@ slowreader
I might be wrong, but I think understanding of I/C is required for the review of a non-issuer's interim financial statements if the annual statements is required.
As stated by AUC 930:
“.01
This section addresses the auditor’s responsibilities when engaged to review interim financial information under the conditions specified in this section. The term auditor is used throughout this section, not because the auditor is performing an audit but because the scope of this section is limited to a review of interim financial information performed by an auditor of the financial statements of the entity.
.02
This section applies to a review of interim financial information when
a. the entity’s latest annual financial statements have been audited by the auditor or a predecessor auditor;
b. the auditor either
i. has been engaged to audit the entity’s current year financial statements or
ii. audited the entity’s latest annual financial statements, and in situations in which it is expected that the current year financial statements will be audited, the engagement of another auditor to audit the current year financial statements is not effective prior to the beginning of the period covered by the review; ”
And further:
“Procedures for a Review of Interim Financial Information
Understanding the Entity and Its Environment, Including Its Internal Control
.11
To plan and conduct the engagement, the auditor should have an understanding of the entity and its environment, including its internal control as it relates to the preparation and fair presentation of both annual and interim financial information, sufficient to be able to
a. identify the types of potential material misstatements in the interim financial information and consider the likelihood of their occurrence.
b. select the inquiries and analytical procedures that will provide the auditor with a basis for reporting whether the auditor is aware of any material modifications that should be made to the interim financial information for it to be in accordance with the applicable financial reporting framework.
.12
To update or, in the case of an auditor who has not yet performed an audit of the entity’s annual financial statements, obtain the understanding required by paragraph .11, the auditor should perform the following procedures: (Ref: par. .A7–.A8)
a. Read available documentation of the preceding year’s audit and of reviews of the prior interim period(s) of the current year and the corresponding interim period(s) of the prior year to the extent necessary, based on the auditor’s judgment, to enable the auditor to identify matters that may affect the current period interim financial information. (Ref: par. .A9–.A10) In reading such documents, the auditor should specifically consider the nature of any
i. corrected material misstatements;
ii. matters identified in any summary of uncorrected misstatements;
iii. identified risks of material misstatement due to fraud, including the risk of management override of controls; and
iv. significant financial accounting and reporting matters that may be of continuing significance, such as significant deficiencies and material weaknesses.
b. Read the most recent annual and comparable prior interim period financial information.
c. Consider the results of any audit procedures performed with respect to the current year’s financial statements.
d. Inquire of management about changes in the entity’s business activities.
e. Inquire of management about the identity of, and nature of transactions with, related parties.
f. Inquire of management about whether significant changes in internal control, as it relates to the preparation and fair presentation of interim financial information, have occurred subsequent to the preceding annual audit or prior review of interim financial information, including changes in the entity’s policies, procedures, and personnel, as well as the nature and extent of such changes.”
Also, it mentions inquiry of lawyer/legal counsel if the auditor becomes aware of legal matters which may be material to the interim financial statements.
I'm in my review stage, and so far have been doing very well on MCQs re: Reviews/Comps/Attestations, but than I got an interim review question wrong because of the internal control issue, which opened up a whole other segment to it which I was unaware of, or at least forgot (the difference in scope for interim reviews vs. annual).
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