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Interim Review Threats

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › Interim Review Threats

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by Kim Smith.
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  • June 25, 2020 at 6:14 am #574648
    salman7
    Participant
    • Topics: 77
    • Replies: 36
    • ☆☆

    Hi sir,

    There is a question in past papers “Leopard & Co – Sep 2017 Question 3b”, where there is a review of interim financial information in a short time frame with the report being relied on by the bank providing the finance for the acquisition. Client is putting pressure to finish review sooner than originally agreed with client – not to delay loan application.

    In suggested answer, it is written as:
    “It may be perceived externally that the purpose of reviewing the progress of the interim review is to ensure that any output from this does not impact the attempt by Cheetah Co (CLIENT) to secure the loan finance. Leopard & Co(AUDIT FIRM) should communicate with the directors of Cheetah Co explaining that the firm is unable to be involved in the interim review or to review any of the working papers.”

    My questions are:
    1) Normally the firms provide the interim review and annual audit, so I think there should not be a problem providing the interim review.
    2) I could not get “reviewing the progress of the interim review”. Who reviews the progress of interim review? I am not sure about the process of interim review.
    3) Is there any restriction for interim review by audit firms in case of listed and non-listed clients as I could not get anything in Code of Ethics?

    Thanks,

    June 25, 2020 at 7:40 am #574649
    Kim Smith
    Keymaster
    • Topics: 134
    • Replies: 8304
    • ☆☆☆☆☆

    You are not alone in querying this scenario https://opentuition.com/topic/leopard-co/ which, as you say, is not one that is described by the Code.

    1) You are quite right – in fact ISRE 2410 is called “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”.
    The comment “the firm is unable to be involved in the interim review” is confusing because the last sentence is to communicate with the “interim review engagement partner”. I think what it should be saying is that the audit engagement cannot interfere with the review engagement.
    2) This is “made up” by the examining team – it is not a general thing – just that in the circumstances of this scenario pressure is being put on the auditor to speed up the interim review process.
    3) IAS 34 applies only to listed entities and will usually be carried out by the auditor

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