REVIEW ENGAGEMENTS

SECTION 8100
general review standards
Effective date. The Recommendations in this Section apply to review engagement reports issued on or after January 1, 1989,
except that the Recommendation in paragraph 8100.26 applies to reports issued on or after October 1, 2003. For those
public accountants who can comply with the Recommendations in this Section, including the objective state of mind
requirement (see paragraph 8100.15), earlier implementation is encouraged.

TABLE OF CONTENTS

Paragraph

Scope and definitions

.01

Appropriate criteria

.08

Acceptance of engagement

.09

Standards applicable to review engagements

.15

General standard

.16

Knowledge of the entity's business

.17

Review procedures

.19

Documentation

.23

Reporting

.25

Reservations in the review engagement report

.32

Other modifications to the review engagement report

.41

Subsequent discovery of a misstatement

.47

SCOPE AND DEFINITIONS

.01

This Section deals with reviews by public accountants of annual and interim financial statements and other
information, 1 except when the auditor of an entity reviews its unaudited interim financial statements in the circumstances
described in AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS, Section 7060. The use of the word
"information" in the context of information on which the public accountant reports is also intended to apply to the subject
matter of a review for compliance with agreements and regulations.

.02

Subsequent Sections provide specific guidance and should be read in conjunction with this Section when reviewing:
(a)

.03

financial statements annual and interim (Section 8200);

(b)

financial information other than financial statements (Section 8500);

(c)

compliance with agreements and regulations (Section 8600).

Review engagements do not include:

(a)

compilations, without review, of unaudited financial statements or financial information (see COMPILATION
ENGAGEMENTS, Section 9200);

(b)

preparation of unaudited financial statements prepared by, or with the assistance of, a public accountant acting in
the capacity of trustee in bankruptcy, receiver or liquidator;

(c)

applying specified auditing procedures to financial information other than financial statements (see REPORTS ON
THE RESULTS OF APPLYING SPECIFIED AUDITING PROCEDURES TO FINANCIAL INFORMATION
OTHER THAN FINANCIAL STATEMENTS, Section 9100).

.04

The standards and reporting requirements for reviews of financial statements included in a prospectus or other offering
document are set out in AUDITOR'S CONSENT TO THE USE OF A REPORT OF THE AUDITOR INCLUDED IN AN
OFFERING DOCUMENT, Section 7150, and AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS,
Section 7060.

.05

Reviews are distinguishable from audits in that the scope of a review is less than that of an audit and therefore the level of
assurance provided is lower. A review consists primarily of inquiry, analytical procedures and discussion related to
information supplied to the public accountant by the enterprise with the limited objective of assessing whether the
information being reported on is plausible within the framework of appropriate criteria. In this Section, the word
"plausible" is used in the sense of appearing to be worthy of belief based on the information obtained by the public
accountant in connection with the review.

.06

Inquiry, analytical procedures and discussion are normally sufficient for the purposes of considering whether information
supplied to the public accountant is plausible in the circumstances. However, these procedures are not sufficient to
provide reasonable assurance that undetected error or fraud does not exist. A review emphasizes inquiries of
management, the responses to which the public accountant is entitled to accept as long as such responses appear
plausible. A review does not require the public accountant to seek supporting or independent evidence or to study and
evaluate internal control. As a result, the public accountant's review will not normally include procedures such as physical
inspection, observation of client procedures, confirmation from external parties and examination of documents which are
usually performed in an audit. However, when the public accountant decides to perform additional procedures which
might also be carried out in an audit engagement (for example, when there is reason to doubt the plausibility of
information obtained or when such procedures facilitate obtaining information), the review engagement is not converted
to an audit engagement. The public accountant's responsibilities with respect to a review engagement remain as outlined
in this Section and as agreed with the client.

.07

In review engagements, it is essential that the public accountant not lead the reader to conclude that an audit opinion is
being expressed. The style of reporting known as negative assurance is distinguishable from an audit opinion and has
gained acceptance when a level of assurance below that given in an audit opinion is being conveyed. Negative
assurance is therefore appropriate for these engagements. The negative assurance form of reporting used for review
engagements (see paragraph8100.26(c)) informs the reader that, although sufficient evidence has not been obtained to
enable the public accountant to express an audit opinion, a review has been completed in accordance with the standards
of this Section and nothing has come to the attention of the public accountant that causes him or her to believe that the
information being reported on is not, in all material respects, in accordance with appropriate criteria.

.08

The standards set out in paragraph 8100.15 require that the public accountant perform a review to assess whether the
information being reported on is plausible within the framework of appropriate criteria and provide negative assurance as
to whether the information being reported on is, in all material respects, in accordance with appropriate criteria. When the
public accountant is reporting on financial statements or other financial information, such criteria would be generally
accepted accounting principles or a basis of accounting described in the notes to the financial statements (see
paragraph 8100.28). When the public accountant is reporting on compliance with agreements or regulations, the relevant
provisions of the agreement or regulations would provide appropriate criteria. When the public accountant is reporting in
other circumstances, for example on statistical information of a non-financial nature, appropriate criteria would be
established by the terms of the engagement.

APPROPRIATE CRITERIA

ACCEPTANCE OF ENGAGEMENT

.09

The objective of a review engagement is to add a measure of credibility to the subject matter being reported on.

.10

Before accepting a review engagement, the public accountant should be satisfied that:
(a)

the subject matter is within the professional expertise of public accountants; and

(b)

there are appropriate criteria against which the subject matter can be evaluated. [JAN. 1989 *]

.11

It is important that there be a clear understanding and agreement between the public accountant and the client as to the
nature and terms of a review engagement and it is highly desirable that such agreement be in writing to avoid
misunderstandings. 2Information on which the public accountant reports is the representation of management even
though, in some circumstances, it is prepared by, or with the assistance of, the public accountant. If limitations in the
scope of the review are imposed by the client, the public accountant would consider whether they are so significant as to
preclude acceptance of the engagement. The scope of the review is the responsibility of the public accountant and not
that of the client.

.12

When the public accountant is aware that an audit is required by statute or by the terms of a client's contract with third
parties, the client would be informed that a review will not satisfy such requirements. In these situations it may be
desirable for the public accountant to suggest that the client obtain legal advice.

.13

To avoid misunderstandings of the terms of the review engagement, the agreement with the client would normally specify:
(a)

that the public accountant will conduct the review in accordance with generally accepted standards for review
engagements;

(b)

the anticipated form and content of the report, including any restrictions on its use;

(c)

that an engagement is not intended to, and accordingly will not, result in the expression of an audit opinion;

(d)

that, in a situation when there is a statutory or other audit requirement, the engagement will not satisfy that
requirement;

(e)

that management will provide the information the public accountant requires;

(f)

that management is responsible for the accuracy and completeness of the information on which the public
accountant is to report;

(g)

that a review engagement cannot be relied on to prevent or detect error and fraud;

(h)

that, if the public accountant's association with the information being reported on is to be communicated to third
parties, the public accountant's report will be attached to that information; and

(i)

that each page of the information being reported on will be conspicuously marked as being unaudited.

.14

For review engagements, the public accountant should reach an understanding and agreement with the client as to the
services to be provided. [JAN. 1989 *]

.15

Standards applicable to review engagements are as follows:

STANDARDS APPLICABLE TO REVIEW ENGAGEMENTS

General standard
The review should be performed and the review engagement report prepared by a person or persons having adequate
technical training and proficiency in conducting reviews, with due care and with an objective state of mind.
Review standards
(i)

The work should be adequately planned and properly executed. If assistants are employed, they should be properly
supervised.

(ii)

The public accountant should possess or acquire sufficient knowledge of the business carried on by the enterprise
so that intelligent inquiry and assessment of information obtained can be made.

(iii) The public accountant should perform a review with the limited objective of assessing whether the information being
reported on is plausible in the circumstances within the framework of appropriate criteria. Such a review should
consist of:
(a)

inquiry, analytical procedures and discussion; and

(b)

additional or more extensive procedures when the public accountant's knowledge of the business carried
on by the enterprise and the results of the inquiry, and analytical procedures and discussion cause
him or her to doubt the plausibility of such information.

Reporting standards
(i)

The review engagement report should indicate the scope of the review. The nature of the review engagement
should be made evident and be clearly distinguished from an audit.

(ii)

The report should indicate, based on the review:

(a)

whether anything has come to the public accountant's attention that causes him or her to believe that the
information being reported on is not, in all material respects, in accordance with appropriate criteria;
or

(b)

that no assurance can be provided.

The report should provide an explanation of the nature of any reservations contained therein and, if readily
determinable, their effect. [JAN. 1989 *]
GENERAL STANDARD

.16

In applying the general standard the public accountant would refer to the rules of professional conduct of the applicable
provincial institute. Proficiency is attained through formal education, training and practical experience. The reviewer
needs to undergo training and obtain professional experience in conducting reviews. Some of the skills needed in
conducting reviews would be the same as those employed in auditing. For example, skills that are employed in both
types of engagements include bringing to bear an objective and inquiring mind, applying analytical procedures and
assessing the accounting principles and disclosures of the enterprise.

.17

To judge whether the information being reported on is plausible in the circumstances, the public accountant must be in a
position to assess whether the information obtained during the course of the engagement is plausible. This requires
sufficient knowledge of the enterprise and the business in which it is involved to make intelligent inquiries and a
reasonable assessment of responses and other information obtained. It also requires a general understanding of the
manner in which the enterprise operates and an appreciation of matters that could have a significant effect on the
information being reported on. For example, when reviewing financial statements, the public accountant would be aware
of the manner of organization of the enterprise, the nature of its assets and liabilities, the sources of its revenues and the
types of its expenses. The required knowledge would include a general understanding of the accounting matters peculiar
to the business and to the industry of which it forms part. The public accountant may possess most of this knowledge
prior to the commencement of the particular engagement through previous involvement with this or similar enterprises, in
which case only limited inquiries would be needed to update such knowledge. The public accountant's objective can
normally be achieved with a less detailed knowledge of the business than is required in an audit.

.18

The public accountant, in determining the plausibility of the information being reported on needs to consider information
obtained during previous engagements. When the review is undertaken by the enterprise's auditor, consideration would
have to be given to knowledge obtained as auditor concerning the business carried on by the enterprise, the industry of
which it forms part and its internal control.

.19

A review consists primarily of:

KNOWLEDGE OF THE ENTITY'S BUSINESS

REVIEW PROCEDURES
(a)

making inquiries concerning financial, operating, contractual and other information, and considering responses
that, in addition to oral responses, may take the form of listings, schedules or other documents;
and

(b)

applying analytical procedures such as comparing the current and prior period information and considering the
reasonableness of financial and other inter-relationships. Analytical procedures performed during a review
engagement would normally be less extensive than analytical procedures performed during an audit.
Explanations for relationships and individual items that appear to be unusual would be obtained by directing
inquiries to appropriate personnel of the enterprise, the responses to which the public accountant is entitled to
accept without examination of supporting evidence as long as such responses appear plausible;

(c)

having discussions with appropriate officials of the enterprise concerning information received and the information
being reported on.

Examples of inquiry, analytical procedures and discussion are set out in the following specific situations:
(i)

financial statements, paragraph 8200.23;

(ii)

financial information other than financial statements, paragraph 8500.04; and

(iii) compliance with agreements and regulations, paragraph 8600.02.

.20

When the public accountant doubts the plausibility of the information being reported on, sufficient additional or more
extensive procedures would be carried out to resolve such doubt or confirm that a reservation is required (see
paragraph 8100.34).

.21

The enterprise may use assumptions and estimates, the plausibility of which may be difficult for the public accountant to
assess. Such assumptions and estimates may be used, for example, when it is not feasible or economical for the
enterprise to do or require as much work at an interim financial statement date as at a year-end date. In these
circumstances, the public accountant would consider whether available information establishes the plausibility of such
assumptions and estimates. On occasion, the public accountant may be unable to determine the plausibility of these
assumptions and estimates. In such cases, consideration would be given to the need to report with reservation (see
paragraph 8100.34).

.22

There is a greater risk that misstatements will not be detected in a review than in an audit. When considering the effect of a
misstatement, the measurement of what is material is made by reference to the information the public accountant is
reporting on, not the level of assurance being given.

.23

Matters that in the public accountant's professional judgment are important to support the content of the report would be
documented. Supporting working papers would describe the procedures undertaken and any unusual matters considered
during the performance of the review, including the disposition of such matters. A checklist is one form of providing a
record of work done and may be helpful in avoiding omission of important procedures, making efficient use of time and
developing consistent approaches to similar engagements.

.24

The public accountant should document matters that in his or her professional judgment are important to support the content
of the report. [JAN. 1989 *]

DOCUMENTATION

REPORTING

.25

Negative assurance reporting should be used only when the standards set out in paragraph 8100.15 have been met. [JAN.
1989*]

.26

The public accountant's communication relating to a review engagement should be entitled "Review Engagement Report"
and should:
(a)

in a scope paragraph:
(i)

specifically identify the subject matter reported on; and

(ii)

state that the review was made in accordance with Canadian generally accepted standards for review
engagements and, accordingly, consisted primarily of inquiry, analytical procedures and discussion
related to information supplied by the enterprise;

(b)

in a disclaimer paragraph, state that the review does not constitute an audit and disclaim an audit opinion; and

(c)

in a negative assurance paragraph, except when reservations are required:

(i)

follow the guidance in paragraph 8100.28 when reporting on financial statements;

(ii)

state, when reporting on other financial information, that, based on the review, nothing has come to the
public accountant's attention that causes him or her to believe that the information is not, in all
material respects, in accordance with a disclosed basis of accounting; or

(iii) state, when reporting on non-financial information, that, based on the review, nothing has come to the
public accountant's attention that causes him or her to believe that the information is not, in all
material respects, in accordance (or does not comply) with (indicate appropriate criteria). [OCT. 1,
2003 *]
.27

Each page of the information on which the public accountant reports should be conspicuously marked as being
unaudited. [JAN. 1989 *]

.28

The negative assurance paragraph of the public accountant's report on financial statements would state that nothing has
come to the public accountant's attention that causes him or her to believe that the information is not, in all material
respects, in accordance with:

.29

(a)

Canadian generally accepted accounting principles, when the financial statements are prepared for general
purposes; or

(b)

the basis of accounting described in the notes to the financial statements, only when the financial statements are
prepared:
(i)

in accordance with regulatory or legislative requirements to meet the specific needs of a regulator or a
legislator; 3 or

(ii)

in accordance with written contractual requirements such as may be set out in trust indentures or buy /
sell agreements.

Uniformity in the form of the review engagement report is desirable because it encourages a consistent approach and assists
the reader by identifying and highlighting unusual circumstances. It is suggested that a review engagement report without
reservation take the form illustrated in:
(a)

PUBLIC ACCOUNTANT'S REVIEW OF FINANCIAL STATEMENTS, paragraph 8200.42, and Examples

A and B ofAppendix B, for financial statements;

(b)

REVIEWS OF FINANCIAL INFORMATION OTHER THAN FINANCIAL STATEMENTS, paragraph 8500.06, for
financial information other than financial statements;

(c)

REVIEWS OF COMPLIANCE WITH AGREEMENTS AND REGULATIONS, paragraph 8600.04, for compliance
with agreements and regulations.

.30

The date of substantial completion of the review would be used as the date of the review engagement report. This can be
described as the date by which the public accountant has performed sufficient procedures to support the content of the
report.

.31

The terms of certain review engagements may require the public accountant to carry out work in addition to that required to
complete the review. This work might include, for example, an examination of certain items within financial statements
and the issuance of a special report with respect to those items. To avoid confusion, the results of the additional work
would normally be the subject of a separate report (see SPECIAL REPORTS, Sections 5800 to 5815).

.32

The term "reservation in the review engagement report" is used when the public accountant:

Reservations in the review engagement report

(a)

expresses negative assurance with a qualification with respect to a departure from appropriate criteria or with
respect to an inability to complete the review;

(b)

expresses an adverse statement that the information is not presented in accordance with appropriate criteria; or

(c)

is unable to express any assurance on the information because of an inability to complete the review.

.33

When changes have been made in the application of generally accepted accounting principles or other appropriate criteria
and such changes are not adequately disclosed in the information being reported on, this would represent a departure
from appropriate criteria and the public accountant would express a reservation.

.34

A reservation should be expressed in the review engagement report when the public accountant:

(a)

.35

(b)

concludes that there is a departure from the appropriate criteria; or

(c)

concludes that any significant interpretations of provisions of an agreement or regulation referred to in the report
are not appropriate or reasonable. [JAN. 1989 *]

In deciding which type of reservation (paragraph 8100.32) is appropriate, the public accountant needs to consider, in addition
to materiality:
(a)

.36

.37

is unable to complete the review because there is a lack of information or because it is impractical to obtain
satisfactory information, and is thus unable to decide whether some or all of the information being reported on
is plausible within the framework of appropriate criteria;

the degree to which the matter impairs the usefulness of the information;

(b)

the extent to which the effects of the matter on the information can be determined;

(c)

the extent to which the effects on the information can be related to specific items; and

(d)

whether the information is or may be misleading even when read in conjunction with the review engagement
report.

When a reservation is required, the review engagement report would be qualified unless the public accountant concludes:
(a)

that departures from the appropriate criteria render the information misleading or virtually useless even when read
in conjunction with the report, in which case an adverse report would be provided; or

(b)

in circumstances when the public accountant is unable to complete the review, that the limitation in scope is such
that the effect on the information of possible departures from the appropriate criteria could be so pervasive or
significant that there is no basis for expressing any assurance on the information, in which case a denial of
assurance would be provided.

When the public accountant concludes that a reservation in the review engagement report is necessary, the report should
draw attention to the reservation as follows:
(a)

the reservation paragraph should immediately precede the negative assurance paragraph;

(b)

the negative assurance paragraph should include:

(c)

(i)

wording appropriate for the type of reservation; and

(ii)

a reference to the reservation paragraph; and

in addition, when the reservation results from an inability to complete the review, the scope paragraph should
contain a reference to the reservation paragraph. [JAN. 1989 *]

.38

The reservation paragraph needs to be worded so that it does not imply that the public accountant has verified the matter
giving rise to the reservation or determined that the information, in any other respects, is in accordance with the
appropriate criteria.

.39

When a reservation is expressed in the review engagement report, the public accountant should:
(a)

.40

include all reservations known to him or her as a result of the review;

(b)

describe the reasons for each reservation; and

(c)

indicate how and, when readily determinable, the extent to which the information being reported on is affected by a
departure from the appropriate criteria. If the effects are not readily determinable, the public accountant is not
obliged to determine them but should indicate in the review engagement report that the effects have not been
determined. [JAN. 1989 *]

If the client will not accept the review engagement report containing the reservation, the public accountant would refuse to be
further associated with the engagement. In these circumstances, the public accountant would:
(a)

write to the client advising why the engagement cannot be continued; and

(b)

consider whether it is appropriate to continue the relationship with the client.

Other modifications to the review engagement report

.41

When comparative figures:

(a)

are based on information reported on by another public accountant; or

(b)

were neither audited nor reviewed,

and disclosure of such matters is not made in the information on which the public accountant reports, disclosure should be
made in a separate and final paragraph of the review engagement report. [JAN. 1989 *]
.42

When comparative figures are included and a reservation has been expressed in the auditor's report or the public
accountant's review engagement report for the preceding period, it may be appropriate to make reference to the
reservation in the review engagement report for the current period. Such a reference, however, would not normally be
appropriate when the matter giving rise to the reservation has subsequently been settled and does not impair the
comparability of the current and comparative figures. When it is appropriate to refer to a reservation of the preceding
period, the reference is best included as a separate paragraph following the negative assurance paragraph. However, if
the reservation still exists and affects the information of the current period, it would be dealt with as outlined in
paragraph 8100.34.

.43

The review engagement report would normally be addressed to the person engaging the public accountant. When it is
addressed other than to the client, it may be appropriate to indicate who has engaged the public accountant, by such
words as:

"At the request of Client Limited, I have reviewed ........"

.44

In certain circumstances, such as when reporting on financial information other than financial statements, the public
accountant may wish to indicate in a final paragraph of the review engagement report, its purpose or any restrictions on
its use, by such words as:
"This report is intended to be used solely for (indicate specific use) and is not to be referred to or distributed to any
person not a member of management of Client Limited or (name of person to whom the report is addressed)."

.45

Public accountants sometimes include in their review engagement reports other information and explanations that could be
interpreted as a reservation, although none is intended. Usually, such information and explanations would be more
appropriately disclosed in the information being reviewed. When the public accountant makes comments of this nature,
the comments would be expressed in such a way that they would not be confused with a reservation.

.46

If the public accountant expands the review engagement report to include information and explanations not intended as a
reservation, the additional information and explanations should follow the negative assurance paragraph. [JAN. 1989 *]

.47

If, after the release of the review engagement report, the public accountant becomes aware of a possible misstatement that
might have affected such report had the public accountant known about it, the matter would be discussed with
management as soon as possible. When there are differences between management and the public accountant with
respect to such matters as the existence of a misstatement or informing users of the report of a misstatement, and the
public accountant does not believe that such matters have been dealt with appropriately, consideration would be given to
seeking legal advice as to the action to be taken to discharge the public accountant's responsibilities. When revised
information is to be issued and the misstatement is of an isolated nature, the public accountant's procedures may be
confined to the misstatement and the revised report double dated. However, if the misstatement is so pervasive that it
casts doubt on the results of the review as a whole, the public accountant would re-open the review and issue a new
report with a new date. When information which has been reported on is revised because of a misstatement, the review
engagement report on the revised information would be clearly differentiated from the original report by stating, in a
separate paragraph of the new report following the negative assurance paragraph, that the previous report dated ..........
has been withdrawn and that the information has been revised. This paragraph would also include either an explanation
of the revision or a cross-reference to a note to the information explaining the revision.

Subsequent discovery of a misstatement

Document ID: 8100