SRE 2410 - Review of Interim Financial Information performed by the Independent auditor of the Entity
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The objective 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.
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The auditor and the
client should agree on the terms of the engagement.
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The auditor should
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Comply with the ethical requirements relevant to the audit of the annual financial
statements of the entity.
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Implement quality control procedures that are applicable to the individual
engagement.
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Plan and perform the review with an attitude of professional skepticism, recognizing
that circumstances may exist that cause the interim financial information to require
a material adjustment for it to be prepared, in all material respects, in accordance
with the applicable financial reporting framework.
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The auditor should have
an understanding of the entity and its environment, including its internal control,
as it relates to the preparation of both annual and interim financial information,
sufficient to plan and conduct the engagement so as to be able to:
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Identify the types of
potential material misstatement and consider the likelihood of their occurrence;
and
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Select the inquiries,
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 interim financial information is not prepared, in all
material respects, in accordance with the applicable financial reporting
framework.
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The procedures performed
to update the understanding of the entity and its environment, including its internal
control, ordinarily may include the following:
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Reading the documentation, to the extent necessary, of the preceding
year’s audit and reviews of prior interim period of the current year and
corresponding interim period of the prior year, to enable the auditor to identify
matters that may affect the current-period interim financial information.
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Considering any significant risks, including the risk of management override
of controls, that were identified in the audit of the prior year’s financial
statements.
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Reading the most recent annual and comparable prior period interim financial
information.
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Considering materiality with reference to the applicable financial reporting
framework as it relates to interim financial information to assist in determining the
nature and extent of the procedures to be performed and evaluating the effect of
misstatements.
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Considering the nature of any corrected material misstatements and any
identified uncorrected immaterial misstatements in the prior year’s
financial statements.
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Considering significant financial accounting and reporting matters that may be
of continuing significance such as material weaknesses in internal control.
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Considering the results of any audit procedures performed with respect to the
current year’s financial statements.
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Considering the results of any internal audit performed and the subsequent
actions taken by management.
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Inquiring of management about the results of management’s assessment
of the risk that the interim financial information may be materially misstated as
a result of fraud.
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Inquiring of management about the effect of changes in the entity’s
business activities.
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Inquiring of management about any changes in internal significant
control and the potential effect of any such changes on the preparation of
interim financial information.
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Inquiring of management of the process by which the interim financial
information has been prepared and the reliability of the underlying accounting
records to which the interim financial information is agreed or reconciled.
Inquiring, 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 interim
financial information is not prepared, in all material respects, in accordance with
the applicable financial reporting framework.
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To inquire, primarily of
persons responsible for financial and accounting matters, and others to ascertain
whether:
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the interim financial information has been prepared and presented in accordance with
the applicable financial reporting framework.
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there have been any changes in accounting principles or in the methods of applying
them.
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any new transactions have necessitated the application of a new accounting
principle.
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the interim financial information contains any known uncorrected misstatements.
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any Unusual or complex situations that may have affected the interim financial
information, such as a business combination or disposal of a segment of the
business.
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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.
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related party transactions have been appropriately accounted for and disclosed in the
interim financial information.
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Significant changes in commitments and contractual obligations.
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Significant changes in contingent liabilities including litigation or claims.
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Compliance with debt covenants.
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Matters about which questions have arisen in the course of applying the review
procedures.
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Significant transactions occurring in the last several days of the interim period or
the first several days of the next interim period.
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Knowledge of any fraud or suspected fraud affecting the entity involving:
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Knowledge of any allegations of fraud, or suspected fraud, affecting the
entity’s interim financial information communicated by employees, former
employees, analysts, regulators, or others.
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Knowledge of any actual or possible noncompliance with laws and regulations that
could have a material effect on the interim financial information.
Reviewer may decide to perform certain audit procedures concurrently with the review
of interim financial information.
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Analytical and other
review procedures includes:
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To obtain evidence
that the interim financial information agrees or reconciles with the underlying
accounting records
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To inquire whether
management has identified all events up to the date of the review report that may
require adjustment to or disclosure in the interim financial information
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To inquire whether
management has changed its assessment of the entity’s ability to continue as a
going concern
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To make additional
inquiries or perform other procedures to enable the auditor to express a conclusion
in the review report, when a matter comes to the auditor’s attention that leads
the auditor to question whether a material adjustment should be made for the interim
financial information to be prepared, in all material respects, in accordance with
the applicable financial reporting framework
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To evaluate,
individually and in the aggregate, whether uncorrected misstatements that have come
to the auditor’s attention are material to the interim financial
information
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To read the other
information that accompanies the interim financial information to consider whether
any such information is materially inconsistent with the interim financial
information
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If, as a result of
performing the review of interim financial information, a matter comes to the
auditor’s attention that causes the auditor to believe in the existence of
fraud or noncompliance by the entity with laws and regulations, it should be
communicated as soon as practicable to the appropriate level of management and those
charged with governance.
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If, in the
auditor’s judgment, those charged with governance do not respond appropriately
within a reasonable period of time, the auditor should consider:
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Whether to modify the report;
or
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The possibility of
withdrawing from the engagement; and
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The possibility of
resigning from the appointment to audit the annual financial statements.
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The auditor should issue a written
report that contains the following:
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An appropriate title.
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An addressee, as required by
the circumstances of the engagement.
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Identification of the
interim financial information reviewed, including identification of the title of each
of the statements contained in the complete or condensed set of financial statements
and the date and period covered by the interim financial information.
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If the interim financial
information comprises a complete set of general purpose financial statements prepared
in accordance with a financial reporting framework designed to achieve fair
presentation, a statement that management is responsible for the preparation and fair
presentation of the interim financial information in accordance with the applicable
financial reporting framework.
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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.
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A statement that the
auditor is responsible for expressing a conclusion on the interim financial
information based on the review.
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A statement that the review
of the interim financial information was conducted in accordance with Standard on
Review Engagements (SRE) 2410, “Review of Interim Financial Information
Performed by the Independent Auditor of the Entity,” and a statement that that
such a review consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
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A statement that a review is
substantially less in scope than an audit conducted in accordance with Standards on
Auditing 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.
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If the interim
financial information comprises a complete set of general purpose financial
statements prepared in accordance with a financial reporting framework designed to
achieve fair presentation, a conclusion as to whether anything has come to the
auditor’s attention that causes the auditor to believe that the interim
financial information does not give a true and fair view, or does not present fairly,
in all material respects, in accordance with the applicable financial reporting
framework (including a reference to the relevant jurisdiction of the financial
reporting framework when the financial reporting framework used is not Financial
Reporting Standards applicable in India).
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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 relevant jurisdiction of the financial
reporting framework when the financial reporting framework used is not Financial
Reporting Standards applicable in India).
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The date of the report.
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Place of Signature.
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The auditor’s signature and
membership number assigned by the Institute of Chartered Accountants of India
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The Firm’s registration
number of the member of the Institute, wherever applicable, as allotted by ICAI.
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A qualified or adverse conclusion
be expressed 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 interim financial
information for it to be prepared, in all material respects, in accordance with the
applicable financial reporting framework.
Where adequate disclosure is made in the interim financial information, the auditor
should add an emphasis of matter paragraph to the review report to highlight a
material uncertainty relating to an event or condition that may cast significant
doubt on the entity’s ability to continue as a going concern.
Where there is a material uncertainty that casts significant doubt about the
entity’s ability to continue as a going concern is not adequately disclosed in
the interim financial information, the auditor should express a qualified or adverse
conclusion, as appropriate. The report should include specific reference to the fact
that there is such a material uncertainty.
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To obtain written
representation from management that:
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It acknowledges its
responsibility for the design and implementation of internal control to prevent and
detect fraud and error;
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The interim financial
information is prepared and presented in accordance with the applicable financial
reporting framework;
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It believes the effect
of those uncorrected misstatements aggregated by the auditor during the review are
immaterial, both individually and in the aggregate, to the interim financial
information taken as a whole. A summary of such items is included in or attached to
the written representations;
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It has disclosed to the
auditor all significant facts relating to any frauds or suspected frauds known to
management that may have affected the entity;
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It has disclosed to the
auditor the results of its assessment of the risks that the interim financial
information may be materially misstated as a result of fraud;
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It has disclosed to the
auditor all known actual or possible noncompliance with laws and regulations whose
effects are to be considered when preparing the interim financial information;
and
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It has 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 interim financial information.
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To 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 SRE and applicable legal and regulatory requirements.
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