Advanced Auditing, Assurance and Professional Ethics · Review of Financial Information

Review Engagements under SRE 2400 (Revised): Scope

Updated 5 October 2026 · Fact-checked

SRE 2400 (Revised) applies when a practitioner who is not the entity's auditor reviews historical financial statements. The objective is to express a conclusion, with limited assurance, on whether anything suggests the statements are not prepared in all material respects under the framework. You solve questions by identifying scope, assurance level and the audit contrast.

Understand Review Engagements under SRE 2400 (Revised): Scope

A review engagement is an assurance engagement on historical financial statements. The practitioner does less work than in an audit. So the assurance given is lower. It is called limited assurance.

SRE 2400 (Revised) deals with review engagements on historical financial statements where the practitioner is not the auditor of the entity. It is the practitioner's responsibility to follow the standard when performing such an engagement. If the practitioner is the entity's auditor and reviews its interim financial information, a different standard applies (SRE 2410). Do not mix the two.

The objective has two parts. First, to conclude whether anything has come to the practitioner's attention that causes them to believe the financial statements are not prepared, in all material respects, in accordance with the applicable financial reporting framework. Second, to report in line with that conclusion. The conclusion is in negative form. The practitioner says nothing has come to attention. The practitioner does not say the statements give a true and fair view.

The nature of the work is mainly inquiry and analytical procedures. The practitioner also applies other procedures where needed, for example when a matter suggests the statements may be materially misstated. A review does not normally need tests of controls, inspection, observation or external confirmation. Because of this, the risk of missing a material misstatement is higher than in an audit.

In an audit, the auditor gives reasonable assurance, which is high but not absolute, and the opinion is in positive form. In a review the assurance is limited, the procedures are narrower, and the report is in negative form. Both need ethical compliance, professional skepticism and quality control. The review practitioner must also be independent and the engagement is accepted only if the preconditions are met. These are covered in the next topics.

Key rules to remember

Scope of SRE 2400 (Revised): Review of historical financial statements + practitioner is not the entity's auditor; Both conditions must hold. For the entity's auditor reviewing interim information, SRE 2410 applies instead.
Objective of a review: Limited assurance conclusion on whether anything makes the practitioner believe the statements are not prepared, in all material respects, under the applicable framework; The conclusion is expressed in negative form.
Assurance level: Review = limited assurance; Audit = reasonable assurance; Limited assurance is a meaningful level, but lower than reasonable assurance.
Nature of procedures: Inquiry + analytical procedures (+ other procedures when a matter suggests possible material misstatement); Tests of controls, inspection, observation and confirmation are not normally part of a review.
Form of conclusion: Audit: positive opinion; Review: negative-form conclusion; The review report says nothing came to attention. It does not say true and fair.

How to solve Review Engagements under SRE 2400 (Revised): Scope questions

Use this method for any question on scope, objective or audit-versus-review under SRE 2400 (Revised).

1Read the facts and note who the practitioner is. Check whether they are the entity's auditor.
2Check the subject matter. Confirm it is historical financial statements, not prospective information or a control report.
3Name the standard: SRE 2400 (Revised) if the practitioner is not the auditor. Mention SRE 2410 if the auditor reviews interim information.
4State the objective: limited assurance conclusion in negative form, with a report in line with it.
5Describe the nature of work: inquiry and analytical procedures, with further procedures when a matter arises.
6If asked for differences, compare assurance level, procedures, risk, form of conclusion and evidence.
7Apply to the case and give a clear conclusion in one line.

Quickest way: Four-point check: Who, What, How much, How worded

When to use it: Use it for short MCQs and for opening an answer in a case scenario when time is short.

Who: not the entity's auditor means SRE 2400 (Revised).
What: historical financial statements only.
How much: limited assurance, mainly inquiry and analytical procedures.
How worded: negative-form conclusion. No true and fair opinion.

Common mistakes in Review Engagements under SRE 2400 (Revised): Scope

Saying a review gives no assurance.
Students treat low work as no assurance.
Fix: Write that a review gives limited assurance, which is a lower but real level.
Writing that the review report gives a true and fair opinion.
Students carry over audit report wording.
Fix: Use the negative form: nothing came to attention to believe the statements are not prepared in all material respects under the framework.
Applying SRE 2400 (Revised) to the entity's own auditor.
The word review appears in both SRE 2400 and SRE 2410.
Fix: Check the practitioner's role first. The entity's auditor reviewing interim information falls under SRE 2410.
Listing tests of controls and confirmations as normal review procedures.
Students copy the audit procedure list.
Fix: State that review relies mainly on inquiry and analytical procedures.
Treating limited assurance as only a smaller sample size of the same audit work.
Students think the difference is only in quantity.
Fix: Explain that the nature, timing and extent of procedures are all reduced, so the risk of missing a misstatement is higher.
Using the review standard for prospective information or service organisation controls.
Students see any engagement with limited work as a review.
Fix: Confirm the subject matter is historical financial statements before applying this standard.

Worked examples

Example 1

Case: Meera & Co, a firm of chartered accountants, is engaged by a private company to report on its annual financial statements for the year ended 31 March. Meera & Co is not the company's auditor. The directors want a conclusion at a lower cost than an audit. Which standard applies, what is the objective, and what assurance does Meera & Co give?

Show the solution

Subject matter: annual historical financial statements.
Role: Meera & Co is not the entity's auditor.
So the engagement is a review under SRE 2400 (Revised).
Objective: conclude, with limited assurance, whether anything has come to attention that makes the firm believe the statements are not prepared, in all material respects, under the applicable framework, and report accordingly.
The conclusion is in negative form. The firm will not state a true and fair opinion.

Answer: SRE 2400 (Revised) applies. The objective is a negative-form conclusion with limited assurance on the historical financial statements. The firm does not give reasonable assurance.

Example 2

Case: A director asks, 'Why does a review cost less than an audit, and can we use the review report for the same purposes?' Explain the differences in procedures and assurance.

Show the solution

Assurance: a review gives limited assurance. An audit gives reasonable assurance.
Procedures: a review is mainly inquiry and analytical procedures. An audit includes tests of controls where relevant, inspection, observation, confirmation and other substantive procedures.
Risk: the risk of an undetected material misstatement is higher in a review.
Conclusion: a review gives a negative-form conclusion. An audit gives a positive opinion.
Cost is lower because less work is done. For that same reason, a review report cannot replace a statutory audit report where an audit is required by law.
Users should understand the lower level of assurance.

Answer: A review costs less because the work is narrower and gives only limited assurance in a negative-form conclusion. It cannot replace an audit where law requires an audit.

Exam tips

Open every answer with the standard name, the engagement type and the assurance level. It earns quick marks.
In a difference question, use at least four points: assurance, procedures, risk, form of conclusion.
Quote the objective in negative form. Do not slip into true and fair wording.
In case scenarios, check the practitioner's role first. It decides between SRE 2400 and SRE 2410.
Answer MCQs with no negative marking. Always attempt them after the four-point check.

Practice questions from Review of Financial Information

Review Engagements under SRE 2400 (Revised): Scope: frequently asked questions

What is limited assurance in a review engagement?

It is a meaningful but lower level of assurance than in an audit. The practitioner does limited procedures, mainly inquiry and analytical procedures. The conclusion is in negative form.

Does SRE 2400 (Revised) apply to the entity's statutory auditor?

No. It applies when the practitioner is not the auditor of the entity. If the auditor reviews the entity's interim financial information, SRE 2410 applies.

Can a review replace a statutory audit?

No. A review gives lower assurance and a differently worded conclusion. Where the law requires an audit, a review report does not satisfy that requirement.

What is the objective of a review under SRE 2400 (Revised)?

The objective is to conclude, with limited assurance, whether anything makes the practitioner believe the financial statements are not prepared in all material respects under the applicable framework. The practitioner then reports in line with that conclusion.