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I read with interest that auditors may also be engaged in limited review audits (ie. auditing quarterly financial reporting) whereby the scope of audit in a limited review is smaller than that of a financial statement audit.
As per “ISRE2400 (Revised) – Engagements to Review Historical Financial Statements”, audit procedures for limited reviews would include making management inquiries and analytical procedures.
However, I’m curious as to whether substantive procedures such as substantive analytical procedures and test of details are still required to be performed for limited review? If these are not done, how do auditors address that audit risk can be reduced to a sufficiently low level?
Thanks for your feedback. 🙂
Well, your quote doem ISRE2400 states that analytical procedures are performed in review assignments (analytical procedures are always classes as substantive tests).
Almost certainly, tests of detail would not be performed.
A review engagement is much less stringent than an audit. Paragraph 9 of ISRE2400 states:
“A review engagement provides a moderate level of assurance that the
information subject to review is free of material misstatement, this is expressed
in the form of negative assurance.”A negative assurance means that the ‘audit risk’, presumably better called the ‘review risk’, is much less significant.
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