SRE 2410 Interim Review
SRE 2410
Review of Interim Financial Information
Performed by the Independent
Auditor of the Entity
(Effective for reviews of interim financial information for periods
beginning on or after April 1, 2010)
Contents
Paragraph(s)
Introduction ........................................................................................... 1-3
General Principles of a Review of Interim Financial Information .......... 4-6
Objective of an Engagement to Review Interim Financial Information .. 7-9
Agreeing the Terms of the Engagement ........................................... 10-11
Procedures for a Review of Interim Financial Information ................. 12-29
Evaluation of Misstatements ............................................................ 30-33
Management Representations ......................................................... 34-35
Auditor’s Responsibility for Accompanying Information ................... 36-37
Communication ................................................................................. 38-42
Reporting the Nature, Extent and Results of the Review of
Interim Financial Information ............................................................ 43-63
Documentation ...................................................................................... 64
Effective Date ........................................................................................ 65
Material Modifications vis-a-vis ISRE 2410, “Review of Interim Financial
Information Performed by the Independent Auditor of the Entity”
Appendix 1: Example of an Engagement Letter for a Review of Interim
Financial Information
Appendix 2: Analytical Procedures the Auditor May Consider When
Performing a Review of Interim Financial Information
Published in May, 2010 issue of the Journal.
Appendix 3: Example of a Management Representation Letter
Appendix 4: Examples of Review Reports on Interim Financial
Information
Appendix 5: Examples of Review Reports with a Qualified Conclusion for
a Departure from the Applicable Financial Reporting Framework
Appendix 6: Examples of Review Reports with a Qualified Conclusion for
a Limitation on Scope Not Imposed by Management
Appendix 7: Examples of Review Reports with an Adverse Conclusion
for a Departure from the Applicable Financial Reporting Framework
Standard on Review Engagements (SRE) 2410, “Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity” should be read in the context of the “Preface to the Standards on
Quality Control, Auditing, Review, Other Assurance and Related
Services”, which sets out the application and authority of SREs.
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Introduction
1. The purpose of this Standard on Review Engagements (SRE) is to
establish standards and provide guidance on the auditor’s professional
responsibilities when the auditor undertakes an engagement to review interim
financial information of an audit client, and on the form and content of the report.
The term “auditor” is used throughout this SRE, not because the auditor is
performing an audit function but because the scope of this SRE is limited to a
review of interim financial information performed by the independent auditor of
the financial statements of the entity.
2. For purposes of this SRE, interim financial information is financial
information that is prepared and presented in accordance with an applicable
financial reporting framework1 and comprises either a complete or a condensed
set of financial statements for a period that is shorter than the entity’s financial
year.
3. The auditor who is engaged to perform a review of interim financial
information should perform the review in accordance with this SRE.
Through performing the audit of the annual financial statements, the auditor
obtains an understanding of the entity and its environment, including its internal
control. When the auditor is engaged to review the interim financial information,
this understanding is updated through inquiries made in the course of the review,
and assists the auditor in focusing the inquiries to be made and the analytical
and other review procedures to be applied. A practitioner who is engaged to
perform a review of interim financial information, and who is not the auditor of the
entity, performs the review in accordance with SRE 2400 (Revised),
“Engagements to Review Financial Statements.” As the practitioner does not
ordinarily have the same understanding of the entity and its environment,
including its internal control, as the auditor of the entity, the practitioner needs to
carry out different inquiries and procedures to meet the objective of the review.
3a. This SRE is directed towards a review of interim financial information by an
entity’s auditor. However, it is to be applied, adapted as necessary in the
circumstances, when an entity’s auditor undertakes an engagement to review
historical financial information other than interim financial information of an audit
client.
1 For example, Accounting Standards issued by the Institute of Chartered Accountants of India
(ICAI) or Accounting Standards, notified by the Central Government by publishing the same as the
Companies (Accounting Standards) Rules, 2006, or the Accounting Standards for Local Bodies
issued by the ICAI, as may be applicable.
3 SRE 2410
General Principles of a Review of Interim Financial
Information
4. The auditor should comply with the ethical requirements relevant to
the audit of the annual financial statements of the entity. These ethical
requirements govern the auditor’s professional responsibilities in the following
areas: independence, integrity, objectivity, professional competence and due
care, confidentiality, professional behavior, and technical standards.
5. The auditor should implement quality control procedures that are
applicable to the individual engagement. The elements of quality control that
are relevant to an individual engagement include leadership responsibilities for
quality on the engagement, ethical requirements, acceptance and continuance of
client relationships and specific engagements, assignment of engagement
teams, engagement performance, and monitoring.
6. The auditor should 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. An attitude of professional skepticism means
that the auditor makes a critical assessment, with a questioning mind, of the
validity of evidence obtained and is alert to evidence that contradicts or brings
into question the reliability of documents or representations by management of
the entity.
Objective of an Engagement to Review Interim Financial
Information
7. 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. The auditor makes
inquiries, and performs analytical and other review procedures in order to reduce
to a moderate level the risk of expressing an inappropriate conclusion when the
interim financial information is materially misstated.
8. 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 of interim financial information does not provide a basis for expressing
an opinion whether the financial information gives a true and fair view, or is
SRE 2410 4
presented fairly, in all material respects, in accordance with an applicable
financial reporting framework.
9. 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. 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.
Agreeing the Terms of the Engagement
10. The auditor and the client should agree on the terms of the
engagement.
11. The agreed terms of the engagement are ordinarily recorded in an
engagement letter. Such a communication helps to avoid misunderstandings
regarding the nature of the engagement and, in particular, the objective and
scope of the review, management’s responsibilities, the extent of the auditor’s
responsibilities, the assurance obtained, and the nature and form of the report.
The communication ordinarily covers the following matters:
The objective of a review of interim financial information.
The scope of the review.
Management’s responsibility for the interim financial information.
Management’s responsibility for establishing and maintaining effective
internal control relevant to the preparation of interim financial information.
Management’s responsibility for making all financial records and related
information available to the auditor
Management’s agreement to provide written representations to the auditor
to confirm representations made orally during the review, as well as
representations that are implicit in the entity’s records.
The anticipated form and content of the report to be issued, including the
identity of the addressee of the report.
Management’s agreement that where any document containing interim
financial information indicates that the interim financial information has
been reviewed by the entity’s auditor, the review report will also be included
in the document.
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An illustrative engagement letter is set out in Appendix 1 to this SRE. The terms
of engagement to review interim financial information can also be combined with
the terms of engagement to audit the annual financial statements.
Procedures for a Review of Interim Financial Information
Understanding the Entity and its Environment, Including its Internal
Control
12. 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:
(a) Identify the types of potential material misstatement and consider the
likelihood of their occurrence; and
(b) 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.
13. As required by SA 315, “Identifying and Assessing the Risks of Material
Misstatement Through Understanding the Entity and its Environment,” the auditor
who has audited the entity’s financial statements for one or more annual periods
has obtained an understanding of the entity and its environment, including its
internal control, as it relates to the preparation of annual financial information that
was sufficient to conduct the audit. In planning a review of interim financial
information, the auditor updates this understanding. The auditor also obtains a
sufficient understanding of internal control as it relates to the preparation of
interim financial information as it may differ from internal control as it relates to
annual financial information.
14. The auditor uses the understanding of the entity and its environment,
including its internal control, to determine the inquiries to be made and the
analytical and other review procedures to be applied, and to identify the
particular events, transactions or assertions to which inquiries may be directed or
analytical or other review procedures applied.
15. The procedures performed by the auditor to update the understanding of
the entity and its environment, including its internal control, ordinarily 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(s) of the current year and
corresponding interim period(s) of the prior year, to enable the auditor to
identify matters that may affect the current-period interim financial
information.
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.
Reading the most recent annual and comparable prior period interim
financial information.
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.
Considering the nature of any corrected material misstatements and any
identified uncorrected immaterial misstatements in the prior year’s financial
statements.
Considering significant financial accounting and reporting matters that may
be of continuing significance such as material weaknesses in internal
control.
Considering the results of any audit procedures performed with respect to
the current year’s financial statements.
Considering the results of any internal audit performed and the subsequent
actions taken by management.
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.
Inquiring of management about the effect of changes in the entity’s
business activities.
Inquiring of management about any significant changes in internal control
and the potential effect of any such changes on the preparation of interim
financial information.
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.
7 SRE 2410
16. The auditor determines the nature of the review procedures, if any, to be
performed for components and, where applicable, communicates these matters
to other auditors involved in the review. Factors to be considered include the
materiality of, and risk of misstatement in, the interim financial information of
components, and the auditor’s understanding of the extent to which internal
control over the preparation of such information is centralized or decentralized.
17. In order to plan and conduct a review of interim financial information,
a recently appointed auditor, who has not yet performed an audit of the
annual financial statements in accordance with SAs, should obtain 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.
18. This understanding enables the auditor to focus the inquiries made, and the
analytical and other review procedures applied in performing a review of interim
financial information in accordance with this SRE. As part of obtaining this
understanding, the auditor ordinarily makes inquiries of the predecessor auditor
and, peruses the copies of the audited financial statements including the other
relevant documents relating to the prior period financial statements such as
supporting schedules to the audited financial statements. In doing so, the
auditor considers the nature of any corrected misstatements, and any
uncorrected misstatements aggregated by the predecessor auditor, any
significant risks, including the risk of management override of controls, and
significant accounting and any reporting matters that may be of continuing
significance, such as material weaknesses in internal control.
Inquiries, Analytical and Other Review Procedures
19. The auditor should make inquiries, 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.
20. A review ordinarily does not require tests of the accounting records through
inspection, observation or confirmation. Procedures for performing a review of
interim financial information are ordinarily limited to making inquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical
and other review procedures, rather than corroborating information obtained
concerning significant accounting matters relating to the interim financial
information. The auditor’s understanding of the entity and its environment,
SRE 2410 8
including its internal control, the results of the risk assessments relating to the
preceding audit and the auditor’s consideration of materiality as it relates to the
interim financial information, affects the nature and extent of the inquiries made,
and analytical and other review procedures applied.
21. The auditor ordinarily performs the following procedures:
Reading the minutes of the meetings of shareholders, those charged with
governance, and other appropriate committees to identify matters that may
affect the interim financial information, and inquiring about matters dealt
with at meetings for which minutes are not available that may affect the
interim financial information.
Considering the effect, if any, of matters giving rise to a modification of the
audit or review report, accounting adjustments or unadjusted
misstatements, at the time of the previous audit or reviews.
Communicating, where appropriate, with other auditors who are performing
a review of the interim financial information of the reporting entity’s
significant components.
Inquiring of members of management responsible for financial and
accounting matters, and others as appropriate about the following: VIEW
♦ Whether the interim financial information has been prepared and
presented in accordance with the applicable financial reporting
framework.
♦ Whether there have been any changes in accounting principles or in
the methods of applying them.
♦ Whether any new transactions have necessitated the application of a
new accounting principle.
♦ Whether the interim financial information contains any known
uncorrected misstatements.
♦ 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.
♦ 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.
♦ Whether related party transactions have been appropriately
accounted for and disclosed in the interim financial information.
♦ Significant changes in commitments and contractual obligations.
♦ Significant changes in contingent liabilities including litigation or
claims.
9 SRE 2410
♦ Compliance with debt covenants.
♦ Matters about which questions have arisen in the course of applying
the review procedures.
♦ Significant transactions occurring in the last several days of the
interim period or the first several days of the next interim period.
♦ Knowledge of any fraud or suspected fraud affecting the entity
involving:
Management;
Employees who have significant roles in internal control; or
Others where the fraud could have a material effect on the
interim financial information.
♦ 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.
♦ Knowledge of any actual or possible noncompliance with laws and
regulations that could have a material effect on the interim financial
information.
Applying analytical procedures to the interim financial information designed
to identify relationships and individual items that appear to be unusual and
that may reflect a material misstatement in the interim financial information.
Analytical procedures may include ratio analysis and statistical techniques
such as trend analysis or regression analysis and may be performed
manually or with the use of computer-assisted techniques. Appendix 2 to
this SRE contains examples of analytical procedures the auditor may
consider when performing a review of interim financial information.
Reading the interim financial information, and considering 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.
22. The auditor may perform many of the review procedures before or
simultaneously with the entity’s preparation of the interim financial information.
For example, it may be practicable to update the understanding of the entity and
its environment, including its internal control, and begin reading applicable
minutes before the end of the interim period. Performing some of the review
procedures earlier in the interim period also permits early identification and
consideration of significant accounting matters affecting the interim financial
information.
SRE 2410 10
23. The auditor performing the review of interim financial information is also
engaged to perform an audit of the annual financial statements of the entity. For
convenience and efficiency, the auditor may decide to perform certain audit
procedures concurrently with the review of interim financial information. For
example, information gained from reading the minutes of meetings of the board
of directors in connection with the review of the interim financial information also
may be used for the annual audit. The auditor may also decide to perform, at the
time of the interim review, auditing procedures that would need to be performed
for the purpose of the audit of the annual financial statements, for example,
performing audit procedures on significant or unusual transactions that occurred
during the period, such as business combinations, restructurings, or significant
revenue transactions.
24. A review of interim financial information ordinarily does not require
corroborating the inquiries about litigation or claims. It is, therefore, ordinarily not
necessary to send an inquiry letter to the entity’s lawyer. Direct communication
with the entity’s lawyer with respect to litigation or claims may, however, be
appropriate if a matter comes to the auditor’s attention that causes the auditor to
question whether the interim financial information is not prepared, in all material
respects, in accordance with the applicable financial reporting framework, and
the auditor believes the entity’s lawyer may have pertinent information.
25. The auditor should obtain evidence that the interim financial
information agrees or reconciles with the underlying accounting records.
The auditor may obtain evidence that the interim financial information agrees or
reconciles with the underlying accounting records by tracing the interim financial
information to:
(a) The accounting records, such as the general ledger, or a consolidating
schedule that agrees or reconciles with the accounting records; and
(b) Other supporting data in the entity’s records as necessary.
26. The auditor should 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. It is not necessary for the
auditor to perform other procedures to identify events occurring after the date of
the review report.
27. The auditor should inquire whether management has changed its
assessment of the entity’s ability to continue as a going concern. When, as
a result of this inquiry or other review procedures, the auditor becomes
aware of events or conditions that may cast significant doubt on the
entity’s ability to continue as a going concern, the auditor should:
11 SRE 2410
(a) Inquire of management as to its plans for future actions based on its
going concern assessment, the feasibility of these plans, and whether
management believes that the outcome of these plans will improve
the situation; and
(b) Consider the adequacy of the disclosure about such matters in the
interim financial information.
28. Events or conditions which may cast significant doubt on the entity’s ability
to continue as a going concern may have existed at the date of the annual
financial statements or may be identified as a result of inquiries of management
or in the course of performing other review procedures. When such events or
conditions come to the auditor’s attention, the auditor inquires of management as
to its plans for future action, such as its plans to liquidate assets, borrow money
or restructure debt, reduce or delay expenditures, or increase capital. The auditor
also inquires as to the feasibility of management’s plans and whether
management believes that the outcome of these plans will improve the situation.
However, it is not ordinarily necessary for the auditor to corroborate the feasibility
of management’s plans and whether the outcome of these plans will improve the
situation.
29. 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, the auditor should make
additional inquiries or perform other procedures to enable the auditor to
express a conclusion in the review report. For example, if the auditor’s review
procedures lead the auditor to question whether a significant sales transaction is
recorded in accordance with the applicable financial reporting framework, the
auditor performs additional procedures sufficient to resolve the auditor’s
questions, such as discussing the terms of the transaction with senior marketing
and accounting personnel, or reading the sales contract.
Evaluation of Misstatements
30. The auditor should evaluate, individually and in the aggregate,
whether uncorrected misstatements that have come to the auditor’s
attention are material to the interim financial information.
31. A review of interim financial information, in contrast to an audit
engagement, is not designed to obtain reasonable assurance that the interim
financial information is free from material misstatement. However, misstatements
which come to the auditor’s attention, including inadequate disclosures, are
evaluated individually and in the aggregate to determine whether a material
SRE 2410 12
adjustment is required to be made to the interim financial information for it to be
prepared, in all material respects, in accordance with the applicable financial
reporting framework.
32. The auditor exercises professional judgment in evaluating the materiality of
any misstatements that the entity has not corrected. The auditor considers
matters such as the nature, cause and amount of the misstatements, whether the
misstatements originated in the preceding year or interim period of the current
year, and the potential effect of the misstatements on future interim or annual
periods.
33. The auditor may designate an amount below which misstatements need not
be aggregated, because the auditor expects that the aggregation of such
amounts clearly would not have a material effect on the interim financial
information. In so doing, the auditor considers the fact that the determination of
materiality involves quantitative as well as qualitative considerations, and that
misstatements of a relatively small amount could nevertheless have a material
effect on the interim financial information.
Management Representations
34. The auditor should obtain written representation from management
that:
(a) It acknowledges its responsibility for the design and implementation
of internal control to prevent and detect fraud and error;
(b) The interim financial information is prepared and presented in
accordance with the applicable financial reporting framework;
(c) 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;
(d) 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;
(e) 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 fraud2;
2 Refer SA 240, “The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial
Statements”.
13 SRE 2410
(f) 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
(g) 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.
35. The auditor obtains additional representations as are appropriate related to
matters specific to the entity’s business or industry. An illustrative management
representation letter is set out in Appendix 3 to this SRE.
Auditor’s Responsibility for Accompanying Information
36. The auditor should read the other information that accompanies the
interim financial information to consider whether any such information is
materially inconsistent with the interim financial information. If the auditor
identifies a material inconsistency, the auditor considers whether the interim
financial information or the other information needs to be amended. If an
amendment is necessary in the interim financial information and management
refuses to make the amendment, the auditor considers the implications for the
review report. If an amendment is necessary in the other information and
management refuses to make the amendment, the auditor considers including in
the review report an additional paragraph describing the material inconsistency,
or taking other actions, such as withholding the issuance of the review report or
withdrawing from the engagement. For example, management may present
alternative measures of earnings that more positively portray results of
operations than the interim financial information, and such alternative measures
are given excessive prominence, are not clearly defined, or not clearly reconciled
to the interim financial information such that they are confusing and potentially
misleading.
37. If a matter comes to the auditor’s attention that causes the auditor to
believe that the other information appears to include a material
misstatement of fact, the auditor should discuss the matter with the
entity’s management. While reading the other information for the purpose of
identifying material inconsistencies, an apparent material misstatement of fact
may come to the auditor’s attention (i.e., information, not related to matters
appearing in the interim financial information, that is incorrectly stated or
presented). When discussing the matter with the entity’s management, the
auditor considers the validity of the other information and management’s
responses to the auditor’s inquiries, whether valid differences of judgment or
SRE 2410 14
opinion exist and whether to request management to consult with a qualified third
party to resolve the apparent misstatement of fact. If an amendment is necessary
to correct a material misstatement of fact and management refuses to make the
amendment, the auditor considers taking further action as appropriate, such as
notifying those charged with governance and obtaining legal advice.
Communication
38. When, 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 that it is necessary to make a material adjustment to the
interim financial information for it to be prepared, in all material respects,
in accordance with the applicable financial reporting framework, the
auditor should communicate this matter as soon as practicable to the
appropriate level of management.
39. When, in the auditor’s judgment, management does not respond
appropriately within a reasonable period of time, the auditor should inform
those charged with governance. The communication is made as soon as
practicable, either orally or in writing. The auditor’s decision whether to
communicate orally or in writing is affected by factors such as the nature,
sensitivity and significance of the matter to be communicated and the timing of
such communications. If the information is communicated orally, the auditor
documents the communication.
40. When, in the auditor’s judgment, those charged with governance do
not respond appropriately within a reasonable period of time, the auditor
should consider:
(a) Whether to modify the report; or
(b) The possibility of withdrawing from the engagement; and
(c) The possibility of resigning from the appointment to audit the annual
financial statements.
41. When, 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 the auditor should communicate the matter as
soon as practicable to the appropriate level of management. The
determination of which level of management is the appropriate one is affected by
the likelihood of collusion or the involvement of a member of management. The
auditor also considers the need to report such matters to those charged with
governance and considers the implication for the review.
15 SRE 2410
42. The auditor should communicate relevant matters of governance
interest arising from the review of interim financial information to those
charged with governance. As a result of performing the review of the interim
financial information, the auditor may become aware of matters that in the
opinion of the auditor are both important and relevant to those charged with
governance in overseeing the financial reporting and disclosure process. The
auditor communicates such matters to those charged with governance.
Reporting the Nature, Extent and Results of the Review of
Interim Financial Information
43. The auditor should issue a written report that contains the following:
(a) An appropriate title.
(b) An addressee, as required by the circumstances of the engagement.
(c) 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.
(d) 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.
(e) 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.
(f) A statement that the auditor is responsible for expressing a
conclusion on the interim financial information based on the review.
(g) 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.
(h) A statement that a review is substantially less in scope than an audit
conducted in accordance with Standards on Auditing and
SRE 2410 16
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.
(i) 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 Standards3 applicable in
India).
(j) 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).
(k) The date of the report.
(l) Place of Signature.
(m) The auditor’s signature and membership number assigned by the
Institute of Chartered Accountants of India (ICAI).
(n) The Firm’s registration number of the member of the Institute,
wherever applicable, as allotted by ICAI.
Illustrative review reports are set out in Appendix 4 to this SRE.
44. In some jurisdictions, law or regulation governing the review of interim
financial information may prescribe wording for the auditor’s conclusion that is
different from the wording described in paragraph 43(i) or (j). Although the
auditor may be obliged to use the prescribed wording, the auditor’s
3 Accounting Standards issued by the Institute of Chartered Accountants of India or Accounting
Standards notified by the Central Government as the Companies (Accounting Standards) Rules,
2006, or the Accounting Standards for Local Bodies issued by the Institute of Chartered
Accountants of India, as may be applicable.
17 SRE 2410
responsibilities as described in this SRE for coming to the conclusion remain the
same.
Departure from the Applicable Financial Reporting Framework
45. The auditor should express a qualified or adverse conclusion 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.
46. If matters have come to the auditor’s attention that cause the auditor to
believe that the interim financial information is or may be materially affected by a
departure from the applicable financial reporting framework, and management
does not correct the interim financial information, the auditor modifies the review
report. The modification describes the nature of the departure and, if practicable,
states the effects on the interim financial information. If the information that the
auditor believes is necessary for adequate disclosure is not included in the
interim financial information, the auditor modifies the review report and, if
practicable, includes the necessary information in the review report. The
modification to the review report is ordinarily accomplished by adding an
explanatory paragraph to the review report, and qualifying the conclusion.
Illustrative review reports with a qualified conclusion are set out in Appendix 5 to
this SRE.
47. When the effect of the departure is so material and pervasive to the interim
financial information that the auditor concludes a qualified conclusion is not
adequate to disclose the misleading or incomplete nature of the interim financial
information, the auditor expresses an adverse conclusion. Illustrative review
reports with an adverse conclusion are set out in Appendix 7 to this SRE.
Limitation on Scope
48. A limitation on scope ordinarily prevents the auditor from completing the
review.
49. When the auditor is unable to complete the review, the auditor should
communicate, in writing, to the appropriate level of management and to
those charged with governance the reason why the review cannot be
completed, and consider whether it is appropriate to issue a report.
Limitation on Scope Imposed by Management
50. The auditor does not accept an engagement to review the interim financial
information if the auditor’s preliminary knowledge of the engagement
circumstances indicates that the auditor would be unable to complete the review
SRE 2410 18
because there will be a limitation on the scope of the auditor’s review imposed by
management of the entity.
51. If, after accepting the engagement, management imposes a limitation on
the scope of the review, the auditor requests the removal of that limitation. If
management refuses to do so, the auditor is unable to complete the review and
express a conclusion. In such cases, the auditor communicates, in writing, to the
appropriate level of management and those charged with governance the reason
why the review cannot be completed. Nevertheless, if a matter comes to the
auditor’s attention that causes the auditor to believe that a material adjustment to
the interim financial information is necessary for it to be prepared, in all material
respects, in accordance with the applicable financial reporting framework, the
auditor communicates such matters in accordance with the guidance in
paragraphs 38-40.
52. The auditor also considers the legal and regulatory responsibilities,
including whether there is a requirement for the auditor to issue a report. If there
is such a requirement, the auditor disclaims a conclusion, and provides in the
review report the reason why the review cannot be completed. However, if a
matter comes to the auditor’s attention that causes the auditor to believe that a
material adjustment to the interim financial information is necessary for it to be
prepared, in all material respects, in accordance with the applicable financial
reporting framework, the auditor also communicates such a matter in the report.
Other Limitations on Scope
53. A limitation on scope may occur due to circumstances other than a
limitation on scope imposed by management. In such circumstances, the auditor
is ordinarily unable to complete the review and express a conclusion and is
guided by paragraphs 51-52. There may be, however, some rare circumstances
where the limitation on the scope of the auditor’s work is clearly confined to one
or more specific matters that, while material, are not in the auditor’s judgment
pervasive to the interim financial information. In such circumstances, the auditor
modifies the review report by indicating that, except for the matter which is
described in an explanatory paragraph to the review report, the review was
conducted in accordance with this SRE, and by qualifying the conclusion.
Illustrative review reports with a qualified conclusion are set out in Appendix 6 to
this SRE.
54. The auditor may have expressed a qualified opinion on the audit of the
latest annual financial statements because of a limitation on the scope of that
audit. The auditor considers whether that limitation on scope still exists and, if so,
the implications for the review report.
19 SRE 2410
Going Concern and Significant Uncertainties
55. In certain circumstances, an emphasis of matter paragraph may be added
to a review report, without affecting the auditor’s conclusion, to highlight a matter
that is included in a note to the interim financial information that more extensively
discusses the matter. The paragraph would preferably be included after the
conclusion paragraph and ordinarily refers to the fact that the conclusion is not
qualified in this respect.
56. If 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.
57. The auditor may have modified a prior audit or review report by adding an
emphasis of matter paragraph 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. If the material uncertainty still exists and adequate
disclosure is made in the interim financial information, the auditor modifies the
review report on the current interim financial information by adding a paragraph
to highlight the continued material uncertainty.
58. If, as a result of inquiries or other review procedures, a material uncertainty
relating to an event or condition comes to the auditor’s attention that may cast
significant doubt on the entity’s ability to continue as a going concern, and
adequate disclosure is made in the interim financial information the auditor
modifies the review report by adding an emphasis of matter paragraph.
59. If 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.
60. The auditor should consider modifying the review report by adding a
paragraph to highlight a significant uncertainty (other than a going concern
problem) that came to the auditor’s attention, the resolution of which is
dependent upon future events and which may affect the interim financial
information.
Other Considerations
61. The terms of the engagement include management’s agreement that where
any document containing interim financial information indicates that such
information has been reviewed by the entity’s auditor, the review report will also
be included in the document. If management has not included the review report
SRE 2410 20
in the document, the auditor considers seeking legal advice to assist in
determining the appropriate course of action in the circumstances4.
62. If the auditor has issued a modified review report and management issues
the interim financial information without including the modified review report in
the document containing the interim financial information, the auditor considers
seeking legal advice to assist in determining the appropriate course of action in
the circumstances, and the possibility of resigning from the appointment to audit
the annual financial statements5.
63. Interim financial information consisting of a condensed set of financial
statements does not necessarily include all the information that would be
included in a complete set of financial statements, but may rather present an
explanation of the events and changes that are significant to an understanding of
the changes in the state of affairs and performance of the entity since the annual
reporting date. This is because it is presumed that the users of the interim
financial information will have access to the latest audited financial statements,
such as is the case with listed entities. In other circumstances, the auditor
discusses with management the need for such interim financial information to
include a statement that it is to be read in conjunction with the latest audited
financial statements. In the absence of such a statement, the auditor considers
whether, without a reference to the latest audited financial statements, the
interim financial information is misleading in the circumstances, and the
implications for the review report.
Documentation
64. The auditor should 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
4 The Council of the ICAI, at its 308th meeting held in August 2011, considered an issue relating to
difficulties being faced by the members of the Institute in compliance with paragraphs 61 and 62 of
the SRE 2410 raised by the Auditing and Assurance Standards Board of the Institute. On a
consideration of the matter, the Council was of the opinion that paragraphs 61 and 62 did not
envisage the auditor to take steps to ensure that on every occasion when the review
results were published by the management, it also published the review report therewith.
The responsibility of the auditor was upto issuance of the review report on the results, at
most till the time the interim results, along with the review report, were filed by the company with
the concerned stock exchange. Further, since such filing led to the concerned interim results
and the review report thereon becoming available in the public domain, the same would be
construed as sufficient compliance by the auditor with the requirements of paragraphs 61
and 62 of SRE 2410. The complete text of the Announcement is published in Paragraph ‘C’,
“Announcements/Clarifications” of Section 1, “Announcements of the Council regarding Status of
Various Documents issued by the Institute of Chartered Accountants of India”, included in Volume
I.A of the Handbook.
5 ibid
21 SRE 2410
SRE and applicable legal and regulatory requirements. The documentation
enables an experienced auditor having no previous connection with the
engagement to understand the nature, timing and extent of the inquiries made,
and analytical and other review procedures applied, information obtained, and
any significant matters considered during the performance of the review,
including the disposition of such matters.
Effective Date
65. This SRE is effective for reviews of interim financial information for periods
beginning on or after April 1, 2010.
Material Modifications vis-a-vis ISRE 2410, “Review of
Interim Financial Information Performed by the
Independent Auditor of the Entity”
Additions
Paragraph 43 of ISRE 2410 (Paragraph 43 of SRE 2410) deals with the basic
elements of the written report of an auditor on the Review of Interim Financial
Information, which also includes the location in the country or jurisdiction
where the auditor practices. Since in India, Standard on Auditing (SA)
700(Revised) requires the auditor to mention the “Place of Signature”, i.e.,
name of specific location, which is ordinarily the city where the review report
is signed, in his report, the requirement of mentioning the location in the country
or jurisdiction where the auditor practices has been replaced with the
requirement to mention the place of signature in the auditor’s report.
Deletion
Paragraph 18 of ISRE 2410 (Paragraph 18 of SRE 2410) deals with the
procedures for obtaining the understanding of the entity and its environment for
conducting the review of the interim financial information. These procedures also
include the review of the predecessor auditor’s documentation for the preceding
annual audit, and for any prior interim periods in the current year that have been
reviewed by the predecessor auditor. Since in India, Clause 1 of Part I of the
Second Schedule to the Code of Ethics provides that a Chartered Accountant in
Practice shall be deemed to be guilty of professional misconduct if he discloses
information acquired in the course of his professional engagement to any person
other than his client, an auditor cannot provide access to his working paper to the
another auditor. Therefore, keeping in view the requirements of the Code of
Ethics, the requirement of reviewing the predecessor auditor’s documentation
has been replaced with the requirement of perusing the copies of the audited
financial statements including the other relevant documents relating to the prior
period financial statements.
SRE 2410 22
Appendix 1
Example of an Engagement Letter for a Review of Interim
Financial Information
The following letter is to be used as a guide in conjunction with the consideration
outlined in paragraph 10 of this SRE and will need to be adapted according to
individual requirements and circumstances.
To the Board of Directors of ABC Company Ltd. (or the appropriate
representative of senior management)
We are providing this letter to confirm our understanding of the terms and
objectives of our engagement to review the entity’s interim balance sheet as at
September 30, 20X1 and the related statement of profit & loss and cash flows for
the six-month period then ended.
Our review will be conducted in accordance with Standard on Review
Engagements (SRE) 2410, “Review of Interim Financial Information Performed
by the Independent Auditor of the Entity” issued by the Institute of Chartered
Accountants of India (ICAI) with the objective of providing us with a basis for
reporting whether anything has come to our attention that causes us to believe
that the interim financial information is not prepared, in all material respects, in
accordance with the [indicate applicable financial reporting framework, including
a reference to the relevant jurisdiction of the financial reporting when the financial
reporting framework used is not Financial Reporting Standards6 applicable in
India]. Such a review consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures and does not, ordinarily, require corroboration of the
information obtained. The scope of a review of interim financial information is
substantially less than the scope of an audit conducted in accordance with
Standards on Auditing whose objective is the expression of an opinion regarding
the financial statements and, accordingly, we shall express no such opinion.
We expect to report on the interim financial information as follows:
[Include text of sample report.]
Responsibility for the interim financial information, including adequate disclosure,
is that of management of the entity. This includes designing, implementing and
maintaining internal control relevant to the preparation and presentation of
interim financial information that is free from material misstatement, whether due
to fraud or error; selecting and applying appropriate accounting policies; and
6 See footnote 4.
23 SRE 2410
making accounting estimates that are reasonable in the circumstances. As part
of our review, we will request written representations from management
concerning assertions made in connection with the review. We will also request
that where any document containing interim financial information indicates that
the interim financial information has been reviewed, our report will also be
included in the document.
A review of interim financial information does not provide assurance that we will
become aware of all significant matters that might be identified in an audit.
Further, our engagement cannot be relied upon to disclose whether fraud or
errors, or illegal acts exist. However, we will inform you of any material matters
that come to our attention.
We look forward to full cooperation with your staff and we trust that they will
make available to us whatever records, documentation and other information are
requested in connection with our review.
[Insert additional information here regarding fee arrangements and billings, as
appropriate.]
This letter will be effective for future years unless it is terminated, amended or
superseded (if applicable).
Please sign and return the attached copy of this letter to indicate your
acknowledgement of, and agreement with, the arrangements for our review of
the interim financial information including our respective responsibilities.
XYZ & Co.
Chartered Accountants
Firm’s Registration Number
(Signature)
(Name of the Member)
(Designation7)
Date:
Place:
Acknowledged on behalf of ABC Company by
……………………..
(Signature)
Name and Designation
Date
7 Partner or proprietor, as the case may be.
SRE 2410 24
Appendix 2
Analytical Procedures the Auditor May Consider When
Performing a Review of Interim Financial Information
Examples of analytical procedures the auditor may consider when performing a
review of interim financial information include the following:
Comparing the interim financial information with the interim financial
information of the immediately preceding interim period, with the interim
financial information of the corresponding interim period of the preceding
financial year, with the interim financial information that was expected by
management for the current period, and with the most recent audited
annual financial statements.
Comparing current interim financial information with anticipated results,
such as budgets or forecasts (for example, comparing tax balances and the
relationship between the provision for income taxes to pretax income in the
current interim financial information with corresponding information in (a)
budgets, using expected rates, and (b) financial information for prior
periods).
Comparing current interim financial information with relevant non-financial
information.
Comparing the recorded amounts, or ratios developed from recorded
amounts, to expectations developed by the auditor. The auditor develops
such expectations by identifying and applying relationships that are
reasonably expected to exist based on the auditor’s understanding of the
entity and of the industry in which the entity operates.
Comparing ratios and indicators for the current interim period with those of
entities in the same industry.
Comparing relationships among elements in the current interim financial
information with corresponding relationships in the interim financial
information of prior periods, for example, expense by type as a percentage
of sales, assets by type as a percentage of total assets, and percentage of
change in sales to percentage of change in receivables.
Comparing disaggregated data. The following are examples of how data
may be disaggregated:
♦ By period, for example, revenue or expense items disaggregated into
quarterly, monthly, or weekly amounts.
25 SRE 2410
♦ By product line or source of revenue.
♦ By location, for example, by component.
♦ By attributes of the transaction, for example, revenue generated by
designers, architects, or craftsmen.
♦ By several attributes of the transaction, for example, sales by product
and month.
SRE 2410 26
Appendix 3
Example of a Management Representation Letter
The following letter is not intended to be a standard letter. Representations by
management will vary from entity to entity and from one interim period to the
next.
(Entity Letterhead)
(To Auditor) (Date)
Opening paragraphs if interim financial information comprises condensed
financial statements:
This representation letter is provided in connection with your review of the
condensed balance sheet of ABC Entity as of June 30, 20X1 and the related
condensed statements of profit & loss and cash flows for the three-month period
then ended for the purposes of expressing a conclusion whether anything has
come to your attention that causes you to believe that the interim financial
information is not prepared, in all material respects, in accordance with [indicate
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 Standards8 applicable in India].
We acknowledge our responsibility for the preparation and presentation of the
interim financial information in accordance with [indicate applicable financial
reporting framework].
Opening paragraphs if 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:
This representation letter is provided in connection with your review of the
balance sheet of ABC Entity as of June 30, 20X1 and the related statements of
income, changes in equity and cash flows for the three-month period then ended
and a summary of the significant accounting policies and other explanatory notes
for the purposes of expressing a conclusion whether anything has come to your
attention that causes you to believe that the interim financial information does not
give a true and fair view of (or “does not present fairly, in all material respects,”)
the state of affairs of ABC Entity as at June 30, 20X1, and of its results of
operations and its cash flows in accordance with [indicate applicable financial
reporting framework, including a reference to the relevant jurisdiction of the
8 See footnote 4.
27 SRE 2410
financial reporting framework when the financial reporting framework used is not
Financial Reporting Standards9 applicable in India].
We acknowledge our responsibility for the fair presentation of the interim
financial information in accordance with [indicate applicable financial reporting
framework].
We confirm, to the best of our knowledge and belief, the following
representations:
The interim financial information referred to above has been prepared and
presented in accordance with [indicate applicable financial reporting
framework].
We have made available to you all books of account and supporting
documentation, and all minutes of meetings of shareholders and the board
of directors (namely those held on [insert applicable dates]).
There are no material transactions that have not been properly recorded in
the accounting records underlying the interim financial information.
There has been no known actual or possible noncompliance with laws and
regulations that could have a material effect on the interim financial
information in the event of noncompliance.
We acknowledge responsibility for the design and implementation of
internal control to prevent and detect fraud and error.
We have disclosed to you all significant facts relating to any known frauds
or suspected frauds that may have affected the entity.
We have disclosed to you the results of our assessment of the risk that the
interim financial information may be materially misstated as the result of
fraud.
We believe the effects of uncorrected misstatements summarized in the
accompanying schedule are immaterial, both individually and in the
aggregate, to the interim financial information taken as a whole.
We confirm the completeness of the information provided to you regarding
the identification of related parties.
The following have been properly recorded and, when appropriate,
adequately disclosed in the interim financial information:
9 See footnote 4.
SRE 2410 28
♦ Related party transactions, including sales, purchases, loans,
transfers, leasing arrangements and guarantees, and amounts
receivable from or payable to related parties;
♦ Guarantees, whether written or oral, under which the entity is
contingently liable; and
♦ Agreements and options to buy back assets previously sold.
The presentation and disclosure of the fair value measurements of assets
and liabilities are in accordance with [indicate applicable financial reporting
framework]. The assumptions used reflect our intent and ability to carry
specific courses of action on behalf of the entity, where relevant to the fair
value measurements or disclosure.
We have no plans or intentions that may materially affect the carrying value
or classification of assets and liabilities reflected in the interim financial
information.
We have no plans to abandon lines of product or other plans or intentions
that will result in any excess or obsolete inventory, and no inventory is
stated at an amount in excess of realizable value.
The entity has satisfactory title to all assets and there are no liens or
encumbrances on the entity’s assets.
We have recorded or disclosed, as appropriate, all liabilities, both actual
and contingent.
[Add any additional representations related to new accounting standards
that are being implemented for the first time and consider any additional
representations required by a new Standard on Auditing that are relevant to
interim financial information.]
To the best of our knowledge and belief, no events have occurred subsequent to
the balance sheet date and through the date of this letter that may require
adjustment to or disclosure in the aforementioned interim financial information.
__________________________
(Senior Executive Officer)
__________________________
(Senior Financial Officer)
29 SRE 2410
Appendix 4
Examples of Review Reports on Interim Financial
Information
Complete Set of General Purpose Financial Statements Prepared in
Accordance with a Financial Reporting Framework Designed to
Achieve Fair Presentation (see paragraph 43(i))
Report on Review of Interim Financial Information
(Appropriate addressee)
Introduction
We have reviewed the accompanying balance sheet of ABC Entity as of June 30,
20X1 and the related statements of profit & loss and cash flows for the three-
month period then ended, and a summary of significant accounting policies and
other explanatory notes. Management is responsible for the preparation and fair
presentation of this interim financial information in accordance with [indicate
applicable financial reporting framework]. Our responsibility is to express a
conclusion on this interim financial information based on our review.
Scope of Review
We conducted our review in accordance with Standard on Review Engagements
(SRE) 2410, “Review of Interim Financial Information Performed by the
Independent Auditor of the Entity”10. A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
Standards on Auditing and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the accompanying interim financial information does not give a true and fair
view of (or “does not present fairly, in all material respects,”) the state of affairs of
the entity as at June 30, 20X1, and of its results of operations and its cash flows
10 In the case of a review of historical financial information other than interim financial
information, this sentence should read as follows: “We conducted our review in accordance
with Standard on Review Engagements 2410, which applies to a review of historical
financial information performed by the independent auditor of the entity.” The remainder of the
report should be adapted as necessary in the circumstances.
SRE 2410 30
for the three month period then ended in accordance with [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 Standards11 applicable in India].
For ABC and Co.,
Chartered Accountants
Firm’s Registration Number
Auditor’s Signature
(Name of Member signing the Audit Report)
(Designation12)
Membership Number
Place of Signature
Date
Other Interim Financial Information (see paragraph 43(j))
Report on Review of Interim Financial Information
(Appropriate addressee)
Introduction
We have reviewed the accompanying [condensed] balance sheet of ABC Entity
as of June 30, 20X1 and the related [condensed] statements of profit & loss and
cash flows for the three-month period then ended. Management is responsible
for the preparation and presentation of this interim financial information in
accordance with [indicate applicable financial reporting framework]. Our
responsibility is to express a conclusion on this interim financial information
based on our review.
Scope of Review
We conducted our review in accordance with Standard on Review Engagements
(SRE) 2410, “Review of Interim Financial Information Performed by the
Independent Auditor of the Entity”13. A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial and
11 See footnote 4.
12 Partner or proprietor, as the case may be.
13 In the case of a review of historical financial information other than interim financial
information, this sentence should read as follows: “We conducted our review in accordance
with Standard on Review Engagements 2410, which applies to a review of historical
financial information performed by the independent auditor of the entity.” The remainder of the
report should be adapted as necessary in the circumstances.
31 SRE 2410
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
Standards on Auditing and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the accompanying interim financial information is not prepared, in all material
respects, in accordance with [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 Standards14
applicable in India].
For ABC and Co.,
Chartered Accountants
Firm’s Registration Number
Auditor’s Signature
(Name of Member signing the Audit Report)
(Designation15)
Membership Number
Place of Signature
Date
14 See footnote 4.
15 Partner or proprietor, as the case may be.
SRE 2410 32
Appendix 5
Examples of Review Reports with a Qualified Conclusion
for a Departure from the Applicable Financial Reporting
Framework
Complete Set of General Purpose Financial Statements Prepared in
Accordance with a Financial Reporting Framework Designed to
Achieve Fair Presentation (see paragraph 43(i))
Report on Review of Interim Financial Information
(Appropriate addressee)
Introduction
We have reviewed the accompanying balance sheet of ABC Entity as of June 30,
20X1 and the related statements of profit & loss and cash flows for the three-
month period then ended, and a summary of significant accounting policies and
other explanatory notes. Management is responsible for the preparation and fair
presentation of this interim financial information in accordance with [indicate
applicable financial reporting framework]. Our responsibility is to express a
conclusion on this interim financial information based on our review.
Scope of Review
We conducted our review in accordance with Standard on Review Engagements
(SRE) 2410, “Review of Interim Financial Information Performed by the
Independent Auditor of the Entity”16. A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
Standards on Auditing and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Basis for Qualified Conclusion
Based on information provided to us by management, ABC Entity has excluded
from property and long-term debt certain lease obligations that we believe should
16 In the case of a review of historical financial information other than interim financial
information, this sentence should read as follows: “We conducted our review in accordance
with Standard on Review Engagements 2410, which applies to a review of historical
financial information performed by the independent auditor of the entity.” The remainder of the
report should be adapted as necessary in the circumstances.
33 SRE 2410
be capitalized to conform with [indicate applicable financial reporting framework].
This information indicates that if these lease obligations were capitalized at June
30, 20X1, property would be increased by Rs.______, long-term debt by
Rs.______, and net income and earnings per share would be increased
(decreased) by Rs.________, Rs._________, Rs.________, and Rs.________,
respectively for the three-month period then ended.
Qualified Conclusion
Based on our review, with the exception of the matter described in the preceding
paragraph, nothing has come to our attention that causes us to believe that the
accompanying interim financial information does not give a true and fair view of
(or “does not present fairly, in all material respects,”) the state of affairs of the
entity as at June 30, 20X1, and of its results of operations and its cash flows for
the three month period then ended in accordance with [indicate applicable
financial reporting framework, including the reference to the relevant jurisdiction
of the financial reporting framework when the financial reporting framework used
is not Financial Reporting Standards17 applicable in India].
For ABC and Co.,
Chartered Accountants
Firm’s Registration Number
Auditor’s Signature
(Name of Member signing the Audit Report)
(Designation18)
Membership Number
Place of Signature
Date
17 See footnote 4.
18 Partner or proprietor, as the case may be.
SRE 2410 34
Other Interim Financial Information (see paragraph 43(j))
Report on Review of Interim Financial Information
(Appropriate addressee)
Introduction
We have reviewed the accompanying [condensed] balance sheet of ABC Entity
as of June 30, 20X1 and the related [condensed] statements of profit & loss and
cash flows for the three-month period then ended. Management is responsible
for the preparation and presentation of this interim financial information in
accordance with [indicate applicable financial reporting framework]. Our
responsibility is to express a conclusion on this interim financial information
based on our review.
Scope of Review
We conducted our review in accordance with Standard on Review Engagements
(SRE) 2410, “Review of Interim Financial Information Performed by the
Independent Auditor of the Entity”19. A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
Standards on Auditing and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Basis for Qualified Conclusion
Based on information provided to us by management, ABC Entity has excluded
from property and long-term debt certain lease obligations that we believe should
be capitalized to conform with [indicate applicable financial reporting framework].
This information indicates that if these lease obligations were capitalized at June
30, 20X1, property would be increased by Rs.______, long-term debt by
Rs.______, and net income and earnings per share would be increased
(decreased) by Rs.________, Rs._________, Rs.________, and Rs.________,
respectively for the three-month period then ended.
19 In the case of a review of historical financial information other than interim financial
information, this sentence should read as follows: “We conducted our review in accordance
with Standard on Review Engagements 2410, which applies to a review of historical
financial information performed by the independent auditor of the entity.” The remainder of the
report should be adapted as necessary in the circumstances.
35 SRE 2410
Qualified Conclusion
Based on our review, with the exception of the matter described in the preceding
paragraph, nothing has come to our attention that causes us to believe that the
accompanying interim financial information is not prepared, in all material
respects, in accordance with [indicate 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 Standards20 applicable in India].
For ABC and Co.,
Chartered Accountants
Firm’s Registration Number
Auditor’s Signature
(Name of Member signing the Audit Report)
(Designation21)
Membership Number
Place of Signature
Date
20 See footnote 4.
21 Partner or proprietor, as the case may be.
SRE 2410 36
Appendix 6
Examples of Review Reports with a Qualified Conclusion
for a Limitation on Scope Not Imposed By Management
Complete Set of General Purpose Financial Statements Prepared in
Accordance with a Financial Reporting Framework Designed to
Achieve Fair Presentation (see paragraph 43(i))
Report on Review of Interim Financial Information
(Appropriate addressee)
Introduction
We have reviewed the accompanying balance sheet of ABC Entity as of June 30,
20X1 and the related statements of profit & loss and cash flows for the three-
month period then ended, and a summary of significant accounting policies and
other explanatory notes. Management is responsible for the preparation and fair
presentation of this interim financial information in accordance with [indicate
applicable financial reporting framework]. Our responsibility is to express a
conclusion on this interim financial information based on our review.
Scope of Review
Except as explained in the following paragraph, we conducted our review in
accordance with Standard on Review Engagements (SRE) 2410, “Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity”22. A review of interim financial information consists of making inquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less in
scope than an audit conducted in accordance with Standards on Auditing and
consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Basis for Qualified Conclusion
As a result of a fire in a branch office on (date) that destroyed its accounts
receivable records, we were unable to complete our review of accounts
receivable totaling Rs.________ included in the interim financial information. The
22 In the case of a review of historical financial information other than interim financial
information, this sentence should read as follows: “We conducted our review in accordance
with Standard on Review Engagements 2410, which applies to a review of historical
financial information performed by the independent auditor of the entity.” The remainder of the
report should be adapted as necessary in the circumstances.
37 SRE 2410
entity is in the process of reconstructing these records and is uncertain as to
whether these records will support the amount shown above and the related
allowance for uncollectible accounts. Had we been able to complete our review
of accounts receivable, matters might have come to our attention indicating that
adjustments might be necessary to the interim financial information.
Qualified Conclusion
Except for the adjustments to the interim financial information that we might have
become aware of had it not been for the situation described above, based on our
review, nothing has come to our attention that causes us to believe that the
accompanying interim financial information does not give a true and fair view of
(or “does not present fairly, in all material respects,”) the state of affairs of the
entity as at June 30, 20X1, and of its Results of Operations and its cash flows
for the three-month period then ended in accordance with [indicate 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 Standards23 applicable in India].
For ABC and Co.,
Chartered Accountants
Firm’s Registration Number
Auditor’s Signature
(Name of Member signing the Audit Report)
(Designation24)
Membership Number
Place of Signature
Date
Other Interim Financial Information (see paragraph 43(j))
Report on Review of Interim Financial Information
(Appropriate addressee)
Introduction
We have reviewed the accompanying [condensed] balance sheet of ABC Entity
as of June 30, 20X1 and the related [condensed] statements of profit & loss and
cash flows for the three-month period then ended. Management is responsible
23 See footnote 4.
24 Partner or proprietor, as the case may be.
SRE 2410 38
for the preparation and presentation of this interim financial information in
accordance with [indicate applicable financial reporting framework]. Our
responsibility is to express a conclusion on this interim financial information
based on our review.
Scope of Review
Except as explained in the following paragraph, we conducted our review in
accordance with Standards on Review Engagements (SRE) 2410, “Review of
Interim Financial Information Performed by the Auditor of the Entity”25. A review
of interim financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with Standards on Auditing and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Basis for Qualified Conclusion
As a result of a fire in a branch office on (date) that destroyed its accounts
receivable records, we were unable to complete our review of accounts
receivable totaling Rs.________ included in the interim financial information. The
entity is in the process of reconstructing these records and is uncertain as to
whether these records will support the amount shown above and the related
allowance for uncollectible accounts. Had we been able to complete our review
of accounts receivable, matters might have come to our attention indicating that
adjustments might be necessary to the interim financial information.
Qualified Conclusion
Except for the adjustments to the interim financial information that we might have
become aware of had it not been for the situation described above, based on our
review, nothing has come to our attention that causes us to believe that the
accompanying interim financial information is not prepared, in all material
respects, in accordance with [indicate applicable financial reporting framework,
including a reference to the relevant jurisdiction of the financial reporting
25 In the case of a review of historical financial information other than interim financial
information, this sentence should read as follows: “We conducted our review in accordance
with Standard on Review Engagements 2410, which applies to a review of historical
financial information performed by the independent auditor of the entity.” The remainder of the
report should be adapted as necessary in the circumstances.
39 SRE 2410
framework when the financial reporting framework used is not Financial
Reporting Standards26 applicable in India].
For ABC and Co.,
Chartered Accountants
Firm’s Registration Number
Auditor’s Signature
(Name of Member signing the Audit Report)
(Designation27)
Membership Number
Place of Signature
Date
26 See footnote 4.
27 Partner or proprietor, as the case may be.
SRE 2410 40
Appendix 7
Examples of Review Reports with an Adverse Conclusion
for a Departure from the Applicable Financial Reporting
Framework
Complete Set of General Purpose Financial Statements Prepared in
Accordance with a Financial Reporting Framework Designed to
Achieve Fair Presentation (see paragraph 43(i))
Report on Review of Interim Financial Information
(Appropriate addressee)
Introduction
We have reviewed the accompanying balance sheet of ABC Entity as of June 30,
20X1 and the related statements of profit & loss and cash flows for the three-
month period then ended, and a summary of significant accounting policies and
other explanatory notes. Management is responsible for the preparation and fair
presentation of this interim financial information in accordance with [indicate
applicable financial reporting framework]. Our responsibility is to express a
conclusion on this interim financial information based on our review.
Scope of Review
We conducted our review in accordance with Standard on Review Engagements
(SRE) 2410, “Review of Interim Financial Information Performed by the Auditor of
the Entity”28. A review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and accounting matters,
and applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with Standards on Auditing
and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Basis for Adverse Conclusion
Commencing this period, management of the entity ceased to consolidate the
financial statements of its subsidiary companies since management considers
28 In the case of a review of historical financial information other than interim financial
information, this sentence should read as follows: “We conducted our review in accordance
with Standard on Review Engagements 2410, which applies to a review of historical
financial information performed by the independent auditor of the entity.” The remainder of the
report should be adapted as necessary in the circumstances.
41 SRE 2410
consolidation to be inappropriate because of the existence of new substantial
non-controlling interests. This is not in accordance with [indicate 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 Standards29 applicable in India]. Had consolidated
financial statements been prepared, virtually every account in the interim
financial information would have been materially different.
Adverse Conclusion
Our review indicates that, because the entity’s investment in subsidiary
companies is not accounted for on a consolidated basis, as described in the
preceding paragraph, this interim financial information does not give a true and
fair view of (or “does not present fairly, in all material respects,”) the state of
affairs of the entity as at June 30, 20X1, and of its results of operations and its
cash flows for the three-month period then ended in accordance with [indicate
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 Standards30 applicable in India].
For ABC and Co.,
Chartered Accountants
Firm’s Registration Number
Auditor’s Signature
(Name of Member signing the Audit Report)
(Designation31)
Membership Number
Place of Signature
Date
Other Interim Financial Information (see paragraph 43(j))
Report on Review of Interim Financial Information
(Appropriate addressee)
Introduction
We have reviewed the accompanying [condensed] balance sheet of ABC Entity
as of June 30, 20X1 and the related [condensed] statements of profit & loss and
29 See footnote 4.
30 See footnote 4.
31 Partner or proprietor, as the case may be.
SRE 2410 42
cash flows for the three-month period then ended. Management is responsible
for the preparation and presentation of this interim financial information in
accordance with [indicate applicable financial reporting framework]. Our
responsibility is to express a conclusion on this interim financial information
based on our review.
Scope of Review
We conducted our review in accordance with Standard on Review Engagements
(SRE) 2410, “Review of Interim Financial Information Performed by the
Independence Auditor of the Entity”32. A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
Standards on Auditing and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Basis for Adverse Conclusion
Commencing this period, management of the entity ceased to consolidate the
financial statements of its subsidiary companies since management considers
consolidation to be inappropriate because of the existence of new substantial
non-controlling interests. This is not in accordance with [indicate applicable
financial reporting framework, including the reference to the relevant jurisdiction
of the financial reporting framework when the financial reporting framework used
is not Financial Reporting Standards33 applicable in India]. Had consolidated
financial statements been prepared, virtually every account in the interim
financial information would have been materially different.
Adverse Conclusion
Our review indicates that, because the entity’s investment in subsidiary
companies is not accounted for on a consolidated basis, as described in the
preceding paragraph, this interim financial information is not prepared, in all
material respects, in accordance with [indicate applicable financial reporting
framework, including a reference to the jurisdiction of the financial reporting
32 In the case of a review of historical financial information other than interim financial
information, this sentence should read as follows: “We conducted our review in accordance
with Standard on Review Engagements 2410, which applies to a review of historical
financial information performed by the independent auditor of the entity.” The remainder of the
report should be adapted as necessary in the circumstances.
33 See footnote 4.
43 SRE 2410
framework when the financial reporting framework used is not Financial
Reporting Standards34 applicable in India].
For ABC and Co.,
Chartered Accountants
Firm’s Registration Number
Auditor’s Signature
(Name of Member signing the Audit Report)
(Designation35)
Membership Number
Place of Signature
Date
34 See footnote 4.
35 Partner or proprietor, as the case may be.
SRE 2410 44