TOP AUDITING ISSUES FOR 2013 - CCH

MODULE 2 — CHAPTER 4 — Top Ten Implementation Issues—SSARS 19 47
Issue No. 2: Improper Dating of Review Reports
Problem. Improper report dating of review reports is surprisingly prevalent,
yet seldom apparent to outside users of the report. It is detected only by
comparing the dates on the review documentation to the report date.
SSARS 19 states that the accountant’s report in a review engagement
should be dated no earlier than the date on which accountant has amassed
review evidence sufficient to provide a reasonable basis for the conclusion
that the accountant has obtained limited assurance that no material
modifications to the financial statements are necessary in order for them
to be in conformity with the applicable financial reporting framework.
The question of how much evidence is enough is subject to a high degree
of professional judgment. Some indicators that the accountant did not have
sufficient review evidence are:
A representation letter dated after the report date
Responses to the accountant’s inquiries about significant matters that
are dated after the report date
Material adjusting entries made after the report date
Other significant review procedures that are performed after the
report date
This problem often arises from the discovery of a material adjusting entry
late in the engagement. Frequently this happens during the review of the
draft financial statements, when either the accountant or the client spots
“just one more thing” that requires an adjustment.
Another prevalent cause is a simple lack of attention to the dating of the
report compared to the engagement’s timeline, and the dates on which key
review evidence was obtained. This may occur due to deadline pressures, or
to simple lack of awareness of the requirements.
Solutions. The best solution to this problem is usually attention to detail in
the preissuance review process. Most particularly, the report and the representation
letter should bear the same date. Those dates should not be earlier
than the dates on which all significant adjusting entries were discovered
and all significant inquiries and other review procedures were completed.
Simple inattention to detail is best corrected, as a first-level measure, by
instilling professional discipline through training and setting a positive “tone
at the top” within the firm, which emphasizes quality of performance, and
by training to heighten engagement personnel’s awareness of the importance
of report dating.