The International Auditing and Assurance Standards Board has released a revised version of its International Standard on Review Engagements to better meet the needs of small and midsized entities.

Arnold Schilder

ISRE 2400 (Revised), Engagements to Review Historical Financial Statements, follows upon the heels of the release earlier this year of International Standard on Related Services 4410 (Revised), Compilation Engagements, a standard also addressing services of particular relevance to SMEs.

“An important aspect of the IAASB’s strategic focus in recent years has been our response to the growing demand for assurance services, other than the financial statement audit, that help enhance the credibility of SMEs’ financial statements,” said IAASB chairman Arnold Schilder in a statement. “In light of this demand, it is fundamental that there be robust standards to support a diverse range of services for this important stakeholder group. ISRE 2400 (Revised) is an important contribution to this aim.”

Review engagements are of particular relevance for entities that are not required, or do not elect, to have an audit, but wish to enhance the credibility of, and confidence in, their unaudited financial statements among their users through practitioner involvement. The practitioner’s report when a review engagement has been conducted in accordance with ISRE 2400 (Revised) describes whether anything has come to the practitioner's attention that causes the practitioner to believe the financial statements are not prepared, in all material respects, in accordance with the applicable financial reporting framework.

A review is a limited assurance engagement, however, and the procedures performed are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing. Accordingly, the practitioner's review engagement report does not express an audit opinion on the financial statements.

The IAASB operates under the auspices of the International Federation of Accountants, of which the American Institute of CPAs is a member organization.

“This standard enhances both the value and performance of review engagements,” said IAASB technical director James Gunn. “Through strengthened requirements and additional guidance, it helps ensure there is sufficient appropriate evidential support for the practitioner’s conclusion on the financial statements and further promotes high-quality engagements.”

The revised standard is effective for reviews of financial statements for periods ending on or after Dec. 31, 2013. An At a Glance publication provides an overview of the revised standard.