Page 189 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
Audit or Compilation: When the practitioner’s preliminary understanding of the engagement circumstances
indicates that accepting a review engagement would not be appropriate, the practitioner may consider
recommending another type of engagement.
Depending on the circumstances, the practitioner may, for example, believe that performance of an audit
engagement would be more appropriate than a review. In other cases, if the engagement circumstances preclude
the performance of an assurance engagement, the practitioner may recommend a compilation engagement, or
other accounting services engagement, as appropriate.
Doubt on Management’s Integrity: The practitioner has cause to doubt management’s integrity such that it is
likely to affect proper performance of the review.
Availability or Reliability of Information: The practitioner’s preliminary understanding of the engagement
circumstances indicates that information needed to perform the review engagement is likely to be unavailable
or unreliable.

(CNO SRE 2400.080) Preconditions for Accepting a Review Engagement (SA 210)
Prior to accepting a review engagement, the practitioner shall: -
1. Acceptability of FRF: Determine whether the financial reporting framework applied in the preparation of
the financial statements is acceptable, including, in the case of special purpose financial statements, obtaining an
understanding of the purpose for which the financial statements are prepared and of the intended users.
2. Management's Agreement: Obtain the agreement of management that it acknowledges and understands its
responsibilities with respect to following
2A. Preparation of FST: for the preparation of the financial statements in accordance with the applicable
financial reporting framework, including, where relevant, their fair presentation.
2B. Establishing Internal Controls: For such internal control as management determines is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
2C. Access to All Information: To provide the practitioner with access to all information of which management
is aware that is relevant to the preparation of the financial statements, such as records, documentation, and other
matters.
2D. Additional Information: Additional information that the practitioner may request from management for
the purpose of the review.
2E. Unrestricted Access to Persons: And unrestricted access to persons within the entity from whom the
practitioner determines it necessary to obtain evidence.
Practitioner Not Satisfied
1A. Discussion with Management: If the practitioner is not satisfied as to any of the matters set out above as
preconditions for accepting a review engagement, the practitioner shall discuss the matter with the management
or those charged with governance.
1B. No Changes: If changes cannot be made to satisfy the practitioner as to those matters, the practitioner shall
not accept the proposed engagement unless required by law or regulation to do so.
1C. Not as per SRE: However, an engagement conducted under such circumstances does not comply with this
SRE. Accordingly, the practitioner shall not include any reference within the practitioner’s report to the review
having been conducted in accordance with this SRE.
2. Post Acceptance Issue: If it is discovered after the engagement has been accepted that the practitioner is not
satisfied as to any of the above preconditions, the practitioner shall discuss the matter with the management or
those charged with governance and determined following:
2A. Resolution: The practitioner shall determine whether the matter can be resolved.
2B. Withdrawal: whether it is appropriate to continue with the engagement.
2C. Modify Report: And whether and, if so, how to communicate the matter in the practitioner’s report.

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