry in which the entity operates.
Comparing ratios and indicators for the current period with those of entities in the same
industry.
Comparing relationships among elements in the current financial report with corresponding
relationships in the financial report of prior periods, for example, expense by type as a
percentage of sales, assets by type as a percentage of total assets, and percentage of change in
sales to percentage of change in receivables.
Comparing disaggregated data. The following are examples of how data may be
disaggregated:
by period, for example, revenue or expense items disaggregated into quarterly,
monthly, or weekly amounts;
by product line or source of revenue;
by location, for example by component;
by attributes of the transaction, for example, revenue generated by designers,
architects, or craftsmen; and
by several attributes of the transaction, for example, sales by product and month.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 2 (continued)
ASRE 2410 - compiled - 39 - AUDITING STANDARD
ILLUSTRATIVE DETAILED PROCEDURES THAT MAY BE PERFORMED
IN AN ENGAGEMENT TO REVIEW A FINANCIAL REPORT
The enquiry, analytical and other procedures carried out in a review of a financial report are
determined by the auditor exercising professional judgement in light of the auditor‟s assessment of the
risk of material misstatement. The procedures listed below are for illustrative purposes only. It is not
intended that all the procedures suggested apply to every review engagement. This Appendix is not
intended to serve as a program or checklist in the conduct of a review.
General
1. Confirm that the engagement team complies with relevant independence and ethical
requirements.
2. Prepare and send an engagement letter to the entity.
3. Discuss the terms and scope of the engagement with the engagement team.
4. Obtain or update knowledge and understanding of the business, the key internal and external
changes (including laws and regulations), and their effect on the scope of the review,
materiality and risk assessment. This can be performed through the following:
(a) Ascertaining whether there have been any significant changes to the nature and scope
of operations.
(b) Considering the results and effects of previous audits and review engagements.
(c) Enquiring of persons responsible for financial reporting in respect of matters that
impact on the reliability of the underlying accounting records. For example,
considering fraud risk, material weaknesses in internal controls and any significant
changes to internal control policies and procedures
(d) Considering the results of any internal audits performed and the subsequent actions
taken by management.
(e) Considering whether additional procedures will be required on any significant
accounts where internal controls relating to significant processes have been
historically unreliable in detecting and preventing errors in the financial report.
Assess the relevance and impact of the results of the above procedures on the current period.
5. Determine materiality, exercising professional judgement, considering both qualitative and
quantitative factors.
6. Enquire of persons responsible for financial reporting about the following:
(a) Accounting policies adopted and consider whether:
(i) they comply with the applicable financial reporting framework;
(ii) they have been applied appropriately; and
(iii) they have been applied consistently and, if not, consider whether disclosure
has been made of any changes in the accounting policies.
(b) Policies and procedures used to assess asset impairment and any consequential
estimation of recoverable amount.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 2 (continued)
ASRE 2410 - compiled - 40 - AUDITING STANDARD
(c) The policies and procedures to determine the fair value of financial assets and
financial liabilities.
(d) New, unusual or complex situations that may have affected the financial report such as
a business combination or disposal of a segment of the business. Consider adequacy
of additional note disclosures in the financial report.
(e) Plans to dispose of major assets or business segments.
(f) Material off-balance sheet transactions, special purpose entities and other equity
investments and related accounting treatment and disclosure.
(g) Knowledge of any allegations of fraud, or suspected fraud.
(h) Knowledge of any actual or possible significant non-compliance with laws and
regulations.
(i) Compliance with debt covenants.
(j) Material or unusual related party transactions.
(k) New or significant changes in commitments, contractual obligations.
7. Obtain and read the minutes of meetings of shareholders, those charged with governance and
other appropriate committees to identify matters that may affect the financial report, and
enquire about matters dealt with at meetings for which minutes are not yet available that may
affect the financial report.
8. Enquire if actions taken at meetings of shareholders or those charged with governance that
affect the financial report have been appropriately reflected therein.
9. Ensure the financial report is agreed to the trial balance and is fairly presented including
additional disclosure notes. If applicable, enquire as to whether all intercompany balances
have been eliminated.
10. Review other information included in the financial report and document findings. Discuss any
material misstatements of fact with the entity‟s management.
Cash
11. Obtain the bank reconciliations. Enquire about any old or unusual reconciling items with
client personnel to assess reasonableness.
12. Enquire about transfers between cash accounts for the period before and after the review date.
13. Enquire whether there are any restrictions on cash accounts.
Revenue and Receivables
14. Enquire about the accounting policies for recognising sales revenue and trade receivables and
determine whether they have been consistently and appropriately applied.
15. Obtain a schedule of receivables and determine whether the total agrees with the trial balance.
16. Obtain and consider explanations of significant variations in account balances from previous
periods or from those anticipated.
17. Obtain an aged analysis of the trade receivables. Enquire about the reason for unusually large
accounts, credit balances on accounts or any other unusual balances and enquire about the
collectibility of receivables.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 2 (continued)
ASRE 2410 - compiled - 41 - AUDITING STANDARD
18. Consider, with management, the classification of receivables, including non-current balances,
net credit balances and amounts due from shareholders, those charged with governance and
other related parties in the financial report.
19. Enquire about the method for identifying “slow payment” accounts and setting allowances for
doubtful accounts and consider it for reasonableness.
20. Enquire whether receivables have been pledged, factored or discounted and determine whether
they have been properly accounted for.
21. Enquire about procedures applied to ensure that a proper cut-off of sales transactions and sales
returns has been achieved.
22. Enquire whether accounts represent goods shipped on consignment and, if so, whether
adjustments have been made to reverse these transactions and include the goods in inventory.
23. Enquire whether any large credits relating to recorded income have been issued after the
balance sheet reporting date and whether provision has been made for such amounts.
Consider the reasonableness of any provisions.
Inventories
24. Obtain the inventory list and determine whether:
(a) the total agrees with the balance in the trial balance; and
(b) the list is based on a physical count of inventory.
25. Enquire about the method for counting inventory.
26. Where a physical count was not carried out on the balance sheet date, enquire whether:
(a) a perpetual inventory system is used and whether periodic comparisons are made with
actual quantities on hand; and
(b) an integrated cost system is used and whether it has produced reliable information in
the past.
27. Consider adjustments made resulting from the last physical inventory count.
28. Enquire about procedures applied to control cut-off and any inventory movements.
29. Enquire about the basis used in valuing each inventory classification and, in particular,
regarding the elimination of inter-branch profits. Enquire whether inventory is valued at the
lower of cost and net realisable value (or lower of cost and replacement cost for not-for-profit
organisations).
30. Consider the consistency with which inventory valuation methods have been applied,
including factors such as material, labour and overhead.
31. Compare amounts of major inventory categories with those of prior periods and with those
anticipated for the current period. Enquire about major fluctuations and differences.
32. Compare inventory turnover with that in previous periods.
33. Enquire about the method used for identifying slow moving and obsolete inventory and
whether such inventory has been accounted for at net realisable value.
34. Enquire whether any inventory has been consigned to the entity and, if so, whether
adjustments have been made to exclude such goods from inventory.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 2 (continued)
ASRE 2410 - compiled - 42 - AUDITING STANDARD
35. Enquire whether any inventory is pledged, stored at other locations or on consignment to
others and consider whether such transactions have been accounted for appropriately.
Investments (Including Associated Entities and Financial Instruments)
36. Obtain a schedule of the investments at the balance sheet reporting date and determine
whether it agrees with the trial balance.
37. Enquire whether the accounting policy applied to investments is consistent with prior periods.
38. Enquire from management about the carrying values of investments. Consider whether there
are any realisation problems.
39. Enquire whether there are any new investments, including business combinations. Consider
classification, measurement and disclosure in respect of material or significant acquisitions.
40. Consider whether gains and losses and investment income have been properly accounted for.
41. Enquire about the classification of long-term and short-term investments.
Property Plant and Equipment and Depreciation
42. Obtain a schedule of the property, plant and equipment indicating the cost and accumulated
depreciation and determine whether it agrees with the trial balance.
43. Enquire about the accounting policy applied regarding residual values, provisions to allocate
the cost of property, plant and equipment over their estimated useful lives using the expected
pattern of consumption of the future economic benefits and distinguishing between capital and
maintenance items. Consider whether there are any indicators of impairment and whether the
property, plant and equipment have suffered a material, permanent impairment in value.
44. Discuss with management the additions and deletions to property, plant and equipment
accounts and accounting for gains and losses on disposals or de-recognition. Enquire whether
all such transactions have been properly accounted for.
45. Enquire about the consistency with which the depreciation method and rates have been applied
and compare depreciation provisions with prior years.
46. Enquire whether there are any restrictions on the property, plant and equipment.
47. Enquire whether lease agreements have been properly reflected in the financial report in
conformity with current accounting pronouncements.
Prepaid Expenses, Intangibles and Other Assets
48. Obtain schedules identifying the nature of these accounts and determine whether they agree
with the trial balance. Discuss recoverability thereof with management.
49. Enquire whether management have updated their impairment calculations in respect of
goodwill or other intangibles. Consider whether there have been any indicators of impairment
for intangibles and enquire whether management have appropriately considered discount rates,
growth rates, etc.
50. Enquire about the basis for recording these accounts and the amortisation methods used.
51. Compare balances of related expense accounts with those of prior periods and obtain
explanations for significant variations with management.
52. Discuss the classification between current and non-current accounts with management.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 2 (continued)
ASRE 2410 - compiled - 43 - AUDITING STANDARD
Investment Property
53. Obtain a schedule of investment property and determine whether it agrees with the trial
balance.
54. Enquire whether the accounting policy applied to investment property is consistent with prior
periods.
55. Update with management the acquisitions and disposals to investment property and
accounting for gains and losses on disposals or de-recognition. Determine whether all
significant transactions have been accounted for appropriately.
56. Consider whether there are any indicators of impairment and whether any investment property
was subject to recent valuations.
Loans Payable
57. Obtain from management a schedule of loans payable and determine whether the total agrees
with the trial balance.
58. Enquire whether there are any loans where there has been a change to the terms and conditions
or management has not complied with the provisions of the loan agreement, including any
debt covenants. Assess whether loans have been appropriately classified as current or
non-current in the financial report.
59. Where material, consider the reasonableness of interest expense in relation to loan balances.
60. Enquire whether loans payable are secured. Review loan and working capital facilities.
Enquire if options to extend terms have been exercised or if any debt requires refinancing.
Trade Payables
61. Enquire about the accounting policies for initially recording trade payables and whether the
entity is entitled to any allowances given on such transactions.
62. Obtain and consider explanations of significant variations in account balances from previous
periods or from those anticipated.
63. Obtain a schedule of trade payables and determine whether the total agrees with the trial
balance.
64. Enquire whether balances are reconciled with the creditors‟ statements and compare with prior
period balances. Compare turnover with prior periods.
65. Consider whether there could be material unrecorded liabilities.
66. Enquire whether payables to shareholders, those charged with governance and other related
parties are separately disclosed.
Other Liabilities and Contingent Liabilities
67. Obtain a schedule of other liabilities and determine whether the total agrees with the trial
balance.
68. Compare major balances of related expense accounts with similar accounts for prior periods.
69. Enquire about approvals for such other liabilities, terms of payment, compliance with terms,
collateral and classification.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 2 (continued)
ASRE 2410 - compiled - 44 - AUDITING STANDARD
70. Enquire about other liabilities to assess whether the methodology and assumptions adopted are
consistent with prior periods. Enquire whether there are any unusual trends and developments
affecting accounting estimates.
71. Enquire as to the nature of amounts included in contingent liabilities and commitments.
72. Enquire whether any actual or contingent liabilities exist which have not been recognised in
the accounts. If so, enquire with management and/or those charged with governance whether
provisions need to be made in the accounts or whether disclosure should be made in the notes
to the financial report.
Income and Other Taxes
73. Enquire from management if there were any events, including disputes with taxation
authorities, which could have a significant effect on the taxes payable by the entity. Examine
correspondence in relation to any significant matters arising and assess whether events have
been reflected appropriately in the financial report.
74. Consider the tax expense in relation to the entity‟s income for the period.
75. Enquire from management as to the adequacy of the recognised deferred and current tax assets
and/or liabilities including provisions in respect of prior periods.
Financial Instruments
76. Enquire or update knowledge and understanding with persons responsible for financial
reporting (including any treasury specialist), of what derivatives are in place, what accounting
policies are applied to these derivatives and whether they have been consistently applied.
77. Enquire whether any hedges have been entered into for speculative purposes.
78. Enquire whether there are adequate policies and procedures to determine the fair value of
financial assets and financial liabilities.
79. Enquire whether there are any sales and transfers that may call into question the classification
of investments in securities, including management‟s intent and ability with respect to the
remaining securities classified as held to maturity.
Employee Share Plans
80. Enquire about any new employee share plans or changes to existing plans, and where
employee share plans are material, assess whether the accounting methodology has been
consistently applied.
Subsequent Events
81. Obtain from management the latest financial report and compare it with the financial report
being reviewed or with those for comparable periods from the preceding year.
82. Enquire about events after the balance sheet reporting date that would have a material effect
on the financial report under review and, in particular, enquire whether:
(a) any substantial commitments or uncertainties have arisen subsequent to the balance
sheet date;
(b) any significant changes in the share capital, long-term debt or working capital have
occurred up to the date of enquiry; and
(c) any unusual adjustments have been made during the period between the balance sheet
reporting date and the date of enquiry.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 2 (continued)
ASRE 2410 - compiled - 45 - AUDITING STANDARD
Consider the need for adjustments or disclosure in the financial report.
83. Obtain and read the minutes of meetings of shareholders, those charged with governance and
appropriate committees subsequent to the balance sheet date and consider any impact of the
financial report and disclosures.
Litigation
84. Enquire from persons responsible for financial reporting, and where appropriate in-house
litigation specialists, whether the entity is the subject of any legal actions - threatened, pending
or in process. Consider the effect thereof on the financial report and any provision for loss.
Equity
85. Obtain and consider a schedule of the transactions in the equity accounts, including new
issues, retirements and dividends. Consider whether there are any unusual terms for new
issues of debt or equity which could affect classification.
86. Enquire whether there are any restrictions on retained earnings or other equity accounts.
Operations
87. Compare results with those of prior periods and those expected for the current period. Obtain
explanations of significant variations with management.
88. Enquire whether the recognition of major revenue and expenses have taken place in the
appropriate periods.
89. Enquire whether the policies and procedures related to revenue recognition, including accrued
income, have been consistently applied and whether there are any new or complex changes,
including any changes in major contracts with customers or suppliers.
90. Consider and update with management the relationship between related items in the revenue
account and assess the reasonableness thereof in the context of similar relationships for prior
periods and other information available to the auditor.
91. Discuss the policy in respect of capitalisation of interest and whether it is in accordance with
Australian Accounting Standards.
Going Concern Assessment
92. Consider the going concern assumption. When events or conditions come to attention which
cast significant doubt on the entity‟s ability to continue as a going concern, perform additional
procedures to assess the impact on the financial report and review report. Additional
procedures may include:
Discussion with those charged with governance to understand the events and
circumstances that have contributed to the current situation to determine whether the
risk arising can be mitigated.
Plans for future actions, such as plans or intentions to liquidate assets, borrow money
or restructure debt, reduce or delay expenditures, or increase capital.
Feasibility of the plans and whether those charged with governance believe that the
outcome of these plans will improve the situation.
93. Consider the adequacy of disclosure about such matters in the financial report.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 2 (continued)
ASRE 2410 - compiled - 46 - AUDITING STANDARD
Evaluation of Misstatements
94. Ensure significant review differences have been summarised and their effect evaluated.
95. Ensure material adjustments identified are notified to management/ those charged with
governance (as appropriate).
Written Representations
96. Obtain written representation from the directors/management/those charged with governance
(as appropriate) to confirm matters arising during the course of the review engagement.
Documentation
97. Ensure that review documentation is sufficient and appropriate to provide a basis for the
conclusion and to provide evidence of compliance with ASRE 2410.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
ASRE 2410 - compiled - 47 - AUDITING STANDARD
Appendix 3
(Ref: Para. A41)
AN AUDITOR’S REVIEW REPORT UNDER THE
CORPORATIONS ACT 2001
Financial Report for a Half-year
Introduction
1. This Appendix has been prepared to assist an auditor, engaged to undertake a review
engagement, by providing an example of an auditor‟s review report on a review of a financial
report for a half-year prepared in accordance with Part 2M.3 of the Corporations Act 2001
(“The Act”). The example reflects both requirements of this Auditing Standard and the Act,
but is not intended to require standard wording for the circumstances of particular
modifications.
2. This Appendix contains limited extracts from the Act and the Australian Accounting
Standards in order to provide a context for the example report included in this Appendix.
These selected extracts are included in this Appendix only for the purpose stated and
accordingly are not intended to be an exhaustive list of an auditor‟s obligations and
requirements which are found elsewhere in this Auditing Standard, the Act, the Australian
Accounting Standards and other relevant mandates.
3. This Appendix:
Includes selected extracts from the Act and Australian Accounting Standards, and
references to other relevant information, to provide a contextual framework; and
Provides an example of a review report.
Contextual Framework
Corporations Act 2001
The following selected extracts from the Act are included in this Appendix only to point to some of
the important requirements of the Act that affect auditors engaged to undertake a review engagement
in accordance with the Act.
4. Section 302 states:
“A disclosing entity18 must:
(a) prepare a financial report and directors‟ report for each half-year; and
(b) have the financial report audited or reviewed in accordance with Division 3 and obtain
an auditor‟s report; and
(c) lodge the financial report, the director‟s report and the auditor‟s report on the financial
report with ASIC;
unless the entity is not a disclosing entity when lodgement is due”.
18 The definition of a “disclosing entity” is found in Part 1.2A, Division 2, section 111AC of the Corporations Act 2001.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 3 (continued)
ASRE 2410 - compiled - 48 - AUDITING STANDARD
5. Section 303(1) states:
“The financial report for a half-year consists of:
(a) the financial statements for the half-year;
(b) the notes to the financial statements; and
(c) the directors‟ declaration about the statements and notes”.
6. Section 304 states:
(a) “The financial report for a half-year must comply with the accounting standards and
any further requirements in the regulations”.
7. Section 305 states:
“The financial statements and notes for a half-year must give a true and fair view of:
(a) the financial position and performance of the disclosing entity; or
(b) if consolidated financial statements are required the financial position and
performance of the consolidated entity.
This section does not affect the obligation under section 304 for financial reports to comply
with accounting standards.
Note: If the financial statements prepared in compliance with the accounting standards
would not give a true and fair view, additional information must be included in the notes to the
financial statements under paragraph 303(3)(c)”.
8. Section 309(4) states:
“An auditor who reviews the financial report for a half-year must report to members on
whether the auditor became aware of any matter in the course of the review that makes the
auditor believe the financial report does not comply with Division 2”.
9. Section 309(5) states:
“A report under subsection (4) must:
(a) Describe any matter referred to in subsection (4); and
(b) Say why that matter makes the auditor believe that the financial report does not
comply with Division 2”.
10. Section 309(5A) states:
“The auditor‟s report must include any statements or disclosures required by the auditing
standards”.
11. Section 320 states:
“A disclosing entity that has to prepare or obtain a report for a half-year under Division 2 must
lodge the report with ASIC within 75 days after the end of the half-year”.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 3 (continued)
ASRE 2410 - compiled - 49 - AUDITING STANDARD
Other Information – ASIC and ASX
12. An auditor, in the role of auditor, is required by section 311 of the Act to notify ASIC if the
auditor is aware of certain circumstances. ASIC Regulatory Guide 34 Auditors’ obligations:
reporting to ASIC (December 2007), provides guidance to help auditors comply with their
obligations under section 311 of the Act.
13. ASIC and the ASX have agreed that listed entities can satisfy the requirements of the Act by
lodging the half-year financial report, the directors‟ report, and the review report on the
financial report with the ASX. Details are provided in ASIC Regulatory Guide 28 Relief from
dual lodgement of financial reports (July 2003) and Class Order 98/104 (as amended by Class
Orders 99/90 and 99/837).
Australian Accounting Standards
14. Minimum Components of an Interim Financial Report – AASB 134 Interim Financial
Reporting, paragraph 8:
An interim financial report shall include, at a minimum, the following components:
(a) a condensed statement of financial position;
(b) a condensed statement of comprehensive income;
(c) a condensed statement of changes in equity showing either:
(i) all changes in equity; or
(ii) changes in equity other than those arising from capital transactions with
owners and distributions to owners;
(d) a condensed statement of cash flows; and
(e) selected explanatory notes.
15. Form and Content of Interim Financial Reports - AASB 134 paragraph 9 states:
“If an entity publishes a complete financial report as its interim financial report, the form and
content of that report shall conform to the requirements of AASB 101 for a financial report”.
16. Form and Content of Interim Financial Reports – AASB 134 paragraph 10 states:
“If an entity publishes a condensed financial report as its interim financial report, that
condensed report shall include, at a minimum, each of the headings and subtotals that were
included in its most recent annual financial report and the selected explanatory notes as
required by this Standard. Additional line items or notes shall be included if their omission
would make the condensed interim financial report misleading”.
17. Materiality - AASB 134 paragraph 23 states:
“In deciding how to recognise, measure, classify, or disclose an item for interim financial
reporting purposes, materiality shall be assessed in relation to the interim period financial data.
In making assessments of materiality, it shall be recognised that interim measurements may
rely on estimates to a greater extent than measurements of annual financial data”.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 3 (continued)
ASRE 2410 - compiled - 50 - AUDITING STANDARD
EXAMPLE OF AN UNMODIFIED AUDITOR’S REVIEW REPORT ON A
HALF-YEAR FINANCIAL REPORT – SINGLE DISCLOSING ENTITY
INDEPENDENT AUDITOR‟S REVIEW REPORT
To the members of [name of entity]
Report on the Half-Year Financial Report
We have reviewed the accompanying half-year financial report of [name of entity], which comprises
the condensed statement of financial position as at 31 December 20XX, the condensed statement of
comprehensive income, condensed statement of changes in equity and condensed statement of cash
flows for the half-year ended on that date, notes comprising a summary of significant accounting
policies [statement or description of accounting policies19] and other explanatory information, and the
directors‟ declaration.20
Directors’ Responsibility for the Half-Year Financial Report
The directors of the [company/registered scheme/disclosing entity] are responsible for the preparation
of the half-year financial report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001 and for such internal control as the directors
[those charged with governance] determine is necessary to enable the preparation of the half-year
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
Auditor’s Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We
conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state
whether, on the basis of the procedures described, we have become aware of any matter that makes us
believe that the half-year financial report is not in accordance with the Corporations Act 2001
including: giving a true and fair view of the [company‟s/registered scheme‟s/disclosing entity‟s]
financial position as at 31 December 20XX and its performance for the half-year ended on that date;
and complying with Accounting Standard AASB 134 Interim Financial Reporting and the
Corporations Regulations 2001. As the auditor of [name of entity], ASRE 2410 requires that we
comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review
is substantially less in scope than an audit conducted in accordance with Australian Auditing
Standards and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Independence
In conducting our review, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001,
19 Insert relevant statement or description of accounting policies as required by AASB 134.
20 When the auditor is aware that the half-year financial report will be included in a document that contains other information, the auditor
may consider, if the form of presentation allows, identifying the page numbers on which the audited half-year financial report is
presented.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 3 (continued)
ASRE 2410 - compiled - 51 - AUDITING STANDARD
which has been given to the directors of [name of entity], would be in the same terms if given to the
directors as at the time of this auditor‟s report.21
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us
believe that the half-year financial report of [name of company/registered scheme/disclosing entity] is
not in accordance with the Corporations Act 2001 including:
giving a true and fair view of the [company‟s/registered scheme‟s/disclosing entity‟s] financial
position as at 31 December 20XX and of its performance for the half-year ended on that date; and
complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations
Regulations 2001.
Report on Other Legal and Regulatory Requirements
[Form and content of this section of the auditor‟s review report will vary depending on the nature of
the auditor‟s other reporting responsibilities].
[Auditor‟s signature]22
[Date of the auditor‟s review report]23
[Auditor‟s address]
21
Or, alternatively, include statements (a) to the effect that circumstances have changed since the declaration was given to the relevant
directors; and (b) setting out how the declaration would differ if it had been given to the relevant directors at the time the auditor‟s report
was made.
22 The auditor‟s review report is required to be signed in one or more of the name of the audit firm, the name of the audit company or the
personal name of the auditor as appropriate.
23
The date of the auditor‟s report is the date the auditor signs the report.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
ASRE 2410 - compiled - 52 - AUDITING STANDARD
Appendix 4
(Ref: Para. A41)
Illustrations of Auditors’ Review Reports—Unmodified and Modified
Conclusions
Example of an Unmodified Auditor‟s Review Report on a Financial Report
Financial Report Prepared in Accordance with a Financial Reporting Framework Designed to
Achieve Fair Presentation
Example of an Auditor‟s Review Report with a Qualified Conclusion (Except For) for a Departure
from the Applicable Financial Reporting Framework
Financial Report Prepared in Accordance with a Financial Reporting Framework Designed to
Achieve Fair Presentation
Example of an Auditor‟s Review Report with a Qualified Conclusion for a Limitation On Scope Not
Imposed by Management
Financial Report Prepared in Accordance with a Financial Reporting Framework Designed to
Achieve Fair Presentation
Example of An Auditor‟s Review Report with an Adverse Conclusion for a Departure from the
Applicable Financial Reporting Framework
Financial Report Prepared in Accordance with a Financial Reporting Framework Designed to
Achieve Fair Presentation
Example of an Auditor‟s Review Report with a Qualified Conclusion (Except for) on the Basis that
Comparatives have not been Reviewed or Audited
Financial Report Prepared in Accordance with a Financial Reporting Framework Designed to
Achieve Fair Presentation
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 4 (continued)
ASRE 2410 - compiled - 53 - AUDITING STANDARD
EXAMPLE OF AN UNMODIFIED AUDITOR’S REVIEW REPORT ON A
FINANCIAL REPORT
FINANCIAL REPORT PREPARED IN ACCORDANCE WITH A FINANCIAL REPORTING
FRAMEWORK DESIGNED TO ACHIEVE FAIR PRESENTATION
INDEPENDENT AUDITOR‟S REVIEW REPORT
To [appropriate addressee]
Report on the [appropriate title for the financial report] Financial Report
We have reviewed the accompanying [period] financial report of [name of entity], which comprises
the balance sheet as at [date], and the income statement, statement of changes in equity and cash flow
statement for the [period] ended on that date, a [statement or description of accounting policies24],
other selected explanatory notes, and [the declaration of those charged with governance25].26,27
[Title of those charged with governance] Responsibility for the [period] Financial Report
The [title of those charged with governance] of the [type of entity] are responsible for the preparation
and fair presentation of the [period] financial report in accordance with the [applicable financial
reporting framework] and for such internal control as the directors [those charged with governance]
determine is necessary to enable the preparation and fair presentation of the [period] financial report
that is free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express a conclusion on the [period] financial report based on our review. We
conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state
whether, on the basis of the procedures described, anything has come to our attention that causes us to
believe that the financial report is not presented fairly, in all material respects, in accordance with the
[applicable financial reporting framework]. As the auditor of [name of entity], ASRE 2410 requires
that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a [period] financial report consists of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review
is substantially less in scope than an audit conducted in accordance with Australian Auditing
Standards and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
[Independence
In conducting our review, we have complied with the independence requirements of the Australian
professional accounting bodies28].
Conclusion
Based on our review, which is not an audit, nothing has come to our attention that causes us to believe
that the [period] financial report of [name of entity] does not present fairly, in all material respects, [or
24 Insert relevant statement or description of accounting policies.
25 Amend these terms to reflect the appropriate assertion statement and title for those charged with governance.
26 When the auditor is aware that the financial report will be included in a document that contains other information, the auditor may
consider, if the form of presentation allows, identifying the page numbers on which the reviewed financial report is presented.
27 The auditor may wish to specify the regulatory authority or equivalent with whom the financial report is filed.
28
Use when appropriate.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 4 (continued)
ASRE 2410 - compiled - 54 - AUDITING STANDARD
“give a true and fair view of29”] the financial position of the [entity] as at [date], and of its financial
performance and its cash flows for the [period] ended on that date, in accordance with [applicable
financial reporting framework].
Report on Other Legal and Regulatory Requirements
[Form and content of this section of the auditor‟s review report will vary depending on the nature of
the auditor‟s other reporting responsibilities.]
[Auditor‟s signature]30
[Date of the auditor‟s review report]31
[Auditor‟s address]
29
ASA 700 Forming an Opinion and Reporting on a Financial Report, contains information on the wording of reports that may be helpful.
30
The auditor‟s review report is required to be signed in one or more of the name of the audit firm, the name of the audit company or the
personal name of the auditor, as appropriate.
31
The date of the auditor‟s report is the date the auditor signs the report.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 4 (continued)
ASRE 2410 - compiled - 55 - AUDITING STANDARD
EXAMPLE OF AN AUDITOR’S REVIEW REPORT WITH A QUALIFIED
CONCLUSION (EXCEPT FOR) FOR A DEPARTURE FROM THE
APPLICABLE FINANCIAL REPORTING FRAMEWORK
FINANCIAL REPORT PREPARED IN ACCORDANCE WITH A FINANCIAL REPORTING
FRAMEWORK DESIGNED TO ACHIEVE FAIR PRESENTATION
INDEPENDENT AUDITOR‟S REVIEW REPORT
To [appropriate addressee]
Report on the [appropriate title for the financial report] Financial Report
We have reviewed the accompanying [period] financial report of [name of entity], which comprises
the balance sheet as at [date], and the income statement, statement of changes in equity and cash flow
statement for the [period] ended on that date, a [statement or description of accounting policies,32]
other selected explanatory notes, and [the declaration of those charged with governance33].34,35
[Title of those charged with governance] Responsibility for the [period] Financial Report
The [title of those charged with governance] of the [type of entity] are responsible for the preparation
and fair presentation of the [period] financial report in accordance with the [applicable financial
reporting framework]and for such internal control as the directors [those charged with governance]
determine is necessary to enable the preparation and fair presentation of the [period] financial report
that is free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express a conclusion on the [period] financial report based on our review. We
conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state
whether, on the basis of the procedures described, anything has come to our attention that causes us to
believe that the financial report is not presented fairly, in all material respects, in accordance with the
[applicable financial reporting framework]. As the auditor of [name of entity], ASRE 2410 requires
that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a [period] financial report consists of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review
is substantially less in scope than an audit conducted in accordance with Australian Auditing
Standards and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
[Independence
In conducting our review, we have complied with the independence requirements of the Australian
professional accounting bodies36].
32
Insert relevant statement or description of accounting policies.
33
Amend these terms to reflect the appropriate assertion statement and title for those charged with governance.
34
When the auditor is aware that the financial report will be included in a document that contains other information, the auditor may
consider, if the form of presentation allows, identifying the page numbers on which the reviewed financial report is presented.
35 The auditor may wish to specify the regulatory authority or equivalent with whom the financial report is filed.
36
Use when appropriate.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 4 (continued)
ASRE 2410 - compiled - 56 - AUDITING STANDARD
Basis for Qualified Conclusion
Based on information provided to us by management, [name of entity] has excluded from property and
long-term debt certain lease obligations that we believe should be capitalised to conform with [indicate
applicable financial reporting framework]. This information indicates that if these lease obligations
were capitalised at 31 December 20XX, property would be increased by $_______, long-term debt by
$_______, and net income and earnings per share would be increased (decreased) by $________ and
$________ respectively for the [period] ended on that date.
Qualified Conclusion
Based on our review, which is not an audit, with the exception of the matter described in the preceding
paragraph, nothing has come to our attention that causes us to believe that the [period] financial report
of [name of entity] does not present fairly, in all material respects, [or “give a true and fair view of”37]
the financial position of the [entity] as at [date], and of its financial performance and its cash flows for
the [period] period ended on that date, in accordance with [applicable financial reporting framework].
Report on Other Legal and Regulatory Requirements
[Form and content of this section of the auditor‟s review report will vary depending on the nature of
the auditor‟s other reporting responsibilities].
[Auditor‟s signature]38
[Date of the auditor‟s review report]39
[Auditor‟s address]
37 ASA 700 Forming an Opinion and Reporting on a Financial Report, contains information on the wording of reports that may be helpful.
38
The auditor‟s review report is required to be signed in one or more of the name of the audit firm, the name of the audit company or the
personal name of the auditor, as appropriate.
39
The date of the auditor‟s report is the date the auditor signs the report.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 4 (continued)
ASRE 2410 - compiled - 57 - AUDITING STANDARD
EXAMPLE OF AN AUDITOR’S REVIEW REPORT WITH A QUALIFIED
CONCLUSION FOR A LIMITATION ON SCOPE NOT IMPOSED BY
MANAGEMENT
FINANCIAL REPORT PREPARED IN ACCORDANCE WITH A FINANCIAL REPORTING
FRAMEWORK DESIGNED TO ACHIEVE FAIR PRESENTATION
INDEPENDENT AUDITOR‟S REVIEW REPORT
To [appropriate addressee]
Report on the [appropriate title for the financial report] Financial Report
We have reviewed the accompanying [period] financial report of [name of entity], which comprises
the balance sheet as at [date], and the income statement, statement of changes in equity and cash flow
statement for the [period] ended on that date, a [statement or description of accounting policies40],
other selected explanatory notes, and [the declaration of those charged with governance 41].42,43
[Title of those charged with governance] Responsibility for the [period] Financial Report
The [title of those charged with governance] of the [type of entity] are responsible for the preparation
and fair presentation of the [period] financial report in accordance with the [applicable financial
reporting framework] and for such internal control as the directors [those charged with governance]
determine is necessary to enable the preparation and fair presentation of the [period] financial report
that is free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express a conclusion on the [period] financial report based on our review. We
conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state
whether, on the basis of the procedures described, anything has come to our attention that causes us to
believe that the financial report is not presented fairly, in all material respects, in accordance with the
[applicable financial reporting framework]. As the auditor of [name of entity], ASRE 2410 requires
that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a [period] financial report consists of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review
is substantially less in scope than an audit conducted in accordance with Australian Auditing
Standards and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
[Independence
In conducting our review, we have complied with the independence requirements of the Australian
professional accounting bodies44].
40
Insert relevant statement or description of accounting policies.
41
Amend these terms to reflect the appropriate assertion statement and title for those charged with governance.
42
When the auditor is aware that the financial report will be included in a document that contains other information, the auditor may
consider, if the form of presentation allows, identifying the page numbers on which the reviewed financial report is presented.
43
The auditor may wish to specify the regulatory authority or equivalent with whom the financial report is filed.
44
Use when appropriate.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 4 (continued)
ASRE 2410 - compiled - 58 - AUDITING STANDARD
Basis for Qualified Conclusion
As a result of a fire in a branch office on [date] that destroyed its accounts receivable records, we were
unable to complete our review of accounts receivable totalling $_______ included in the [period]
financial report. The [entity] is in the process of reconstructing these records and is uncertain as to
whether these records will support the amount shown above and the related allowance for
uncollectible accounts. Had we been able to complete our review of accounts receivable, matters
might have come to our attention indicating that adjustments might be necessary to the [period]
financial report.
Qualified Conclusion
Except for the adjustments to the [period] financial report that we might have become aware of had it
not been for the situation described above, based on our review, which is not an audit, nothing has
come to our attention that causes us to believe that the [period] financial report of [name of entity]
does not present fairly, in all material respects, [or “give a true and fair view of45]” the financial
position of the [entity] as at [date], and of its financial performance and its cash flows for the [period]
period ended on that date, in accordance with [applicable financial reporting framework].
Report on Other Legal and Regulatory Requirements
[Form and content of this section of the auditor‟s review report will vary depending on the nature of
the auditor‟s other reporting responsibilities.]
[Auditor‟s signature46]
[Date of the auditor‟s review report]47
[Auditor‟s address]
45 ASA 700 Forming an Opinion and Reporting on a Financial Report, contains information on the wording of reports that may be helpful.
46 The auditor‟s review report is required to be signed in one or more of the name of the audit firm, the name of the audit company or the
personal name of the auditor, as appropriate.
47 The date of the auditor‟s report is the date the auditor signs the report.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 4 (continued)
ASRE 2410 - compiled - 59 - AUDITING STANDARD
EXAMPLE OF AN AUDITOR’S REVIEW REPORT WITH AN ADVERSE
CONCLUSION FOR A DEPARTURE FROM THE APPLICABLE FINANCIAL
REPORTING FRAMEWORK
FINANCIAL REPORT PREPARED IN ACCORDANCE WITH A FINANCIAL REPORTING
FRAMEWORK DESIGNED TO ACHIEVE FAIR PRESENTATION
INDEPENDENT AUDITOR‟S REVIEW REPORT
To [appropriate addressee]
Report on the [appropriate title for the financial report] Financial Report
We have reviewed the accompanying [period] financial report of [name of entity], which comprises
the balance sheet as at [date], and the income statement, statement of changes in equity and cash flow
statement for the [period] ended on that date, a [statement or description of accounting policies48],
other selected explanatory notes, and [the declaration of those charged with governance49].50,51
[Title of those charged with governance] Responsibility for the [period] Financial Report
The [title of those charged with governance] of the [type of entity] are responsible for the preparation
and fair presentation of the [period] financial report in accordance with the [applicable financial
reporting framework] and for such internal control as the directors [those charged with governance]
determine is necessary to enable the preparation and fair presentation of the [period] financial report
that is free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express a conclusion on the [period] financial report based on our review. We
conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state
whether, on the basis of the procedures described, anything has come to our attention that causes us to
believe that the financial report is not presented fairly, in all material respects, in accordance with the
[applicable financial reporting framework]. As the auditor of [name of entity], ASRE 2410 requires
that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a [period] financial report consists of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review
is substantially less in scope than an audit conducted in accordance with Australian Auditing
Standards and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
[Independence
In conducting our review, we have complied with the independence requirements of the Australian
professional accounting bodies52].
48 Insert relevant statement or description of accounting policies.
49 Amend these terms to reflect the appropriate assertion statement and title for those charged with governance.
50
When the auditor is aware that the financial report will be included in a document that contains other information, the auditor may
consider, if the form of presentation allows, identifying the page numbers on which the reviewed financial report is presented.
51
The auditor may wish to specify the regulatory authority or equivalent with whom the financial report is filed.
52
Use when appropriate.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 4 (continued)
ASRE 2410 - compiled - 60 - AUDITING STANDARD
Basis for Adverse Conclusion
Commencing this period, [title of those charged with governance] of the [entity] ceased to consolidate
the financial reports of its subsidiary companies since [title of those charged with governance]
considers consolidation to be inappropriate because of the existence of new substantial non-controlling
interests. This is not in accordance with [applicable financial reporting framework]. Had a
consolidated financial report been prepared, virtually every account in the financial report would have
been materially different.
Adverse Conclusion
Our review indicates, because the [entity‟s] investment in subsidiary companies is not accounted for
on a consolidation basis, as described in the previous paragraph, this [period] financial report of [name
of entity] does not present fairly, in all material respects, [or “give a true and fair view of53]” the
financial position of the [entity] as at [date], and of its financial performance and its cash flows for the
[period] period ended on that date, in accordance with [applicable financial reporting framework].
Report on Other Legal and Regulatory Requirements
[Form and content of this section of the auditor‟s review report will vary depending on the nature of
the auditor‟s other reporting responsibilities.]
[Auditor‟s signature54]
[Date of the auditor‟s review report]55
[Auditor‟s address]
53
ASA 700 Forming an Opinion and Reporting on a Financial Report, contains information on the wording of reports that may be helpful.
54
The auditor‟s review report is required to be signed in one or more of the name of the audit firm, the name of the audit company or the
personal name of the auditor, as appropriate.
55 The date of the auditor‟s report is the date the auditor signs the report.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 4 (continued)
ASRE 2410 - compiled - 61 - AUDITING STANDARD
EXAMPLE OF AN AUDITOR’S REVIEW REPORT WITH A QUALIFIED
CONCLUSION (EXCEPT FOR) ON THE BASIS THAT COMPARATIVES
HAVE NOT BEEN REVIEWED OR AUDITED
FINANCIAL REPORT PREPARED IN ACCORDANCE WITH A FINANCIAL REPORTING
FRAMEWORK DESIGNED TO ACHIEVE FAIR PRESENTATION
INDEPENDENT AUDITOR‟S REVIEW REPORT
To [appropriate addressee]
Report on the [appropriate title for the financial report] Financial Report
We have reviewed the accompanying [period] financial report of [name of entity], which comprises
the balance sheet as at [date], and the income statement, statement of changes in equity and cash flow
statement for the [period] ended on that date, a [statement or description of accounting policies56],
other selected explanatory notes, and [the declaration of those charged with governance57].58,59
[Title of those charged with governance] Responsibility for the [period] Financial Report
The [title of those charged with governance] of the [type of entity] are responsible for the preparation
and fair presentation of the [period] financial report in accordance with the [applicable financial
reporting framework]and for such internal control as the directors [those charged with governance]
determine is necessary to enable the preparation and fair presentation of the [period] financial report
that is free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express a conclusion on the [period] financial report based on our review. We
conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state
whether, on the basis of the procedures described, anything has come to our attention that causes us to
believe that the financial report is not presented fairly, in all material respects, in accordance with the
[applicable financial reporting framework]. As the auditor of [name of entity], ASRE 2410 requires
that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a [period] financial report consists of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A review
is substantially less in scope than an audit conducted in accordance with Australian Auditing
Standards and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
[Independence
In conducting our review, we have complied with the independence requirements of the Australian
professional accounting bodies60].
56
Insert relevant statement or description of accounting policies.
57
Amend these terms to reflect the appropriate assertion and title for those charged with governance.
58
When the auditor is aware that the interim financial report will be included in a document that contains other information, the auditor
may consider, if the form of presentation allows, identifying the page numbers on which the reviewed interim financial report is
presented.
59
The auditor may wish to specify the regulatory authority or equivalent with whom the financial report is filed.
60
Use when appropriate.
Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity as Amended
Appendix 4 (continued)
ASRE 2410 - compiled - 62 - AUDITING STANDARD
Basis for Qualified Conclusion
As this is the first year that [name of entity] is required to prepare a [period] financial report and have
it reviewed, the balance sheet, income statement, statement of changes in equity, cash flow statement,
[statement or description of accounting policies61] and other selected explanatory notes for the
preceding corresponding [period] have not been reviewed or audited. Accordingly, we are not in a
position to and do not express any assurance in respect of the comparative information for the [period]
ended [date of preceding corresponding period]. We have, however, audited the financial report for
the preceding financial year ended [date of preceding financial year] and therefore our review
statement is not qualified in respect of the comparative information for the year ended [date of
preceding financial year] included in the balance sheet.
Qualified Conclusion
Except for the effect, if any, on the comparatives for the preceding corresponding [period] that may
result from the qualification in the preceding paragraph, based on our review, which is not an audit,
nothing has come to our attention that causes us to believe that the [period] financial report of [name
of entity] does not present fairly, in all material respects, [or “give a true and fair view of62]” the
financial position of the [entity] as at [date], and of its financial performance and its cash flows for the
[period] period ended on that date, in accordance with [applicable financial reporting framework].
Report on Other Legal and Regulatory Requirements
[Form and content of this section of the auditor‟s review report will vary depending on the nature of
the auditor‟s other reporting responsibilities.]
[Auditor‟s signature63]
[Date of the auditor‟s review report]64
[Auditor‟s address]
61
Insert relevant statement or description of accounting policies.
62
ASA 700 Forming an Opinion and Reporting on a Financial Report, contains information on the wording of reports that may be helpful.
63
The auditor‟s review report is required to be signed in one or more of the name of the audit firm, the name of the audit company or the
personal name of the auditor, as appropriate.
64 The date of the auditor‟s report is the date the auditor signs the report.
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