IAASB Releases Revised Version of the ISRE for Small and Medium Enterprises
The IAASB has issued a well-revised version of the International Standard on Review Engagements prepared by it in order to match the requirements of small as well as mid-sized companies better. The revised ISRE 2400, Engagements to Review Historical Financial Statement was issued after the release of the revised International Standard on Related Services 4410, Compilation Engagements an accounting standard, which addresses the services of relevance to small and medium enterprises.
Arnold Schilder, Chairman of the IAASB stated that an essential aspect of the International Auditing and Assurance Standards Board’s focus of late has been the board’s response to the growth in demand of assurance related services, apart from the auditing of financial statement, which helps in enhancing the credibility of the statements of the small and medium enterprises. Schilder further mentioned that in view of this existing demand, it is important that strong standards should be created in order to support a variety of services for the SME stakeholders. The revised ISRE 2400 is a fundamental contribution towards this goal.
Review related engagements are relevant for companies that are not expected to or don’t opt for an auditing but hope to improve the credibility of as well as confidence in their statements that have be unaudited, by involving the practitioner. The report from the practitioner after a review related engagement has been carried out as per the revised ISRE 2400 portrays if anything has come to the attention of the practitioner, which forces the practitioner to feel that the statements have not been prepared, in every respect, according to the reporting structure that is applicable.
A review is basically a limited assurance related engagement and the procedures involved during the review process are very less in comparison to the ones that are performed during an audit, which is carried out as per the international auditing standards. Accordingly, the report of the practitioner fails to state any audit related opinion on the statements. The International Auditing and Assurance Standards Board works under the aegis of the International Federation of Accountants of which the AICPA is a member.
The standard that has been revised will come into effect for statements reviews for the periods that end after or on 31st December 2013.