Page 201 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
Audit.
Definition: Audit is a type of reasonable assurance engagement providing a reasonable level of assurance.
Procedures: It performs elaborate and extensive procedures including tests of controls and substantive
procedures.
Level of Assurance: It draws reasonable level of assurance on the basis of sufficient appropriate evidence.
Form of Assurance: It provides an assurance opinion. The language of the assurance opinion is positively
worded.
Review.
Definition: Review is a type of limited assurance engagement providing a lower level of assurance than
reasonable assurance engagement.
Procedures: It performs fewer procedures, primarily focusing on inquiry and analytical procedures.
Level of Assurance: It draws limited level of Assurance on the basis of sufficient appropriate evidence.
Form of Assurance: It provides an assurance conclusion. The language of the assurance conclusion is negatively
worded.

SRE 2410 Review of Interim Financial Information Performed by The Independent Auditor of
the Entity.

(CNO SRE 2410.020) Introduction
SRE 2410: SRE 2410 deals with the auditor’s professional responsibilities when the auditor undertakes an
engagement to review the interim financial information of an audit client and on the form and content of the
report. In other words, SRE 2410 applies when review of interim financial information is performed by the
independent auditor of the financial statements of the entity.
Definition of Interim Financial Information: Interim financial information is financial information that is
prepared and presented in accordance with an applicable financial reporting framework and comprises either a
complete or a condensed set of financial statements for a period that is shorter than the entity’s financial year.
Example of Interim Financial Information: For example, interim financial information may relate to financial
statements of a quarter of the financial year.
Objective of an Engagement to Review Interim Financial Information in Accordance with SRE 2410
Objective of Review Engagement: The objective of an engagement to review interim financial information is
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 interim financial information is not prepared, in all
material respects, in accordance with an applicable financial reporting framework.
Review Procedures: The auditor makes inquiries and performs analytical and other review procedures in order
to reduce to a moderate level risk of expressing an inappropriate conclusion when the interim financial
information is materially misstated.
Difference from Audit: The objective of a review of interim financial information differs significantly from that
of an audit conducted in accordance with Standards on Auditing (SAs). A review does not provide a basis for
expressing an opinion on whether the financial information gives a true and fair view, or is presented fairly, in
all material respects, in accordance with an applicable financial reporting framework.
A review, in contrast to an audit, is not designed to obtain reasonable assurance that the interim financial
information is free from material misstatement. A review consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures.
Limitation of Review: A review may bring significant matters affecting the interim financial information to the
auditor’s attention, but it does not provide all of the evidence that would be required in an audit.

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