What is a Review Engagement?
ISRE 2400.37 limits primary procedures to inquiry and analytical procedures. There is no control testing, no external confirmations, and no detailed substantive testing of transactions — unless those primary procedures reveal something requiring further investigation. That conditional escalation under ISRE 2400.52 is the mechanism most practitioners miss: when analytical procedures flag an unexpected fluctuation, you cannot document it and move on. You must perform additional procedures until the matter is resolved or you determine it affects the conclusion.
The conclusion is expressed in negative form under ISRE 2400.69: “Based on our review, nothing has come to our attention that causes us to believe that the financial statements are not prepared, in all material respects, in accordance with the applicable financial reporting framework.” This wording reflects the narrower scope and lower evidence threshold compared to an audit.
A review is not a softer version of an audit. It is a different engagement with a different objective, different procedures, and a different form of conclusion. Treating it as an audit with less work misunderstands the framework and produces files that satisfy neither standard.
Key Points
- Primary procedures are inquiry and analytical procedures — no control testing or confirmations unless escalation is triggered.
- ISRE 2400.52 conditional escalation requires additional procedures when something unexpected surfaces. You cannot ignore it.
- Negative-form conclusion under ISRE 2400.69 reflects limited assurance, not a watered-down opinion.
- Documentation under ISRE 2400.46 must show structured inquiries and the analytical procedures performed, not just a summary conversation note.
Why it matters in practice
NBA practice reviews found files where a review engagement consisted of a single unstructured conversation with management instead of the structured inquiries ISRE 2400 requires. The file contained a summary of the discussion but no evidence of analytical procedures, no documentation of what the practitioner expected versus what appeared in the financial statements, and no record of how unexpected items were resolved.
The conditional escalation step under ISRE 2400.52 is the most frequently omitted procedure. When analytical procedures reveal an unexpected fluctuation — revenue growing 18% while the market contracted — practitioners note the variance and accept a verbal explanation. ISRE 2400.52 requires them to do more: perform additional procedures until the matter is either resolved or the practitioner determines it must be reflected in the conclusion.
Treating a review as a compilation with a report attached is the most common structural error. A compilation under ISRS 4410 involves no assurance. A review under ISRE 2400 requires the practitioner to form a conclusion. The difference is not cosmetic — it drives what procedures you must perform and what your report represents to the reader.
Key standard references
- ISRE 2400.37: Defines the primary procedures for a review engagement as inquiry and analytical procedures.
- ISRE 2400.52: Requires additional procedures when initial procedures indicate a possible material misstatement (conditional escalation).
- ISRE 2400.69: Specifies the negative-form conclusion wording for the review report.
- ISRE 2400.46: Documentation requirements for review engagements.
Related terms
Frequently asked questions
What is the difference between a review and an audit?
A review provides limited assurance through inquiry and analytical procedures, with a negative-form conclusion ('nothing has come to our attention'). An audit provides reasonable assurance through extensive evidence gathering, with a positive-form opinion ('in our opinion, the financial statements present fairly').
What happens when a review procedure reveals a potential misstatement?
ISRE 2400.52 requires the practitioner to perform additional procedures until the matter is resolved or determined to affect the conclusion. The practitioner cannot simply note the issue and move on.