In order for on to access the credibility of annual financial Statements and accounting records they may need assurance from external parties. Even though one cannot obtain absolute assurance that one can obtain limited assurance through an independent review or reasonable assurance through an external audit. 

My focus in this section is an independent review within the South African jurisdiction. Due to the nature of external audits and the cost of getting an audit done, most Small Business Corporations could not afford to have audit conducted, which resulted in the implementation of Independent reviews which are regulated by IRSE2400 (Revised) having applied quality control procedures as outlined by ISQC1.

Independent reviews are not applicable to all entities as specific requirements are to be meet before an independent review which are mainly governed by the public interest score which is calculated as outlined in IRSE2400 (Revised). For a company's Financial Statements which are prepared by a related party the Public Interest Score must not exceed 100 basis points and the prepared by and external non related party the Public Interest score can go up to 350 points. For any other entity whose basis points are in excess of the above stated figures must be audited by a registered auditor. Another requirement is that an entity whose public interest score is above 500 basis points must appoint an ethics committee as it is deemed that the entity is accountable to the society at large.

In addition to control procedures as outlined in ISQC1, the professional accountant performing a review engagement must exercise professional skepticism. This means that the professional must always keep an eye out for unusual items when performing the independent review.


Most of the independent review work entails perming analytical review and inquiry of management and those in governance position of the entity.

Once the practitioner has completed an independent review, they must issue a limited assurance report which can come in three forms;

• Unmodified Independent Review (No anomalies found during the review)
• Modified Opinion (Once anomalies were found)

A modified opinion should also be issued even if no anomalies were found during the review process if the entities going concern assumption is in question with emphasis on the going concern problems.

There are other non assurance engagements that a practitioner can perform like compilation of Financial Statements for an entity.


 

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Reading this article helped me to see the difference between review and compilation. It also met my expectations by laying out the procedures to be followed.
The knowledge acquired will be used within the organisation if the need arises.