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Independent Review - Coggle Diagram

- - - - They offer relatively high levels of assurance and comfort to users of financial statements.
      - The audit report expresses a positive opinion on the fair representation of financial statements.
      - Audits provide reasonable assurance, aiming to reduce audit risk to low levels.
    - - Reviews are limited assurance engagements, designed to reduce engagement risk to an acceptable level.
      - The assurance provided by reviews is lower than that of audits.
      - The review report expresses a negative opinion, stating that nothing came to the reviewer's attention suggesting misrepresentation in the financial statements.
- - - - Chartered Accountant (SA) (same as category one).
      - Person qualified to be appointed as an accounting officer under section 60(1), (2), or (4) of Closed Corporation Act 69 of 1984.
      - Registered Auditor (same as category one).
    - - Registered Auditor (registered with IRBA and eligible for statutory audits).
      - Chartered Accountant (SA) from a professional body accredited under Auditing Profession Act 26 of 2005 (e.g., SAICA).
  - - - SAIPA is constitutionally obligated to prevent its members from accepting duties they are not competent to perform.
  - - - Non-audited companies must undergo voluntary audit or independent review.
      - Exception: Owner-managed companies where shareholders/owners are all directors are not required to have external opinions on their financial statements.
- - - - Notify the regulatory board (CIPC)
      - Advise the company's board of directors
      - Discuss the irregularity with the company's board members
      - Send a second report to the regulatory board (CIPC)
  - - - Are fraudulent or involve theft
      - Lead to the company trading under insolvent conditions
      - Cause or are likely to cause material financial loss to the company, members, shareholders, creditors, or investors
- - - - Evaluating subsequent events.
      - Assessing uncorrected misstatements.
      - Considering the going concern principle.
    - - Understanding the entity to identify and assess risks of material misstatement.
        
        In a review, less emphasis is placed on the need to understand internal control components.
        
        No reference to formal risk assessment is required.
        
        The entity should be understood, including:
        
        The nature of the entity itself.
        
        The entity’s accounting systems and accounting records.
        
        The industry, regulatory, and other external factors affecting the entity.
        
        The entity’s selection and application of accounting policies.
        
        Sufficient understanding of the entity should be obtained to identify areas within the financial statements that may contain material misstatements.
        
        The practitioner should obtain an understanding of the entity and its environment to identify areas in the financial statements where material misstatements are likely to arise and provide a basis for designing review procedures to address these areas.
      - Designing responses to reduce identified risks to acceptable levels.
        
        In an independent review, the practitioner typically designs and performs inquiry and analytical procedures only to obtain sufficient evidence.
        
        Available responses to address identified risks are limited, given that the review provides limited assurance. Extensive procedures are unnecessary to support the conclusions reached.
        
        Consideration should be given to the adequacy of data from the entity’s accounting system when designing analytical procedures (Para 49 of the ISRE).
      - Setting planning materiality guidelines.
        
        The practitioner determines materiality for the financial statements as a whole (Para 43 of the ISRE).
        
        Detailed guidance on determining materiality, as provided by ISA 320 for the audit process, is not available in the ISRE.
        
        Practitioners should consider revising materiality if new information comes to light during the course of the review (Para 44 of the ISRE).
    - - Confirm the team has appropriate expertise in financial reporting.
      - Agree on the terms of the review engagement and document them in an engagement letter.
      - Ensure the engagement team possesses the necessary competence, capabilities, and assurance skills as per ISRE 2400 (Revised).
      - Follow appropriate procedures for client relationship and engagement acceptance and continuance.