CPA Exam — AUDForming Conclusions and ReportingMedium
A CPA is engaged to perform a review of a non-public entity's interim financial information. Which of the following is most likely to be included in the CPA's review report?
- AA statement that the CPA is not aware of any material modifications that should be made to the financial information for it to be in accordance with the applicable financial reporting framework.
- BA description of the CPA's responsibility to express an opinion on the effectiveness of the entity's internal control over financial reporting.
- CAn opinion on whether the financial information is presented fairly, in all material respects, in accordance with the applicable financial reporting framework.
- DA summary of the significant audit procedures performed, including tests of controls and substantive procedures.
Show answer & explanationAnswer & explanation
Correct answer: A. A statement that the CPA is not aware of any material modifications that should be made to the financial information for it to be in accordance with the applicable financial reporting framework.
A review engagement provides limited assurance, expressed in the form of negative assurance. This means the CPA states that they are not aware of any material modifications needed for the financial information to conform to the applicable framework.
Why the other options are wrong
- B. Internal control opinions are part of an integrated audit, not a review of interim financial information.
- C. An opinion is provided in an audit (reasonable assurance), not a review (limited assurance).
- D. A summary of audit procedures is found in an audit report, not a review report, which involves fewer procedures.
Review Report Conclusion
A review report provides negative assurance, stating that the CPA is unaware of any material modifications needed for the financial statements to conform to the applicable framework.
- Limited assurance
- Negative assurance wording
- No opinion expressed
Memory trick: Review reports say 'unaware of issues,' not 'perfectly fair.'