A limited assurance engagement
A review is a limited assurance engagement where the practitioner performs primarily inquiry and analytical procedures to obtain sufficient appropriate evidence as the basis for a conclusion on the financial statements as a whole, expressed in accordance with the requirements of ISRE 2400 (Revised).An Independent Review is a review engagement performed by a practitioner who was not involved in the preparation of the financial statement.
What is an Independent Review?
An Independent Review was established with the new Companies Act, No. 71 of 2008 in order to keep up with International trends and changes. An Independent Reviewer will give limited assurance that they have no reason to believe that the Annual Financial Statements are not free of material misstatement
Limited assurance is the limited confidence the reviewer has in their findings, after exercising professional and due care, that they have no reason to believe that there are material misstatements in the Annual Financial Statements.
Material misstatement is any error or omission in the Annual Financial Statements that is material enough to affect the shareholders, investors, or any other user’s opinion or action towards the company.
How does an Independent Review differ from an Independent Audit?
The level of assurance given by the reviewer is lower than that given by an auditor. The amount of work done is less and the cost thereof is also less.
An Independent Review will basically confirm assets and liabilities at year end with supporting documents and do an analytical review of the income statement and following up on any discrepancies or risks of material misstatement.
How do I know if my company is required to have an Independent Review done?
If your company is not owner managed it will be subject to an Independent Review.
A company that is not owner managed is one where the directors of the company are not the shareholders and vice versa.