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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Audit-related and assurance services

Tamsin Reyes, a practitioner, is considering whether to accept a review engagement under ISRE 2400 (Revised) for Corvid Trading, a small private company. Which matter is a precondition she must establish before accepting?

Before accepting, the practitioner must establish that management acknowledges its responsibility for preparing the financial statements under the applicable framework, for relevant internal control, and for providing access to information. An internal audit function or extensive substantive testing is not a precondition for a review.

  1. AThat management acknowledges responsibility for preparing the financial statements and for the internal control needed for thisCorrect
  2. BThat the company has an internal audit department
  3. CThat the practitioner will perform detailed substantive testing of all material balances
  4. DThat the company will be listed within two years

Explanation

ISRE 2400 preconditions include that management acknowledges its responsibility for the financial statements, for the internal control it determines necessary, and for giving the practitioner access to information. Internal audit and extensive substantive testing are not required for a review, and listing plans are irrelevant.

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