The auditor who is engaged to perform a review of a financial report shall perform the review in accordance with this Auditing Standard.  (Ref: Para. A4)

Where in rare and exceptional circumstances, factors outside the auditor’s control prevent the auditor from complying with an essential procedure contained within a relevant requirement in this Auditing Standard, the auditor shall:

1. if possible, perform appropriate alternative procedures; and
2. document in the working papers:
   1. the circumstances surrounding the inability to comply;
   2. the reasons for the inability to comply; and
   3. justification of how alternative procedures achieve the objectives of the requirement.

When the auditor is unable to perform appropriate alternative procedures, the auditor shall consider the implications for the auditor’s review report.

The auditor shall comply with relevant ethical requirements relating to the audit of the annual financial report of the entity.  (Ref: Para. A5)

The auditor shall implement quality control procedures that are applicable to the individual engagement.  (Ref: Para. A6)

The auditor shall plan and perform the review by exercising professional judgement and with an attitude of professional scepticism, recognising that circumstances may exist that cause the financial report to require a material adjustment for it to be prepared, in all material respects, in accordance with the applicable financial reporting framework.  (Ref: Para. A7)

(Ref: Para. A8, A58 and A60)

Preconditions for a Review

The auditor shall, prior to agreeing the terms of the engagement, determine whether the financial reporting framework is acceptable and obtain agreement from management and, where appropriate, those charged with governance, that it acknowledges and understands its responsibility:

1. for the preparation of the financial report including, where relevant their fair presentation;
2. for such internal controls as management and, where appropriate, those charged with governance, deems necessary to enable the preparation of the financial report that is free from material misstatement; and
3. to provide the auditor with:
   1. access to information relevant to the preparation of the financial report;
   2. additional information that the auditor may request for the purposes of the review engagement; and
   3. unrestricted access to persons from whom the auditor determines it necessary to obtain evidence.

Agreement on Review Engagement Terms

The auditor shall agree the terms of the engagement with the entity, which shall be recorded in writing by the auditor and forwarded to the entity.  When the review engagement is undertaken pursuant to legislation, the minimum applicable terms are those contained in the legislation. 

The auditor shall obtain an understanding of the entity and its environment, including its internal control, as it relates to the preparation of both the annual and interim or other financial reports, sufficient to plan and conduct the engagement so as to be able to:

1. identify the types of potential material misstatements and consider the likelihood of their occurrence; and
2. select the enquiries, analytical and other review procedures that will provide the auditor with a basis for reporting whether anything has come to the auditor’s attention that causes the auditor to believe that the financial report is not prepared, in all material respects, in accordance with the applicable financial reporting framework. (Ref: Para. A9-A12)

In order to plan and conduct a review of a financial report, a recently appointed auditor, who has not yet performed an audit of the annual financial report in accordance with Australian Auditing Standards, shall obtain an understanding of the entity and its environment, including its internal control, as it relates to the preparation of both the annual and interim or other financial reports.  (Ref: Para. A13)

(Ref: Para. A14-A18)

The auditor shall consider materiality, using professional judgement, when:

1. determining the nature, timing and extent of review procedures; and
2. evaluating the effect of misstatements.

The auditor shall make enquiries, primarily of persons responsible for financial and accounting matters, and perform analytical and other review procedures to enable the auditor to conclude whether, on the basis of the procedures performed, anything has come to the auditor’s attention that causes the auditor to believe that the financial report is not prepared, in all material respects, in accordance with the applicable financial reporting framework.  (Ref: Para. A19‑A23)

The auditor shall obtain evidence that the financial report agrees or reconciles with the underlying accounting records.  (Ref: Para. A24)

The auditor shall enquire whether management has identified all events up to the date of the auditor’s review report that may require adjustment to or disclosure in the financial report.  (Ref: Para. A25)

The auditor shall enquire whether those charged with governance have changed their assessment of the entity’s ability to continue as a going concern. When, as the result of this enquiry or other review procedures, the auditor becomes aware of events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern, the auditor shall:

1. enquire of those charged with governance as to their plans for future actions based on their going concern assessment, the feasibility of these plans, and whether they believe that the outcome of these plans will improve the situation; and
2. consider the adequacy of the disclosure about such matters in the financial report. (Ref: Para. A26)

The auditor shall enquire of management and, where appropriate, those charged with governance, as to the existence of any actual or suspected non-compliance with provisions of laws and regulations that are generally recognised to have a direct effect on the determination of material amounts and disclosures in the financial report. (Ref: Para. A20)

When a matter comes to the auditor’s attention that leads the auditor to question whether a material adjustment should be made for the financial report to be prepared, in all material respects, in accordance with the applicable financial reporting framework, the auditor shall make additional enquiries or perform other procedures to enable the auditor to express a conclusion in the auditor’s review report.  (Ref: Para. A27)

(Ref: Para. A28-A31)

When comparative information is included for the first time in a financial report, an auditor shall perform similar procedures on the comparative information as applied to the current period financial report. 

(Ref: Para. A32-A34)

The auditor shall evaluate, individually and in the aggregate, whether uncorrected misstatements that have come to the auditor’s attention are material to the financial report. 

The auditor shall endeavour to obtain written representations from management and, where appropriate, those charged with governance, that:

1. They acknowledge their responsibility for the design and implementation of internal control to prevent and detect fraud and error;
2. The financial report is prepared and presented in accordance with the applicable financial reporting framework;
3. They believe the effect of those uncorrected misstatements aggregated by the auditor during the review are immaterial, both individually and in the aggregate, to the financial report taken as a whole. A summary of such items is included in or attached to the written representations;
4. They have disclosed to the auditor all significant facts relating to any frauds or suspected frauds known to them that may have affected the entity;
5. They have disclosed to the auditor the results of their assessment of the risk that the financial report may be materially misstated as a result of fraud;
6. They have disclosed to the auditor all known actual or suspected non-compliance with laws and regulations, the effects of which are to be considered when preparing the financial report; and
7. They have disclosed to the auditor all significant events that have occurred subsequent to the balance sheet date and through to the date of the auditor’s review report that may require adjustment to or disclosure in the financial report. (Ref: Para. A35)

If management and, where appropriate, those charged with governance refuse to provide a written representation that the auditor considers necessary, this constitutes a limitation on the scope of the auditor’s work and the auditor shall express a qualified conclusion or a disclaimer of conclusion, as appropriate.

The auditor shall read the other information that accompanies the financial report to consider whether there is a material inconsistency with the financial report.  (Ref: Para. A36)

If a matter comes to the auditor’s attention that causes the auditor to believe that the other information appears to include a material misstatement of fact, the auditor shall discuss the matter with the entity’s management, and where appropriate, those charged with governance.  (Ref: Para. A38)

When, as a result of performing a review of a financial report, a matter comes to the auditor’s attention that causes the auditor to believe that it is necessary to make a material adjustment to the financial report for it to be prepared, in all material respects, in accordance with the applicable financial reporting framework, the auditor shall communicate this matter as soon as practicable to the appropriate level of management.

When, in the auditor’s judgement, management does not respond appropriately within a reasonable period of time, the auditor shall inform those charged with governance.  (Ref: Para. A39)

When, in the auditor’s judgement, those charged with governance do not respond appropriately within a reasonable period of time, the auditor shall consider:

1. Whether to modify the auditor’s review report; or
2. The possibility of withdrawing from the engagement; and
3. The possibility of resigning from the appointment to audit the annual financial report. (Ref: Para. A37 and A62)

When, as a result of performing the review of a financial report, a matter comes to the auditor’s attention that indicates the existence of fraud or non-compliance with laws and regulations, or suspected fraud or non-compliance with laws and regulations, the auditor shall:

1. Communicate the matter unless prohibited by law or regulation, as soon as practicable to management and where appropriate those charged with governance;
2. Request management’s assessment of the effect (s) on the financial report;
3. Consider the effect on the auditor’s conclusion and the auditor’s review report; and
4. Determine whether law, regulation or relevant ethical requirements:
   1. require the auditor to report to an appropriate authority outside the entity;
   2. establish responsibilities under which reporting to an appropriate authority outside the entity may be appropriate in the circumstances. (Ref: Para. A39 – A41)

The auditor shall communicate relevant matters of governance interest arising from the review of the financial report to those charged with governance.  (Ref: Para. A42 and A63)

The auditor shall issue a written report that contains the following:

1. An appropriate title clearly identifying it as a review report of the independent auditor of the entity.
2. An addressee, as required by the circumstances of the engagement.

The first section of the auditor’s review report shall include the auditor’s conclusion, and shall have the heading “Conclusion”. The Conclusion section of the auditor’s review report shall:

1. Identify the entity whose financial report has been reviewed;
2. State that the financial report has been reviewed;
3. Identify the title of each statement comprising the financial report;
4. Refer to the notes, including a summary of significant accounting policies and other explanatory notes^[2];
5. Specify the date or, or the period covered by, each statement comprising the financial report; and
6. Include a conclusion:
   1. When expressing an unmodified conclusion on a half-year financial report prepared in accordance with the Corporations Act 2001, the report shall include a conclusion as to whether the auditor has become aware of any matter that makes the auditor believe that the half-year financial report does not comply with the Corporations Act 2001, including giving a true and fair view of the financial position and its performance, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulation 2001^[3] .
   2. When expressing an unmodified conclusion on a financial report prepared in accordance with a fair presentation framework, the report shall include a conclusion as to whether anything has come to the auditor’s attention that causes the auditor to believe that the financial report does not present fairly, in all material respects, or if applicable is not true and fair, in accordance with the applicable financial reporting framework (including a reference to the jurisdiction or country of origin of the financial reporting framework when Australia is not the origin of the financial reporting framework used).
   3. When expressing an unmodified conclusion on a financial report prepared in accordance with a compliance framework, the report shall include a conclusion as to whether anything has come to the auditor’s attention that causes the auditor to believe that the financial report has not been prepared, in all material respects, in accordance with the applicable financial reporting framework (including a reference to the jurisdiction or country of origin of the financial reporting framework when Australia is not the origin of the financial reporting framework used). (Ref A43 and A44)

The report shall include a section directly following the Conclusion section, with the heading “Basis for Conclusion”, that:

1. States that the review of the financial report was conducted in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity;
2. Refers to the section of the auditor’s review report that describes the auditor’s responsibilities; and
3. Includes a statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit of the annual financial report, and has fulfilled the auditor’s other ethical responsibilities in accordance with these requirements. The statement shall identify the relevant ethical requirements applicable within Australia.

The auditor’s report shall include a section with a heading “Responsibilities of Management for the Financial Report”. The auditor’s review report shall use the term that is appropriate in the context of the legal framework in the particular jurisdiction and need not refer specifically to “management”. In some jurisdictions the appropriate reference may be to those charged with governance. This section of the report shall describe the responsibilities of management for the preparation of the financial report in accordance with the applicable financial reporting framework, and for such internal control as management determines is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error.

When the financial report is prepared in accordance with a fair presentation framework, the description of responsibilities of management for the financial report in the auditor’s review report shall refer to “the preparation and fair presentation of this financial report” or “the preparation of the financial report that gives a true and fair view”, as appropriate in the circumstances.

The report shall include a section with a heading “Auditor’s Responsibilities for the Review of the Financial Report”. This section of the report shall:

1. State that the auditor is responsible for expressing a conclusion on the financial report based on the review;
2. State that a review consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures; and
3. State that a review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable the auditor to obtain assurance that the auditor would become aware of all significant matters that might be identified in an audit, and that accordingly no audit opinion is expressed;

The report shall include:

1. The date the auditor signs the auditor’s review report;
2. The location in the country or jurisdiction where the auditor practices;
3. The name of the engagement partner where required by law or regulation^[4] ; and
4. The auditor’s signature.

The auditor shall express a qualified or adverse conclusion when a matter has come to the auditor’s attention that causes the auditor to believe that a material adjustment should be made to the financial report for it to be prepared, in all material respects, in accordance with the applicable financial reporting framework.  The auditor shall amend the heading “Basis for Conclusion” to “Basis for Qualified Conclusion” or “Basis for Adverse Conclusion” and describe the nature of the departure and, if practicable, state the effects on the financial report.  If the effects or possible effects are incapable of being measured reliably, a statement to that effect and the reasons therefore shall be included in the Basis for Qualified Conclusion or Basis for Adverse Conclusion section of the report. The conclusion paragraph shall be headed “Qualified Conclusion” or “Adverse Conclusion” whichever is relevant.  (Ref: Para. A45)

When the effect of the departure is so material and pervasive to the financial report that the auditor concludes a qualified conclusion is not adequate to disclose the misleading or incomplete nature of the financial report, the auditor shall express an adverse conclusion.  (Ref: Para. A46)

(Ref: Para. A47)

When the auditor is unable to complete the review, the auditor shall communicate, in writing, to the appropriate level of management and to those charged with governance the reason why the review cannot be completed, and consider whether it is appropriate to issue a review report.

Unless required by law or regulation, an auditor shall not accept an engagement to review a financial report when management has imposed a limitation on the scope of the auditor’s review.  (Ref: Para. A48)

If, after accepting the engagement, management imposes a limitation on the scope of the review, the auditor shall request management to remove the limitation.  If management refuses the auditor’s request to remove the limitation, the auditor shall communicate, in writing, to the appropriate level of management and those charged with governance, the reason(s) why the review cannot be completed.  (Ref: Para. A49)

If management and, where appropriate, those charged with governance, refuses the auditor’s request to remove a limitation that has been imposed on the scope of the review, but there is a legal or regulatory requirement for the auditor to issue a report, the auditor shall issue a disclaimer of conclusion or qualified conclusion report, as appropriate, containing the reason(s) why the review cannot be completed.  (Ref: Para A50)

When the auditor disclaims a conclusion on the financial report, the auditor shall not include the elements required by paragraph 35(b).

When the auditor disclaims a conclusion on the financial report, the auditor shall amend the description of the auditor’s responsibilities required by paragraph 38 to include only:

1. A statement that the auditor’s responsibility is to conduct a review of the entity’s financial report in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity;
2. A statement that, however, because of the matter(s) described in the Basis for Disclaimer of Conclusion section, the auditor was not able to obtain sufficient evidence to provide a basis for a review conclusion on the financial report.
3. The statement about auditor independence and other ethical responsibilities required by paragraph 35(c).

(Ref: Para. A51-A52)

The auditor shall express a qualified conclusion when, in rare circumstances, there is a limitation on the scope of the auditor’s work that is confined to one or more specific matters, which while material, is not in the auditor’s judgement pervasive to the financial report, and when the auditor concludes that an unqualified conclusion cannot be expressed.  A qualified conclusion shall be expressed as being “except for” the effects of the matter to which the qualification relates.  The conclusion paragraph shall be headed “Qualified Conclusion”.

(Ref: Para. A53-A54)

Use of going concern basis of accounting is appropriate

If adequate disclosure about the material uncertainty is made in the financial report, the auditor shall express an unmodified review conclusion and the auditor’s review report shall include a separate section under the heading “Material Uncertainty Related to Going Concern” to highlight a material uncertainty relating to an event or condition that casts significant doubt on the entity’s ability to continue as a going concern. This section shall:

1. Draw attention to the note in the financial report that discloses the matter;
2. State that the events or conditions indicate that a material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern and that the auditor’s conclusion is not modified in respect of the matter.

If a material uncertainty that casts significant doubt on the entity’s ability to continue as a going concern is not adequately disclosed in the financial report, the auditor shall:

1. Express a qualified or adverse conclusion, as appropriate; and
2. In the Basis for Qualified or Adverse Conclusion section of the auditor’s review report, state that a material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern and that the financial report does not adequately disclose this matter.

Use of going concern basis of accounting is inappropriate

If the financial report has been prepared using the going concern basis of accounting but, in the auditor’s judgement, management’s use of the going concern basis of accounting in the preparation of the financial report is inappropriate, the auditor shall express an adverse conclusion.

(Ref: A56 and A57)

The auditor shall consider including an Emphasis of Matter paragraph in the auditor’s review report to draw users’ attention to a matter presented or disclosed in the financial report that, in the auditor’s judgement, is of such importance that it is fundamental to users’ understanding of the financial report. 

When the auditor includes an Emphasis of Matter paragraph in the auditor’s review report the auditor shall:

1. Include the paragraph within a separate section of the auditor’s review report with an appropriate heading that includes the term “Emphasis of Matter”;
2. Include a clear reference to the matter being emphasised and to where relevant disclosures that fully describe the matter can be found in the financial report. The paragraph shall refer only to information presented or disclosed in the financial report; and
3. Indicate that the auditor’s review conclusion is not modified in respect of the matter emphasised.

The auditor shall consider including an Other Matter paragraph in the auditor’s review report to communicate a matter other than those that are presented or disclosed in the financial report, that in the auditor’s judgement is relevant to users’ understanding of the review, the auditor’s responsibilities, or the auditor’s review report, if not prohibited by law or regulation. When including an Other Matter paragraph in the auditor’s review report, the auditor shall include a separate section with the heading “Other Matter”, or other appropriate heading.

(Ref: Para. A64)

The auditor shall prepare review documentation that is sufficient and appropriate to provide a basis for the auditor’s conclusion, and to provide evidence that the review was performed in accordance with this Auditing Standard and applicable legal and regulatory requirements.