Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity (June 2020)
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This Auditing Standard reproduces substantial parts of the corresponding International Standard on Review Engagements issued by the International Auditing and Assurance Standards Board (IAASB) and published by the International Federation of Accountants (IFAC), in the manner described in the statement on Conformity with International Standards on Auditing. The AUASB acknowledges that IFAC is the owner of copyright in the International Standard on Review Engagements incorporated in this Auditing Standard throughout the world.
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Part preface - Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity (June 2020) - preface | Zoe
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
Appendix 4: Example of an Unmodified Auditor’s Review Report on a Financial Report - Fair Presentation Framework
Example of an Auditor’s Review Report with a Qualified Conclusion (Except For) for a Departure from the Applicable Financial Reporting Framework – Fair Presentation Framework
Example of an Auditor’s Review Report with a Qualified Conclusion for a Limitation On Scope Not Imposed by Management -Fair Presentation Framework
Example of an Auditor’s Review Report with an Adverse Conclusion for a Departure from the Applicable Financial Reporting Framework -
Fair Presentation Framework
Example of an Unmodified Auditor’s Review Report on a Financial Report -
Compliance Framework
preface
Reasons for Issuing ASRE 2410
The AUASB issues Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity pursuant to the requirements of the legislative provisions and the Strategic Direction explained below.
The AUASB is a Non-corporate Commonwealth entity of the Australian Government established under section 227A of the Australian Securities and Investments Commission Act 2001, as amended (ASIC Act). Under section 336 of the Corporations Act 2001, the AUASB may make Auditing Standards for the purposes of the corporations legislation. These Auditing Standards are legislative instruments under the Legislation Act 2003.
Under the Strategic Direction given to the AUASB by the Financial Reporting Council (FRC), the AUASB is required, inter alia, to develop auditing standards that have a clear public interest focus and are of the highest quality.
Main Features
This Auditing Standard on Review Engagements establishes requirements and provides application and other explanatory material regarding the responsibilities of an auditor of an entity when engaged to undertake a review of a financial report, and on the form and content of the auditor’s review report.
AUTHORITY STATEMENT
The Auditing and Assurance Standards Board (AUASB) makes this Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity (June 2020) pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001.
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: 9 June 2020 R Simnett AO
Chair – AUASB
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).
In 2009 extant ASRE 2410 Review of Interim and Other Financial Reports Performed by the Independent Auditor of the Entity was reissued by the AUASB in clarity format. The underlying standard to extant ASRE 2410 is ISRE 2410 which has not been drafted in “clarity” format by the IAASB.
Additionally in 2009, following consultation with stakeholders in Australia in accordance with normal exposure draft processes, the AUASB decided that:
due to the nature of reviews of other historical financial information, a separate Standard was 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.
At the time of issuing extant ASRE 2410 the AUASB determined that it conformed, 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.
In 2019, following consultation with stakeholders in Australia, further amendments to ASRE 2410 were made to align the reporting requirements with the revised auditor reporting requirements contained in ASA 700 Forming an Opinion and Reporting on a Financial Report (operative for financial reporting periods ending on or after 15 December 2016). These amendments are additional reporting requirements which are not contained in ISRE 2410.
The AUASB considers that 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. Generally, when the text of an International Standard is modified by the AUASB as part of its due process, additional or modified paragraphs are identified through the use of an “Aus.” prefix. Due to the extensive number of additions and restricting of the standard, “Aus.” paragraphs have not been used to identify Australian additions or modifications. The main differences between this Auditing Standard and ISRE 2410 are:
This Auditing Standard contains the following requirements that are not contained in ISRE 2410:
This Auditing Standard applies to:
a review, by the auditor of the entity, of a financial report for a half‑year in accordance with the Corporations Act 2001; and
a review, by the 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:
the circumstances surrounding the inability to comply;
the reasons for the inability to comply; and
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 management and, where appropriate, those charged with governance, that it acknowledges and understands its responsibility:
for the preparation of the financial report including where relevant their fair presentation;
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:
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 (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. 22).
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. 25).
When, as a result of performing the review of a financial report, a matter comes to the auditor’s attention that indicates the existence of fraud or non‑compliance with laws and regulations or suspected fraud or non-compliance with laws and regulations, has occurred in the entity, the auditor shall:
communicate the matter unless prohibited by law or regulation, as soon as practicable to those charged with governance and shall consider the implications for the review
request management’s assessment of the effect (s) on the financial report;
consider the effect on the auditor’s conclusion and the review report; and
determine whether law, regulation or relevant ethical requirements:
o require the auditor to report to an appropriate authority outside the entity;
o establish responsibilities under which reporting to an appropriate authority outside the entity may be appropriate in the circumstances. (Ref: Para. 31).
The following paragraphs contain requirements in relation to the auditor’s review report and are in addition to those in ISRE 2410:
Paragraphs 33 to 39 relate to the content and order of the auditor’s review report;
Paragraphs 40, 41, 48 and 50 relate to auditor’s review reports which contain a modified review conclusion;
Paragraphs 49 to 51 relate to auditor’s review reports with a going concern matter;
Paragraphs 53 and 54 relate to emphasis of matter and other matter paragraphs.
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).
This Auditing Standard provides illustrative examples that differ in form and content from those contained in ISRE 2410, namely:
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).
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 Review of Interim Financial Information Performed by the Independent Auditor of the Entity to the extent described above.