Review of financial statements under ISRE 2400
The middle ground between a full audit and no external check at all. The practitioner performs inquiries and analytical procedures and concludes that nothing has come to their attention indicating material misstatement. For many donors, banks and shareholders that is enough, and a review costs noticeably less than an audit and is delivered faster.
An ISRE 2400 review is a limited assurance engagement. The practitioner does not gather evidence to the extent required in an audit, so the conclusion is expressed in the negative form: nothing has come to our attention that suggests material misstatement. It fits where the donor or bank does not specifically require an auditor’s opinion.
How a review differs from an audit
Reasonable assurance
The auditor gathers evidence: inventory observation, third party confirmations, testing of transaction samples, assessment of internal control, and expresses an opinion on fair presentation.
Limited assurance
The practitioner makes inquiries of management and the accounting team and performs analytical procedures. External confirmations and sample testing are not mandatory. The conclusion is negative in form.
No assurance
The practitioner prepares the statements from the client’s data without verifying them. Used where properly presented statements are needed rather than a check.
The practical difference is how much the practitioner is obliged to do. An audit is a search for evidence; a review is a professional test of plausibility. That is where the difference in timeline and fee comes from.
When a review is enough
The terms of reference say “review” or “limited assurance”. Commissioning a full audit then means overpaying and spending an extra month.
The donor or the parent company asks for assurance on a half-year or quarter, while the annual statements still go through a full audit.
The lender wants an external check but does not insist on an auditor’s report. A review closes the question faster.
An independent look at the statements before approval, with no statutory requirement behind it. For non-profits this is the common case.
Where an audit is required by law, a review does not replace it: the law calls for an auditor’s report with an opinion. The same applies where the donor wrote “audit under ISA” or asks for an ISRS 4400 expenditure verification. More on the statutory audit: statutory audit of financial statements.
Four steps
We read what the donor or bank asks for and confirm that a review is genuinely sufficient. If it is not, we say so at once.
We question the accounting team and management, analyse movements in the line items, compare with budget and prior period and look for unusual variations.
Where the analytics raise questions we request documents and explanations. If we find a material misstatement we report it before the conclusion is signed.
A conclusion in the ISRE 2400 form in English and Ukrainian, with a management letter where there is something to say about the books.
What clients ask most often
What is the difference between a review and an audit in plain words?
An audit looks for evidence and gives an opinion that the statements are fairly presented. A review asks questions and analyses the figures, then says that nothing suggests material error. The second is faster and cheaper but gives less assurance.
Will a donor accept an ISRE 2400 conclusion instead of an audit?
Only if the terms of reference say so. Send us the terms of reference and we will check free of charge whether an audit, a review or an expenditure verification is required.
How much does a review cost?
Noticeably less than an audit of the same entity, because the scope of procedures is smaller. We quote after reviewing the assignment, normally within one working day.
Can a review replace a statutory audit?
No. Where the audit is required by law, an auditor’s report with an opinion is needed and a review does not substitute for it.
Is the conclusion issued in English?
Yes, in English and Ukrainian in one package.
Request a proposal
Tell us who requires the engagement and for which period. We reply within one working day.