Advanced Audit and Assurance (International) · Reporting on other assignments

Review Engagements and ISRE 2400 for ACCA AAA

Updated 11 October 2026 · Fact-checked

A review under ISRE 2400 (Revised) gives limited assurance on historical financial statements, mainly through enquiry and analytical procedures. The conclusion is negative in form. Under a fair presentation framework, nothing has come to attention that the statements 'do not give a true and fair view'. Under a compliance framework, that they 'are not prepared in accordance with' it.

Understand Review Engagements and ISRE 2400

A review engagement is an assurance engagement. It gives a lower level of comfort than an audit. ISRE 2400 (Revised) applies to a practitioner who is not the auditor of the entity, reviewing historical financial statements. ISRE 2410 applies to a review of interim financial information performed by the independent auditor of the entity.

The key idea is limited assurance. In an audit, you gather enough evidence to reduce risk to a low level and give reasonable assurance, which is high but not absolute. In a review, you reduce risk to a level that is acceptable in the circumstances, but still higher than in an audit. So the work is smaller and cheaper, and the conclusion is weaker.

The work is mostly enquiry and analytical procedures. You ask management questions, look at trends and unusual relationships, and consider whether anything suggests the statements may be materially misstated. ISRE 2400 (Revised) does not require you to obtain an understanding of internal control or to test controls. You do need to understand the entity, its environment and the applicable financial reporting framework. You do not normally inspect assets or obtain external confirmations.

Because of this, the conclusion is negative in form. Under a fair presentation framework, it says nothing has come to your attention that causes you to believe the statements do not give a true and fair view. Under a compliance framework, it says nothing has come to your attention that causes you to believe the statements are not prepared, in all material respects, in accordance with the framework. It is not a positive statement that the statements are true and fair. If you do find something, you perform extra procedures. If that does not resolve the matter, you modify the conclusion.

The engagement still needs the basics: agreed terms in an engagement letter, ethical requirements and independence, quality management, professional scepticism and judgement, materiality, a written representation letter, and documentation. A review is cheaper, but you must not treat it as casual.

Key rules to remember

Level of assurance in a review: Review = limited assurance (negative form). Audit = reasonable assurance (positive form).; Limited assurance means risk is reduced to an acceptable level, but higher than in an audit.
Unmodified conclusion: fair presentation framework: Based on our review, nothing has come to our attention that causes us to believe that the financial statements do not give a true and fair view (or do not present fairly, in all material respects) in accordance with [the applicable financial reporting framework].; Use this wording when the framework is a fair presentation framework. Negative form is the key feature.
Unmodified conclusion: compliance framework: Based on our review, nothing has come to our attention that causes us to believe that the financial statements are not prepared, in all material respects, in accordance with [the applicable financial reporting framework].; Use this wording when the framework is a compliance framework. Do not mix it with the true and fair wording.
Main procedures: Enquiry + analytical procedures + other procedures if something looks misstated.; Additional procedures are triggered by matters that suggest possible material misstatement.
Modified conclusions: Qualified (except for) | Adverse | Disclaimer (unable to conclude).; Misstatement: material but not pervasive = qualified; material and pervasive = adverse. Limitation of scope: material but not pervasive = qualified; material and pervasive = disclaimer (or withdraw from the engagement where possible).
Key written representations: Management confirms it has fulfilled its responsibility for the statements and has given you all relevant information.; Without them, you cannot complete the review.

How to solve Review Engagements and ISRE 2400 questions

Use this method for any question on a review engagement. It works for scenario questions on procedures, conclusions or comparison with an audit.

1Identify the engagement. Confirm it is a review of historical financial statements and who is performing it. Note whether the practitioner is the entity's auditor.
2State the assurance level. Say limited assurance, negative form, and contrast it briefly with reasonable assurance in an audit if the requirement asks.
3Link to the scenario. Pick the procedures that fit the facts: enquiries of management, analytical review of trends, comparison with prior periods, and reading minutes.
4Look for red flags in the scenario, such as unexplained variances, evasive management or unusual transactions. Say what extra procedures you would perform.
5Decide on the conclusion. Is there a misstatement or a limitation? Is it material? Is it pervasive? Choose unmodified, qualified, adverse or disclaimer.
6Write the wording. Use negative assurance for an unmodified conclusion and add a basis paragraph if modified.
7Add professional skills: show scepticism, give a clear recommendation, and communicate in a tone suitable for the audience, such as management or the client.

Quickest way: Assurance level, procedures, conclusion

When to use it: Use when time is short and the requirement asks you to explain, compare or conclude on a review.

Write: limited assurance, negative form.
List two or three procedures: enquiry, analytical procedures, additional work if doubts arise.
Say what is not done: no controls testing, no confirmations, no detailed substantive testing as in an audit.
Give the conclusion wording or the modification, tied to the scenario.
Finish with one point of judgement or scepticism.

Common mistakes in Review Engagements and ISRE 2400

Saying a review gives no assurance or assurance that the statements are true and fair.
Students mix up review with audit or with agreed-upon procedures.
Fix: A review gives limited assurance in negative form. An audit gives reasonable assurance in positive form. AUP gives no assurance.
Writing a positive conclusion, such as 'the financial statements give a true and fair view'.
Students copy audit opinion wording out of habit.
Fix: Use 'nothing has come to our attention that causes us to believe...'. Practise this phrase until it is automatic.
Listing full audit procedures like inventory counts and bank confirmations for a review.
Students recall audit programmes and apply them everywhere.
Fix: Focus on enquiry and analytical procedures. Add extra procedures only if something suggests a misstatement, and explain why.
Forgetting ethics, engagement terms and representations.
Students think a review is a light job and skip the basics.
Fix: Mention the engagement letter, independence, quality management and the written representation letter.
Confusing ISRE 2400 with ISRE 2410.
Both are review standards and the numbers look alike.
Fix: ISRE 2400 (Revised) is for a practitioner who is not the auditor of the entity. ISRE 2410 is for a review of interim financial information performed by the independent auditor of the entity.
Choosing the wrong modification type.
Students ignore materiality and pervasiveness.
Fix: Decide first if the issue is a misstatement or a limitation, then whether it is material and whether it is pervasive. Material but not pervasive gives qualified. Material and pervasive gives adverse for a misstatement and a disclaimer for a limitation.

Worked examples

Example 1

Zenith Traders Ltd asks you, a practitioner who is not its auditor, to review its annual financial statements. The bank wants some comfort but not the cost of an audit. (a) Explain the level of assurance you will give. (b) Describe the main procedures. (c) Give the unmodified conclusion wording. (6 marks)

Show the solution

Level of assurance: this is a review under ISRE 2400 (Revised). You give limited assurance, which is lower than the reasonable assurance of an audit.
This suits the bank's need for some comfort at lower cost. Explain to the client that the bank will get a weaker conclusion than an audit opinion.
Procedures: first agree terms in an engagement letter and confirm independence. Understand the entity, its environment and its reporting framework to identify where material misstatement is likely.
Make enquiries of management about accounting policies, unusual transactions, going concern and events after the year end.
Perform analytical procedures, such as comparing margins, receivables days and expenses to prior years and to expectations, and investigate unusual variances.
Obtain a written representation letter from management. If anything suggests a possible material misstatement, perform extra procedures.
Conclusion: use negative assurance wording in one form only. Assume the statements are prepared under a fair presentation framework, so use the true and fair wording as set out in the answer. Use the compliance wording instead only if the framework is a compliance framework.

Answer: You give limited assurance under ISRE 2400 (Revised), based mainly on enquiry and analytical procedures, plus extra work where doubts arise. Unmodified conclusion (fair presentation framework): 'Based on our review, nothing has come to our attention that causes us to believe that the financial statements do not give a true and fair view in accordance with [the applicable financial reporting framework].' If the framework were a compliance framework, you would use the compliance wording instead: 'nothing has come to our attention that causes us to believe that the financial statements are not prepared, in all material respects, in accordance with [the applicable financial reporting framework].'

Example 2

During a review of Orion Ltd you find that management has not recorded a legal claim. Management says it is probably immaterial but gives no support. Your analytical review shows legal costs are well below prior year. Advise on next steps and the conclusion. (6 marks)

Show the solution

Recognise the red flag. The missing provision and the drop in legal costs together suggest a possible material misstatement, so you should not simply accept management's view.
Perform additional procedures. Ask for the legal letter or correspondence, read board minutes, and discuss the claim with those charged with governance and the entity's lawyers.
Show scepticism. Management gave no support, so you need your own evidence before you decide on materiality.
Evaluate. If the claim is material and not recorded or disclosed, the financial statements are misstated.
If the misstatement is material but not pervasive, give a qualified conclusion: 'Except for...'. If it is material and pervasive, give an adverse conclusion.
Treat a limitation only as a conditional point. Management giving no support is not itself a limitation. But if management refuses you access to the legal correspondence or the lawyers, that is a limitation of scope. Ask for it to be removed. If it is not removed, consider withdrawing from the engagement where possible. If withdrawal is not possible, issue a qualified conclusion where the possible effect is material but not pervasive, or a disclaimer where it is material and pervasive.
Communicate clearly to management, explain the effect on the conclusion and include a basis for conclusion paragraph in the report.

Answer: Perform extra procedures such as obtaining legal correspondence, reading minutes and enquiring of governance. Treat the unrecorded claim as a misstatement. If it is material but not pervasive, issue a qualified conclusion ('Except for the effects of the unrecorded claim, nothing has come to our attention...'). If it is also pervasive, issue an adverse conclusion. Only if management refuses access to legal correspondence is there a limitation of scope. Then request its removal and, if it is not removed, consider withdrawing where possible, or issue a qualified conclusion or a disclaimer depending on whether the possible effect is pervasive.

Exam tips

Always write 'limited assurance' and 'negative form' in your first lines. Examiners look for these exact ideas.
Link procedures to the scenario. A generic list of enquiries earns fewer marks than enquiry about the specific red flag.
Practise the conclusion wording until you can write it from memory, then adapt it for qualified, adverse and disclaimer cases.
When a question compares audit and review, use a clear contrast: assurance level, evidence, procedures, conclusion form and cost.
Use the professional skills marks. Show scepticism, give a clear recommendation and address the reader, such as a client or a bank.

Practice questions from Reporting on other assignments

Review Engagements and ISRE 2400: frequently asked questions

What is the difference between an audit and a review engagement?

An audit gives reasonable assurance, expressed as a positive opinion. A review gives limited assurance, expressed as a negative conclusion. A review relies mainly on enquiry and analytical procedures, so it costs less and gives less comfort.

What is negative assurance wording?

It is a conclusion, negative in form, that says nothing has come to your attention that causes you to believe the statements do not give a true and fair view (fair presentation framework). Under a compliance framework, it says they are not prepared, in all material respects, in accordance with the framework. It is not a positive statement that the statements are true and fair.

Which procedures are used in a review under ISRE 2400?

Mainly enquiries of management and analytical procedures. You also understand the entity and framework, obtain written representations, and perform extra procedures if something suggests possible material misstatement.

When does ISRE 2400 apply rather than ISRE 2410?

ISRE 2400 (Revised) applies to a practitioner who is not the auditor of the entity, reviewing historical financial statements. ISRE 2410 applies to a review of interim financial information performed by the independent auditor of the entity.