AFM202 Lecture Notes - Lecture 12: Financial Statement, Bookkeeping, Internal Control
4 Jun 2018
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Department
Course
Professor
Lecture 12
• Review = done by smaller accounting firms
o Smaller firms that need something from the bank
• But don’t want to spend the money
General standard for review engagements Sec 8100
• Adequate technical training
o Know what you are doing when doing review
• Due care
o Everything we do is professional
• Objective state of mind
o We must be independent
o Adhere to independence rules
Review standards (Sec 8100)
• Knowledge of the business
o Review --> rely on discussion with clients
o Able to assess what they are telling us is reasonable or not
• Plausible
o Worthy of believe
• In a review
o We give negative assurance
o "we do not see anything wrong" --> therefore assume everything is right
• We don’t have to vouch to get cooperative evidence
• Only inquiry analysis and discussion
o No confirmation, vouching
• Looking at changes in margin, turnover ratios
• Ask client why you are seeing what you are seeing
o Discuss with client
• Plausible compared to …. (framework of appropriate criteria)
o IFRS / ASPE / some sort of GAAP
Review and compilation services
• F/S --> some assurance
o For clients that do not require an audit
• Review engagements
o Done for other reasons
• Compilation
o No assurance
Engagement letter
• Write to client
• Prepared at the beginning
• Client sends it back
• Contract between client and us
• List out our duties, our responsibilities
• You don't want client to think you are doing more than what you are doing
o Think you are doing audit when you are not
find more resources at oneclass.com
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Document Summary
Lecture 12: review = done by smaller accounting firms, smaller firms that need something from the bank, but don"t want to spend the money. General standard for review engagements sec 8100: adequate technical training, know what you are doing when doing review, due care, everything we do is professional, objective state of mind, we must be independent, adhere to independence rules. Review standards (sec 8100: knowledge of the business, review --> rely on discussion with clients, able to assess what they are telling us is reasonable or not, plausible, worthy of believe. In a review: we give negative assurance. Ifrs / aspe / some sort of gaap. Review and compilation services: f/s --> some assurance, for clients that do not require an audit, review engagements, done for other reasons, compilation, no assurance. Compilation engagement: bookkeeping services, lead to the completion of financial statements, no assurance provided.
