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I don’t understand the sentence.. ” your firm is due to complete the interim review shortly and the management team of cheetah Co has requested that the interim review is completely quickly ” my question is 1) what does mean by interim review? As I know that review is done at the completion of audit work and that done by another person.
From This statement arise self review threat.
Please clear me self review threat based on this statement
The review of interim financial information (interim accounts/financial statements) is a review engagement – not an audit (syllabus area F2). The relevant examinable document is ISRE 2410. A general principle of such a review is that the auditor should comply with the ethical requirements relevant to the audit of the annual financial statements. If the auditor carries out reviews of interim accounts and then audits the final accounts there must be some element of self-review threat. However, the obvious safeguard is that the review and the audit should be performed by different engagement teams – which is the situation we have here.
I think the answer is suggesting that the client is asking the audit team to review the interim review (perhaps to speed it up?) – which would cross the “chinese wall” between the two engagement teams and so negate the safeguard (see last para of the answer). But if that is the case, it is not clear, and I am sure if a candidate’s answer recognised what I said above, that full credit would be given. I think the real threat in this scenario is the intimidation threat.
If you look at the marking scheme you will see that there were more marks available than the maximum of 8 – so you should not worry if there are some points which you don’t indentify.