Accounting principles have been applied on a basis

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accounting principles have been applied on a basis that is consistent with the annual report and the corresponding interim financial statements of the previous year. In particular, the auditor is concerned that interim financial statements are not misleading relative to the annual report. The interim review does not require a complete assessment of internal control risk each quarter or that suffi cient appropriate evidience is gathered for an opinion. The nature, timing, and extent of review procedures explained below presume that the reviewer has a knowledge base of the company from the audit of the most recent annual fi nancial statements. A review done on this knowledge base is guided by signifi cantly more information than one done without this, and it might, therefore, provide more assurance than a review without an audit knowledge base. For example, the public accountant with an existing audit knowledge base has familiarity with the system of internal controls. Nature of Review Procedures Reviews consist mainly of enquiry and analytical procedures. Paragraph 8200.23 and ISRE 2400.20 suggest checklists that include the following: Enquire about the accounting system. Obtain an understanding of the system. Determine whether there have been any sig- nificant changes in the system used to produce interim information. Perform analytical procedures to identify relationships and individual items that seem unusual. Read the minutes of shareholder, board of director, and board committee meetings to identify actions or events that may affect interim financial information. Read (study) the interim financial information and determine whether it conforms with generally accepted accounting principles. Obtain reports from other accountants who perform limited reviews of significant components, subsidiaries, or other investees. Enquire of officers and executives about the following: conformity with generally accepted accounting principles, consistent application of accounting principles, L E A R N I N G O B J E C T I V E 2 Write a report on a review of interim finan- cial information. 6 CICA Handbook , section 1751.
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636 PART IV Other Professional Services changes in the client’s business or accounting practices, questions that have arisen as a result of applying other procedures (listed above), and events subsequent to the date of the interim information. Obtain written representations from management about interim information matters. Timing of Review Procedures Review procedures should be performed at or near the date of the interim information. Starting the engagement prior to the cutoff date will give auditors a chance to deal with problems and questions without undue deadline pressures. Extent of Review Procedures The accountant needs to acquire a sufficient knowledge of the client’s business, as if it were a regular audit. The extent of review procedures depends on the accountant’s profes- sional judgment about problem areas in the system of internal control, the severity of unique accounting principles problems and the errors that have occurred in the past. With
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  • Fall '12
  • Smith
  • Accounting, Accountant, Auditor's report, CICA Handbook

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