Auditing - What are Reviews

The video tutorial explains the differences between a financial statement audit and a review service provided by auditors. It highlights that a review offers limited assurance compared to an audit, as it involves less test work, primarily through analytical procedures and inquiry. The tutorial also discusses the types of clients who might need a review, such as those seeking loans from banks, where a full audit is not necessary but some level of assurance is required.

What distinguishes the service provided by an auditor from a financial statement audit?

• It is identical to a financial statement audit.

• It involves more test work than an audit.

• It provides more assurance than an audit.

• It offers limited assurance with less test work.

In a review, what is the auditor's conclusion based on?

• Reporting framework

• Personal opinion

• Market trends

• Client's request

Which of the following is primarily used in the test work for a review?

• Detailed inspections

• Random sampling

• Analytical procedures and inquiry

• Comprehensive audits

What type of client might require a review instead of a full audit?

• A client facing bankruptcy

• A client undergoing a merger

• A client seeking a loan from a bank

• A client preparing for an IPO

Why might a client seeking a loan prefer a review over a full audit?

• They require less assurance.

• They need more detailed procedures.

• They want to avoid any auditor involvement.

• They need something the auditor has looked at and reviewed.