An ISRE 2400/2410 limited review gives limited assurance on interim financial information without the cost or duration of a full audit. We perform these for UAE companies reporting quarterly or half-yearly to lenders, investors, boards and regional head offices.
Limited review of interim financial information
A limited review is an engagement in which the practitioner performs enquiry and analytical procedures on interim financial information and concludes whether anything has come to their attention suggesting it is not prepared, in all material respects, under the applicable framework.
The conclusion is expressed negatively — nothing has come to our attention — which is why it is called limited assurance. A limited review engagement UAE lenders accept does not involve the substantive testing, confirmations or controls work that support an audit opinion.
Review versus audit
An audit gives reasonable assurance through substantive testing and results in a positive opinion; a review gives limited assurance through enquiry and analysis and results in a negative conclusion.
The practical consequence is cost and speed. A review typically takes a fraction of the audit effort, which makes it viable at quarter or half year, but it cannot be substituted for the annual audit a registrar, free zone authority or the Federal Tax Authority requires.
Needs for an interim reviews in the UAE
Companies with bank covenants tested during the year, group reporting to an overseas parent, businesses in a funding round, and boards that want visibility before the year-end close.
A half yearly review UAE facility agreements call for is the most common driver, usually written into the covenant testing clause. Companies preparing for sale also use reviews to keep interim figures credible for a buyer's diligence team.
How CLA Emirates performs ISRE 2400 and ISRE 2410 reviews
Because a review is built on enquiry and analytics, it depends on knowing the business. We plan the review against the risks identified in the annual audit, so unusual movements are investigated rather than accepted, and issues surface in month seven rather than month thirteen.
Limited Review under ISRE 2400 and ISRE 2410
ISRE 2400 and ISRE 2410 are International Standards on Review Engagements that provide guidelines for performing limited-assurance reviews on financial data. The primary difference is who performs the review and the specific nature of the financial period being examined.
ISRE 2400 (Revised): Applies to engagements to review historical financial statements performed by a practitioner who is not the entity's independent statutory auditor.
ISRE 2410: Applies specifically to the review of interim financial information performed by the independent/statutory auditor of the entity.
Review compared with audit
What a review covers
- Enquiry of finance and operational management
- Analytical review of margins, balances and ratios against expectation
- Review of significant accounting judgements and estimates
- Consistency of accounting policies with the annual accounts
- Follow-up on unusual or non-recurring transactions
- Subsequent events to the date of the conclusion
