Many business owners are concerned how the Canadian Standard on Review standards 2400 (“new standard”) effective after December 15, 2017 will affect the business owners?
If your business’s financial statements is not currently needed or required a review engagement:
- The new standard will have no effect, as your financial statements do not need to be reviewed. But if you want to know more about different types of engagements, click here.
If you business’s financial statements is currently needed or required a review engagement, as obliged under a bank loan or under statutory requirements:
- You should have an understanding of new requirements. Contact your accountant. Please contact / email PNC.
What’ve changed?
Although the new standard will have impact on the accountants’ procedures in accepting client, performing engagement, evaluating evidence, and forming conclusion, it is nonetheless for the benefits of the client and protecting the interest of public at large.
From the perspective of the users of the financial statements, the “Independent Practitioner’s Review Engagement Report” issued at the conclusion of a review has changed in a number of ways:
- Format has changed
- Content has been expanded
- Additional information and terminology is included
Here are the reports under the new standard and the “old” standard (8000 series)
The report that is issued under the new standard is below:
We have reviewed the accompanying financial statements of ABC Ltd. that comprise the balance sheet as at December 31, 2017 and the statements of earnings, deficit and cash flows for the years then ended and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for private enterprises, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Practitioner’s Responsibility
Our responsibility is to express a conclusion on these financial statements based on our review. We conducted our review in accordance with Canadian generally accepted standards for review engagements, which require us to comply with relevant ethical requirements.
A review of financial statements in accordance with Canadian generally accepted standards for review engagements is a limited assurance engagement. The practitioner performs procedures, primarily consisting of making inquiries of management and others within the entity, as appropriate, and applying analytical procedures, and evaluates the evidence obtained.
The procedures performed in a review are substantially less in extent than, and vary in nature from, those performed in an audit conducted in accordance with Canadian generally accepted auditing standards. Accordingly, we do not express an audit opinion on these financial statements.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that these financial statements do not present fairly, in all material respects, the financial position of the ABC Ltd. as at December 31, 2017 and the results of its operations and its cash flows for the years then ended in accordance with Canadian accounting standards for private enterprises.
The report that is issued under the old standard is below:
We have reviewed the balance sheet of ABC Ltd. as at December 31, 2017 and the statements of earnings, deficit and cash flows for the year then ended. Our review was made in accordance with Canadian generally accepted standards for review engagements and accordingly consisted primarily of enquiry, analytical procedures and discussions related to information supplied to us by the Company.
A review does not constitute an audit and consequently we do not express an audit opinion on these financial statements.
Based on our review, nothing has come to our attention that causes us to believe that these financial statements are not, in all material respects, in accordance with Canadian accounting standards for private enterprises.
(updated June 28, 2018 Copyright)
