Review of Interim Financial Information Performed by The Independent Auditor of The Entity

Philippine Standard on Review Engagements 2410
REVIEW OF INTERIM FINANCIAL INFORMATION

PERFORMED BY THE INDEPENDENT AUDITOR OF THE
ENTITY
Conforming Amendments
PSA 210, Terms of Audit Engagements
PSRE 2400, Engagements to Review Financial Statements
PHILIPPINE STANDARD ON REVIEW ENGAGEMENTS 2410

REVIEW OF INTERIM FINANCIAL INFORMATION PERFORMED BY
THE INDEPENDENT AUDITOR OF THE ENTITY
(Effective for reviews of interim financial information for

periods beginning on or after December 15, 2006. Earlier
adoption is permissible.)
CONTENTS
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Paragraph
Introduction.......................................................................................................... 1-3
General Principles of a Review of Interim Financial Information....................... 4-6
Objective of an Engagement to Review Interim

Financial Information .......................................................................................... 7-9
Agreeing the Terms of the Engagement ............................................................. 10-11
Procedures for a Review of Interim Financial Information ................................. 12-29
Evaluation of Misstatements................................................................................ 30-

33
Management Representations .............................................................................. 34-35
Auditor’s Responsibility for Accompanying Information .................................. 36-37
Communication.................................................................................................... 38-
42
Reporting the Nature, Extent and Results of the Review of
Interim Financial Information ............................................................................. 43-63
Documentation..................................................................................................... . 64
Effective Date ...................................................................................................... 65
Acknowledgment ………………………………………………………………. 66-67
Appendix 1: Example of an Engagement Letter for a Review

of Interim Financial Information
Appendix 2: Analytical Procedures the Auditor May Consider When

Performing a Review of Interim Financial Information
Appendix 3: Example of a Management Representation Letter
Appendix 4: Examples of Review Reports on Interim Financial Information
Appendix 5: Examples of Review Reports with a Qualified Conclusion for

a Departure from the Applicable Financial Reporting
Framework
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Appendix 6: Examples of Review Reports with a Qualified Conclusion

for a Limitation on Scope Not Imposed by Management
Appendix 7: Examples of Review Reports with an Adverse Conclusion

for a Departure from the Applicable Financial Reporting
Framework
Philippine Standard on Review Engagements (PSRE) 2410, “Review of Interim Financial

Information Performed by the Independent Auditor of the Entity” should be read in the
context of the “Preface to the Philippine Standards on Quality Control, Auditing,
Assurance and Related Services,” which sets out the application and authority of PSREs.
Review of Interim Financial Information Performed by the

Independent Auditor of the Entity
Introduction
1. The purpose of this Philippine Standard on Review Engagements (PSRE) is to

establish standards and provide guidance on the auditor’s professional
responsibilities when the auditor undertakes an engagement to review interim
financial information of an audit client, and on the form and content of the
report. The term “auditor” is used throughout this PSRE, not because the
auditor is performing an audit function but because the scope of this PSRE is
limited to a review of interim financial information performed by the
independent auditor of the financial statements of the entity.
2. For purposes of this PSRE, interim financial information is financial information

that is prepared and presented in accordance with an applicable financial
reporting framework1 and comprises either a complete or a condensed set of
financial statements for a period that is shorter than the entity’s financial year.
3. The auditor who is engaged to perform a review of interim financial

information should perform the review in accordance with this PSRE. Through
performing the audit of the annual financial statements, the auditor obtains an
1 For example, Philippine Financial Reporting Standards as issued by the Philippine Accounting Standards
Board.
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understanding of the entity and its environment, including its internal control.
When the auditor is engaged to review the interim financial information, this
understanding is updated through inquiries made in the course of the review,
and assists the auditor in focusing the inquiries to be made and the analytical
and other review procedures to be applied. A practitioner who is engaged to
perform a review of interim financial information, and who is not the auditor of
the entity, performs the review in accordance with PSRE 2400, “Engagements
to Review Financial Statements.” As the practitioner does not ordinarily have
the same understanding of the entity and its environment, including its internal
control, as the auditor of the entity, the practitioner needs to carry out
different inquiries and procedures to meet the objective of the review.
General Principles of a Review of Interim Financial Information
4. The auditor should comply with the ethical requirements relevant to the audit
of the annual financial statements of the entity. These ethical requirements
govern the auditor’s professional responsibilities in the following areas:
independence, integrity, objectivity, professional competence and due care,
confidentiality, professional behavior, and technical standards.
5. The auditor should implement quality control procedures that are applicable to
the individual engagement. The elements of quality control that are relevant to
an individual engagement include leadership responsibilities for quality on the
engagement, ethical requirements, acceptance and continuance of client
relationships and specific engagements, assignment of engagement teams,
engagement performance, and monitoring.
6. The auditor should plan and perform the review with an attitude of
professional skepticism, recognizing that circumstances may exist that cause
the interim financial information to require a material adjustment for it to be
prepared, in all material respects, in accordance with the applicable financial
reporting framework. An attitude of professional skepticism means that the
auditor makes a critical assessment, with a questioning mind, of the validity of
evidence obtained and is alert to evidence that contradicts or brings into
question the reliability of documents or representations by management of the
entity.
Objective of an Engagement to Review Interim Financial

Information
7. The objective of an engagement to review interim financial information is to

enable the auditor to express a conclusion whether, on the basis of the review,
anything has come to the auditor’s attention that causes the auditor to believe
that the interim financial information is not prepared, in all material respects,
in accordance with an applicable financial reporting framework. The auditor
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makes inquiries, and performs analytical and other review procedures in order
to reduce to a moderate level the risk of expressing an inappropriate
conclusion when the interim financial information is materially misstated.
8. The objective of a review of interim financial information differs significantly

from that of an audit conducted in accordance with Philippine Standards on
Auditing (PSAs). A review of interim financial information does not provide a
basis for expressing an opinion whether the financial information is presented
fairly, in all material respects, in accordance with an applicable financial
reporting framework.
9. A review, in contrast to an audit, is not designed to obtain reasonable

assurance that the interim financial information is free from material
misstatement. A review consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review may bring significant matters affecting the
interim financial information to the auditor’s attention, but it does not provide
all of the evidence that would be required in an audit.
Agreeing the Terms of the Engagement
10. The auditor and the client should agree on the terms of the engagement.
11. The agreed terms of the engagement are ordinarily recorded in an engagement
letter. Such a communication helps to avoid misunderstandings regarding the
nature of the engagement and, in particular, the objective and scope of the
review, management’s responsibilities, the extent of the auditor’s
responsibilities, the assurance obtained, and the nature and form of the report.
The communication ordinarily covers the following matters:
• The objective of a review of interim financial information.
• The scope of the review.
• Management’s responsibility for the interim financial information.
• Management’s responsibility for establishing and maintaining effective

internal control relevant to the preparation of interim financial
information.
• Management’s responsibility for making all financial records and related

information available to the auditor.
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• Management’s agreement to provide written representations to the

auditor to confirm representations made orally during the review, as
well as representations that are implicit in the entity’s records.
• The anticipated form and content of the report to be issued, including

the identity of the addressee of the report.
• Management’s agreement that where any document containing interim

financial information indicates that the interim financial information has
been reviewed by the entity’s auditor, the review report will also be
included in the document.
An illustrative engagement letter is set out in Appendix 1 to this PSRE. The terms of
engagement to review interim financial information can also be combined with the
terms of engagement to audit the annual financial statements.
Procedures for a Review of Interim Financial Information
Understanding the Entity and its Environment, Including its Internal Control
12. The auditor should have an understanding of the entity and its environment,
including its internal control, as it relates to the preparation of both annual and
interim financial information, sufficient to plan and conduct the engagement so
as to be able to:
(a) Identify the types of potential material misstatement and consider the
likelihood of their occurrence; and
(b) Select the inquiries, analytical and other review procedures that will
provide the auditor with a basis for reporting whether anything has
come to the auditor’s attention that causes the auditor to believe that
the interim financial information is not prepared, in all material
respects, in accordance with the applicable financial reporting
framework.
13. As required by PSA 315, “Understanding the Entity and its Environment and
Assessing the Risks of Material Misstatement,” the auditor who has audited the
entity’s financial statements for one or more annual periods has obtained an
understanding of the entity and its environment, including its internal control,
as it relates to the preparation of annual financial information that was
sufficient to conduct the audit. In planning a review of interim financial
information, the auditor updates this understanding. The auditor also obtains a
sufficient understanding of internal control as it relates to the preparation of
interim financial information as it may differ from internal control as it relates
to annual financial information.
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14. The auditor uses the understanding of the entity and its environment, including
its internal control, to determine the inquiries to be made and the analytical
and other review procedures to be applied, and to identify the particular
events, transactions or assertions to which inquiries may be directed or
analytical or other review procedures applied.
15. The procedures performed by the auditor to update the understanding of the
entity and its environment, including its internal control, ordinarily include the
following:
• Reading the documentation, to the extent necessary, of the preceding

year’s audit and reviews of prior interim period(s) of the current year
and corresponding interim period(s) of the prior year, to enable the
auditor to identify matters that may affect the current-period interim
financial information.
• Considering any significant risks, including the risk of management
override of controls, that were identified in the audit of the prior year’s
financial statements.
• Reading the most recent annual and comparable prior period interim
• Considering materiality with reference to the applicable financial

reporting framework as it relates to interim financial information to
assist in determining the nature and extent of the procedures to be
performed and evaluating the effect of misstatements.
• Considering the nature of any corrected material misstatements and

any identified uncorrected immaterial misstatements in the prior year’s
• Considering significant financial accounting and reporting matters that

may be of continuing significance such as material weaknesses in
internal control.
• Considering the results of any audit procedures performed with respect

to the current year’s financial statements.
• Considering the results of any internal audit performed and the

subsequent actions taken by management.
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• Inquiring of management about the results of management’s

assessment of the risk that the interim financial information may be
materially misstated as a result of fraud.
• Inquiring of management about the effect of changes in the entity’s

business activities.
• Inquiring of management about any significant changes in internal

control and the potential effect of any such changes on the preparation
of interim financial information.
• Inquiring of management of the process by which the interim financial

information has been prepared and the reliability of the underlying
accounting records to which the interim financial information is agreed
or reconciled.
16. The auditor determines the nature of the review procedures, if any, to be
performed for components and, where applicable, communicates these
matters to other auditors involved in the review. Factors to be considered
include the materiality of, and risk of misstatement in, the interim financial
information of components, and the auditor’s understanding of the extent to
which internal control over the preparation of such information is centralized
or decentralized.
17. In order to plan and conduct a review of interim financial information, a

recently appointed auditor, who has not yet performed an audit of the annual
financial statements in accordance with PSAs, should obtain an understanding
of the entity and its environment, including its internal control, as it relates to
the preparation of both annual and interim financial information.
18. This understanding enables the auditor to focus the inquiries made, and the
analytical and other review procedures applied in performing a review of
interim financial information in accordance with this PSRE. As part of obtaining
this understanding, the auditor ordinarily makes inquiries of the predecessor
auditor and, where practicable, reviews the predecessor auditor’s
documentation for the preceding annual audit, and for any prior interim
periods in the current year that have been reviewed by the predecessor
auditor. In doing so, the auditor considers the nature of any corrected
misstatements, and any uncorrected misstatements aggregated by the
predecessor auditor, any significant risks, including the risk of management
override of controls, and significant accounting and any reporting matters that
may be of continuing significance, such as material weaknesses in internal
control.
Inquiries, Analytical and Other Review Procedures

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19. The auditor should make inquiries, primarily of persons responsible for financial
and accounting matters, and perform analytical and other review procedures to
enable the auditor to conclude whether, on the basis of the procedures
performed, anything has come to the auditor’s attention that causes the
auditor to believe that the interim financial information is not prepared, in all
material respects, in accordance with the applicable financial reporting
framework.
20. A review ordinarily does not require tests of the accounting records through
inspection, observation or confirmation. Procedures for performing a review of
interim financial information are ordinarily limited to making inquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures, rather than corroborating
information obtained concerning significant accounting matters relating to the
interim financial information. The auditor’s understanding of the entity and its
environment, including its internal control, the results of the risk assessments
relating to the preceding audit and the auditor’s consideration of materiality as
it relates to the interim financial information, affects the nature and extent of
the inquiries made, and analytical and other review procedures applied.
21. The auditor ordinarily performs the following procedures:
• Reading the minutes of the meetings of shareholders, those charged

with governance, and other appropriate committees to identify matters
that may affect the interim financial information, and inquiring about
matters dealt with at meetings for which minutes are not available that
may affect the interim financial information.
• Considering the effect, if any, of matters giving rise to a modification of

the audit or review report, accounting adjustments or unadjusted
misstatements, at the time of the previous audit or reviews.
• Communicating, where appropriate, with other auditors who are

performing a review of the interim financial information of the reporting
entity’s significant components.
• Inquiring of members of management responsible for financial and

accounting matters, and others as appropriate about the following:
o Whether the interim financial information has been prepared and presented in
accordance with the applicable financial reporting framework.
o Whether there have been any changes in accounting principles

or in the methods of applying them.
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Whether any new transactions have necessitated the application of a new

o
accounting principle.
o Whether the interim financial information contains any known uncorrected
misstatements.
o Unusual or complex situations that may have affected the
interim financial information, such as a business combination or
disposal of a segment of the business.
o Significant assumptions that are relevant to the fair value measurement or
disclosures and management’s intention and ability to carry
out specific courses of action on behalf of the entity.
o Whether related party transactions have been appropriately
accounted for and disclosed in the interim financial information.
o Significant changes in commitments and contractual obligations.
o Significant changes in contingent liabilities including litigation or claims.
o Compliance with debt covenants.
o Matters about which questions have arisen in the course of applying the
review procedures.
o Significant transactions occurring in the last several days of the
interim period or the first several days of the next interim period.
o Knowledge of any fraud or suspected fraud affecting the entity involving:
− Management;
− Employees who have significant roles in internal control;

or
− Others where the fraud could have a material effect on
the interim financial information.
o Knowledge of any allegations of fraud, or suspected fraud,
affecting the entity’s interim financial information communicated
by employees, former employees, analysts, regulators, or others.
o Knowledge of any actual or possible noncompliance with laws

and regulations that could have a material effect on the interim
• Applying analytical procedures to the interim financial information
designed to identify relationships and individual items that appear to be
unusual and that may reflect a material misstatement in the interim
financial information. Analytical procedures may include ratio analysis
and statistical techniques such as trend analysis or regression analysis
and may be performed manually or with the use of computer-assisted
techniques. Appendix 2 to this PSRE contains examples of analytical
procedures the auditor may consider when performing a review of
interim financial information.
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• Reading the interim financial information, and considering whether

anything has come to the auditor’s attention that causes the auditor to
believe that the interim financial information is not prepared, in all
material respects, in accordance with the applicable financial reporting
framework.
22. The auditor may perform many of the review procedures before or
simultaneously with the entity’s preparation of the interim financial
information. For example, it may be practicable to update the understanding
of the entity and its environment, including its internal control, and begin
reading applicable minutes before the end of the interim period. Performing
some of the review procedures earlier in the interim period also permits early
identification and consideration of significant accounting matters affecting the
23. The auditor performing the review of interim financial information is also
engaged to perform an audit of the annual financial statements of the entity.
For convenience and efficiency, the auditor may decide to perform certain
audit procedures concurrently with the review of interim financial information.
For example, information gained from reading the minutes of meetings of the
board of directors in connection with the review of the interim financial
information also may be used for the annual audit. The auditor may also
decide to perform, at the time of the interim review, auditing procedures that
would need to be performed for the purpose of the audit of the annual
financial statements, for example, performing audit procedures on significant
or unusual transactions that occurred during the period, such as business
combinations, restructurings, or significant revenue transactions.
24. A review of interim financial information ordinarily does not require
corroborating the inquiries about litigation or claims. It is, therefore, ordinarily
not necessary to send an inquiry letter to the entity’s lawyer. Direct
communication with the entity’s lawyer with respect to litigation or claims may,
however, be appropriate if a matter comes to the auditor’s attention that
causes the auditor to question whether the interim financial information is not
prepared, in all material respects, in accordance with the applicable financial
reporting framework, and the auditor believes the entity’s lawyer may have
pertinent information.
25. The auditor should obtain evidence that the interim financial information
agrees or reconciles with the underlying accounting records. The auditor may
obtain evidence that the interim financial information agrees or reconciles with
the underlying accounting records by tracing the interim financial information
to:
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(a) The accounting records, such as the general ledger, or a consolidating

schedule that agrees or reconciles with the accounting records; and
(b) Other supporting data in the entity’s records as necessary.
26. The auditor should inquire whether management has identified all events up to
the date of the review report that may require adjustment to or disclosure in
the interim financial information. It is not necessary for the auditor to perform
other procedures to identify events occurring after the date of the review
report.
27. The auditor should inquire whether management has changed its assessment
of the entity’s ability to continue as a going concern. When, as a result of this
inquiry or other review procedures, the auditor becomes aware of events or
conditions that may cast significant doubt on the entity’s ability to continue as
a going concern, the auditor should:
(a) Inquire of management as to its plans for future actions based on its
going concern assessment, the feasibility of these plans, and whether
management believes that the outcome of these plans will improve the
situation; and
(b) Consider the adequacy of the disclosure about such matters in the
28. Events or conditions which may cast significant doubt on the entity’s ability to
continue as a going concern may have existed at the date of the annual
financial statements or may be identified as a result of inquiries of
management or in the course of performing other review procedures. When
such events or conditions come to the auditor’s attention, the auditor inquires
of management as to its plans for future action, such as its plans to liquidate
assets, borrow money or restructure debt, reduce or delay expenditures, or
increase capital. The auditor also inquires as to the feasibility of management’s
plans and whether management believes that the outcome of these plans will
improve the situation. However, it is not ordinarily necessary for the auditor to
corroborate the feasibility of management’s plans and whether the outcome of
these plans will improve the situation.
29. When a matter comes to the auditor’s attention that leads the auditor to
question whether a material adjustment should be made for the interim
financial information to be prepared, in all material respects, in accordance
with the applicable financial reporting framework, the auditor should make
additional inquiries or perform other procedures to enable the auditor to
express a conclusion in the review report. For example, if the auditor’s review
procedures lead the auditor to question whether a significant sales transaction
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is recorded in accordance with the applicable financial reporting framework,

the auditor performs additional procedures sufficient to resolve the auditor’s
questions, such as discussing the terms of the transaction with senior
marketing and accounting personnel, or reading the sales contract.
Evaluation of Misstatements
30. The auditor should evaluate, individually and in the aggregate, whether
uncorrected misstatements that have come to the auditor’s attention are
material to the interim financial information.
31. A review of interim financial information, in contrast to an audit engagement, is

not designed to obtain reasonable assurance that the interim financial
information is free from material misstatement. However, misstatements
which come to the auditor’s attention, including inadequate disclosures, are
evaluated individually and in the aggregate to determine whether a material
adjustment is required to be made to the interim financial information for it to
be prepared, in all material respects, in accordance with the applicable financial
reporting framework.
32. The auditor exercises professional judgment in evaluating the materiality of any
misstatements that the entity has not corrected. The auditor considers matters
such as the nature, cause and amount of the misstatements, whether the
misstatements originated in the preceding year or interim period of the current
year, and the potential effect of the misstatements on future interim or annual
periods.
33. The auditor may designate an amount below which misstatements need not be
aggregated, because the auditor expects that the aggregation of such amounts
clearly would not have a material effect on the interim financial information. In
so doing, the auditor considers the fact that the determination of materiality
involves quantitative as well as qualitative considerations, and that
misstatements of a relatively small amount could nevertheless have a material
effect on the interim financial information.
Management Representations
34. The auditor should obtain written representation from management that:
(a) It acknowledges its responsibility for the design and implementation of

internal control to prevent and detect fraud and error;
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(b) The interim financial information is prepared and presented in

accordance with the applicable financial reporting framework;
(c) It believes the effect of those uncorrected misstatements aggregated by

the auditor during the review are immaterial, both individually and in
the aggregate, to the interim financial information taken as a whole. A
summary of such items is included in or attached to the written
representations;
(d) It has disclosed to the auditor all significant facts relating to any frauds
or suspected frauds known to management that may have affected the
entity;
(e) It has disclosed to the auditor the results of its assessment of the risks
that the interim financial information may be materially misstated as a
result of fraud;2
(f) It has disclosed to the auditor all known actual or possible

noncompliance with laws and regulations whose effects are to be
considered when preparing the interim financial information; and
(g) It has disclosed to the auditor all significant events that have occurred
subsequent to the balance sheet date and through to the date of the
review report that may require adjustment to or disclosure in the
35. The auditor obtains additional representations as are appropriate related to

matters specific to the entity’s business or industry. An illustrative
management representation letter is set out in Appendix 3 to this PSRE.
Auditor’s Responsibility for Accompanying Information
36. The auditor should read the other information that accompanies the interim
financial information to consider whether any such information is materially
inconsistent with the interim financial information. If the auditor identifies a
material inconsistency, the auditor considers whether the interim financial
information or the other information needs to be amended. If an amendment
is necessary in the interim financial information and management refuses to
2 Paragraph 35 of PSA 240, “The Auditor’s Responsibility to Consider Fraud in an Audit of Financial
Statements” explains that the nature, extent and frequency of such an assessment vary from entity to
entity and that management may make a detailed assessment on an annual basis or as part of continuous
monitoring. Accordingly, this representation, insofar as it relates to the interim financial information, is
tailored to the entity’s specific circumstances.
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make the amendment, the auditor considers the implications for the review
report. If an amendment is necessary in the other information and
management refuses to make the amendment, the auditor considers including
in the review report an additional paragraph describing the material
inconsistency, or taking other actions, such as withholding the issuance of the
review report or withdrawing from the engagement. For example,
management may present alternative measures of earnings that more
positively portray financial performance than the interim financial information,
and such alternative measures are given excessive prominence, are not clearly
defined, or not clearly reconciled to the interim financial information such that
they are confusing and potentially misleading.
37. If a matter comes to the auditor’s attention that causes the auditor to believe
that the other information appears to include a material misstatement of fact,
the auditor should discuss the matter with the entity’s management. While
reading the other information for the purpose of identifying material
inconsistencies, an apparent material misstatement of fact may come to the
auditor’s attention (i.e., information, not related to matters appearing in the
interim financial information, that is incorrectly stated or presented). When
discussing the matter with the entity’s management, the auditor considers the
validity of the other information and management’s responses to the auditor’s
inquiries, whether valid differences of judgment or opinion exist and whether
to request management to consult with a qualified third party to resolve the
apparent misstatement of fact. f an amendment is necessary to correct a
material misstatement of fact and management refuses to make the
amendment, the auditor considers taking further action as appropriate, such as
notifying those charged with governance and obtaining legal advice.
Communication
38. When, as a result of performing the review of interim financial information, a

matter comes to the auditor’s attention that causes the auditor to believe that
it is necessary to make a material adjustment to the interim financial
information for it to be prepared, in all material respects, in accordance with
the applicable financial reporting framework, the auditor should communicate
this matter as soon as practicable to the appropriate level of management.
39. When, in the auditor’s judgment, management does not respond appropriately
within a reasonable period of time, the auditor should inform those charged
with governance. The communication is made as soon as practicable, either
orally or in writing. The auditor’s decision whether to communicate orally or in
writing is affected by factors such as the nature, sensitivity and significance of
the matter to be communicated and the timing of such communications. If the
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information is communicated orally, the auditor documents the

communication.
40. When, in the auditor’s judgment, those charged with governance do not
respond appropriately within a reasonable period of time, the auditor should
consider:
(a) Whether to modify the report; or
(b) The possibility of withdrawing from the engagement; and
(c) The possibility of resigning from the appointment to audit the annual
41. When, as a result of performing the review of interim financial information, a

matter comes to the auditor’s attention that causes the auditor to believe in
the existence of fraud or noncompliance by the entity with laws and
regulations the auditor should communicate the matter as soon as practicable
to the appropriate level of management. The determination of which level of
management is the appropriate one is affected by the likelihood of collusion or
the involvement of a member of management. The auditor also considers the
need to report such matters to those charged with governance and considers
the implication for the review.
42. The auditor should communicate relevant matters of governance interest
arising from the review of interim financial information to those charged with
governance. As a result of performing the review of the interim financial
information, the auditor may become aware of matters that in the opinion of
the auditor are both important and relevant to those charged with governance
in overseeing the financial reporting and disclosure process. The auditor
communicates such matters to those charged with governance.
Reporting the Nature, Extent and Results of the Review of Interim

Financial Information
43. The auditor should issue a written report that contains the following:
(a) An appropriate title.
(b) An addressee, as required by the circumstances of the engagement.
(c) Identification of the interim financial information reviewed, including

identification of the title of each of the statements contained in the
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complete or condensed set of financial statements and the date and

period covered by the interim financial information.
(d) If the interim financial information comprises a complete set of general

purpose financial statements prepared in accordance with a financial
reporting framework designed to achieve fair presentation, a statement
that management is responsible for the preparation and fair
presentation of the interim financial information in accordance with the
applicable financial reporting framework.
(e) In other circumstances, a statement that management is responsible for

the preparation and presentation of the interim financial information in
accordance with the applicable financial reporting framework.
(f) A statement that the auditor is responsible for expressing a conclusion

on the interim financial information based on the review.
(g) A statement that the review of the interim financial information was
conducted in accordance with Philippine Standard on Review
Engagements (PSRE) 2410, “Review of Interim Financial Information
Performed by the Independent Auditor of the Entity,” and a statement
that that such a review consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical
and other review procedures.
(h) A statement that a review is substantially less in scope than an audit

conducted in accordance with Philippine Standards on Auditing and
consequently does not enable the auditor to obtain assurance that the
auditor would become aware of all significant matters that might be
identified in an audit and that accordingly no audit opinion is expressed.
(i) If the interim financial information comprises a complete set of general

purpose financial statements prepared in accordance with a financial
reporting framework designed to achieve fair presentation, a conclusion
as to whether anything has come to the auditor’s attention that causes
the auditor to believe that the interim financial information does not
present fairly, in all material respects, in accordance with the applicable
financial reporting framework (including a reference to the jurisdiction
or country of origin of the financial reporting framework when the
financial reporting framework used is not Philippine Financial Reporting
Standards); or
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(j) In other circumstances, a conclusion as to whether anything has come

to the auditor’s attention that causes the auditor to believe that the
interim financial information is not prepared, in all material respects, in
accordance with the applicable financial reporting framework (including
a reference to the jurisdiction or country of origin of the financial
reporting framework when the financial reporting framework used is
not Philippine Financial Reporting Standards).
(k) The date of the report.
(l) The location in the country or jurisdiction where the auditor practices.
(m) The auditor’s signature.
Illustrative review reports are set out in Appendix 4 to this PSRE.
44. In some cases, law or regulation governing the review of interim financial
information may prescribe wording for the auditor’s conclusion that is different
from the wording described in paragraph 43(i) or (j). Although the auditor may
be obliged to use the prescribed wording, the auditor’s responsibilities as
described in this PSRE for coming to the conclusion remain the same.
Departure from the Applicable Financial Reporting Framework
45. The auditor should express a qualified or adverse conclusion when a matter has
come to the auditor’s attention that causes the auditor to believe that a
material adjustment should be made to the interim financial information for it
to be prepared, in all material respects, in accordance with the applicable
financial reporting framework.
46. If matters have come to the auditor’s attention that cause the auditor to
believe that the interim financial information is or may be materially affected
by a departure from the applicable financial reporting framework, and
management does not correct the interim financial information, the auditor
modifies the review report. The modification describes the nature of the
departure and, if practicable, states the effects on the interim financial
information. If the information that the auditor believes is necessary for
adequate disclosure is not included in the interim financial information, the
auditor modifies the review report and, if practicable, includes the necessary
information in the review report. The modification to the review report is
ordinarily accomplished by adding an explanatory paragraph to the review
report, and qualifying the conclusion. Illustrative review reports with a
qualified conclusion are set out in Appendix 5 to this PSRE.
- 18 - PSRE 2410
47. When the effect of the departure is so material and pervasive to the interim
financial information that the auditor concludes a qualified conclusion is not
adequate to disclose the misleading or incomplete nature of the interim
financial information, the auditor expresses an adverse conclusion. Illustrative
review reports with an adverse conclusion are set out in Appendix 7 to this
PSRE.
Limitation on Scope
48. A limitation on scope ordinarily prevents the auditor from completing the
review.
49. When the auditor is unable to complete the review, the auditor should
communicate, in writing, to the appropriate level of management and to those
charged with governance the reason why the review cannot be completed, and
consider whether it is appropriate to issue a report.
Limitation on Scope Imposed by Management
50. The auditor does not accept an engagement to review the interim financial
information if the auditor’s preliminary knowledge of the engagement
circumstances indicates that the auditor would be unable to complete the
review because there will be a limitation on the scope of the auditor’s review
imposed by management of the entity.
51. If, after accepting the engagement, management imposes a limitation on the
scope of the review, the auditor requests the removal of that limitation. If
management refuses to do so, the auditor is unable to complete the review
and express a conclusion. In such cases, the auditor communicates, in writing,
to the appropriate level of management and those charged with governance
the reason why the review cannot be completed. Nevertheless, if a matter
comes to the auditor’s attention that causes the auditor to believe that a
material adjustment to the interim financial information is necessary for it to
reporting framework, the auditor communicates such matters in accordance
with the guidance in paragraphs 38-40.
52. The auditor also considers the legal and regulatory responsibilities, including
whether there is a requirement for the auditor to issue a report. If there is
such a requirement, the auditor disclaims a conclusion, and provides in the
review report the reason why the review cannot be completed. However, if a
matter comes to the auditor’s attention that causes the auditor to believe that
a material adjustment to the interim financial information is necessary for it to
- 19 - PSRE 2410

reporting framework, the auditor also communicates such a matter in the
report.
Other Limitations on Scope
53. A limitation on scope may occur due to circumstances other than a limitation
on scope imposed by management. In such circumstances, the auditor is
ordinarily unable to complete the review and express a conclusion and is
guided by paragraphs 51-52. There may be, however, some rare circumstances
where the limitation on the scope of the auditor’s work is clearly confined to
one or more specific matters that, while material, are not in the auditor’s
judgment pervasive to the interim financial information. In such circumstances,
the auditor modifies the review report by indicating that, except for the matter
which is described in an explanatory paragraph to the review report, the review
was conducted in accordance with this PSRE, and by qualifying the conclusion.
Illustrative review reports with a qualified conclusion are set out in Appendix 6
to this PSRE.
54. The auditor may have expressed a qualified opinion on the audit of the latest
annual financial statements because of a limitation on the scope of that audit.
The auditor considers whether that limitation on scope still exists and, if so, the
implications for the review report.
Going Concern and Significant Uncertainties
55. In certain circumstances, an emphasis of matter paragraph may be added to a

review report, without affecting the auditor’s conclusion, to highlight a matter
that is included in a note to the interim financial information that more
extensively discusses the matter. The paragraph would preferably be included
after the conclusion paragraph and ordinarily refers to the fact that the
conclusion is not qualified in this respect.
56. If adequate disclosure is made in the interim financial information, the auditor
should add an emphasis of matter paragraph to the review report to highlight a
material uncertainty relating to an event or condition that may cast significant
doubt on the entity’s ability to continue as a going concern.
57. The auditor may have modified a prior audit or review report by adding an
emphasis of matter paragraph to highlight a material uncertainty relating to an
event or condition that may cast significant doubt on the entity’s ability to
continue as a going concern. If the material uncertainty still exists and
adequate disclosure is made in the interim financial information, the auditor
modifies the review report on the current interim financial information by
adding a paragraph to highlight the continued material uncertainty.
- 20 - PSRE 2410
58. If, as a result of inquiries or other review procedures, a material uncertainty

relating to an event or condition comes to the auditor’s attention that may cast
significant doubt on the entity’s ability to continue as a going concern, and
adequate disclosure is made in the interim financial information the auditor
modifies the review report by adding an emphasis of matter paragraph.
59. If a material uncertainty that casts significant doubt about the entity’s ability to
continue as a going concern is not adequately disclosed in the interim financial
information, the auditor should express a qualified or adverse conclusion, as
appropriate. The report should include specific reference to the fact that there
is such a material uncertainty.
60. The auditor should consider modifying the review report by adding a paragraph
to highlight a significant uncertainty (other than a going concern problem) that
came to the auditor’s attention, the resolution of which is dependent upon
future events and which may affect the interim financial information.
Other Considerations
61. The terms of the engagement include management’s agreement that where
any document containing interim financial information indicates that such
information has been reviewed by the entity’s auditor, the review report will
also be included in the document. If management has not included the review
report in the document, the auditor considers seeking legal advice to assist in
determining the appropriate course of action in the circumstances.
62. If the auditor has issued a modified review report and management issues the
interim financial information without including the modified review report in
the document containing the interim financial information, the auditor
considers seeking legal advice to assist in determining the appropriate course
of action in the circumstances, and the possibility of resigning from the
appointment to audit the annual financial statements.
63. Interim financial information consisting of a condensed set of financial

statements does not necessarily include all the information that would be
included in a complete set of financial statements, but may rather present an
explanation of the events and changes that are significant to an understanding
of the changes in the financial position and performance of the entity since the
annual reporting date. This is because it is presumed that the users of the
interim financial information will have access to the latest audited financial
statements, such as is the case with listed entities. In other circumstances, the
auditor discusses with management the need for such interim financial
information to include a statement that it is to be read in conjunction with the
- 21 - PSRE 2410
latest audited financial statements. In the absence of such a statement, the

auditor considers whether, without a reference to the latest audited financial
statements, the interim financial information is misleading in the
circumstances, and the implications for the review report.
Documentation
64. The auditor should prepare review documentation that is sufficient and
appropriate to provide a basis for the auditor’s conclusion and to provide
evidence that the review was performed in accordance with this PSRE and
applicable legal and regulatory requirements. The documentation enables an
experienced auditor having no previous connection with the engagement to
understand the nature, timing and extent of the inquiries made, and analytical
and other review procedures applied, information obtained, and any significant
matters considered during the performance of the review, including the
disposition of such matters.
Effective Date
65. This PSRE is effective for reviews of interim financial information for periods
beginning on or after December 15, 2006. Earlier adoption of the PSRE is
permissible.
Acknowledgment
66. This PSRE is based on International Standard on Review Engagements (ISRE)

2410, “Review of Interim Financial Information Performed by the Independent
Auditor of the Entity,” issued by the International Auditing and Assurance
Standards Board.
67. There are no significant differences between this PSRE 2410 and ISRE 2410.
Public Sector Perspective
1. Paragraph 10 requires that the auditor and the client agree on the terms of
engagement. Paragraph 11 explains that an engagement letter helps to avoid
misunderstandings regarding the nature of the engagement and, in particular,
the objective and scope of the review, management’s responsibilities, the
extent of the auditor’s responsibilities, the assurance obtained, and the nature
and form of the report. Law or regulation governing review engagements in
the public sector ordinarily mandates the appointment of the auditor.
Consequently, engagement letters may not be a widespread practice in the
public sector. Nevertheless, an engagement letter setting out the matters
- 22 - PSRE 2410
referred to in paragraph 11 may be useful to both the public sector auditor and
the client. Public sector auditors, therefore, consider agreeing with the client
the terms of a review engagement by way of an engagement letter.
2. In the public sector, the auditor’s statutory audit obligation may extend to
other work, such as a review of interim financial information. Where this is the
case, the public sector auditor cannot avoid such an obligation and,
consequently, may not be in a position not to accept (see paragraph 50) or to
withdraw from a review engagement (see paragraphs 36 and 40(b)). The public
sector auditor also may not be in the position to resign from the appointment
to audit the annual financial statements (see paragraphs 40(c)) and 62).
3. Paragraph 41 discusses the auditor’s responsibility when a matter comes to the

auditor’s attention that causes the auditor to believe in the existence of fraud
or noncompliance by the entity with laws and regulations. In the public sector,
the auditor may be subject to statutory or other regulatory requirements to
report such a matter to regulatory or other public authorities.
Appendix 1
Example of an Engagement Letter for a Review of Interim

Financial Information
The following letter is to be used as a guide in conjunction with the consideration

outlined in paragraph 10 of this PSRE and will need to be adapted according to
individual requirements and circumstances.
To the Board of Directors (or the appropriate representative of senior management)
We are providing this letter to confirm our understanding of the terms and
objectives of our engagement to review the entity’s interim balance sheet as at June
30, 20X1 and the related statements of income, changes in equity and cash flows for
the six-month period then ended.
Our review will be conducted in accordance with Philippine Standard on Review

Engagements 2410, “Review of Interim Financial Information Performed by the
Independent Auditor of the Entity” issued by the Auditing and Assurance Standards
Council with the objective of providing us with a basis for reporting whether anything
has come to our attention that causes us to believe that the interim financial
- 23 - PSRE 2410
information is not prepared, in all material respects, in accordance with the [indicate
applicable financial reporting framework, including a reference to the jurisdiction or
country of origin of the financial reporting when the financial reporting framework
used is not Philippine Financial Reporting Standards]. Such a review consists of making
inquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures and does not, ordinarily, require
corroboration of the information obtained. The scope of a review of interim financial
information is substantially less than the scope of an audit conducted in accordance
with Philippine Standards on Auditing whose objective is the expression of an opinion
regarding the financial statements and, accordingly, we shall express no such opinion.
We expect to report on the interim financial information as follows:
[Include text of sample report]

Appendix 1
Responsibility for the interim financial information, including adequate disclosure, is

that of management of the entity. This includes designing, implementing and
maintaining internal control relevant to the preparation and presentation of interim
financial information that is free from material misstatement, whether due to fraud or
error; selecting and applying appropriate accounting policies; and making accounting
estimates that are reasonable in the circumstances. As part of our review, we will
request written representations from management concerning assertions made in
connection with the review. We will also request that where any document containing
interim financial information indicates that the interim financial information has been
reviewed, our report will also be included in the document.
A review of interim financial information does not provide assurance that we will
become aware of all significant matters that might be identified in an audit. Further,
our engagement cannot be relied upon to disclose whether fraud or errors, or illegal
acts exist. However, we will inform you of any material matters that come to our
attention.
We look forward to full cooperation with your staff and we trust that they will make
available to us whatever records, documentation and other information are requested
in connection with our review.
[Insert additional information here regarding fee arrangements and billings, as

appropriate.]
This letter will be effective for future years unless it is terminated, amended or
superseded (if applicable).
- 24 - PSRE 2410
Please sign and return the attached copy of this letter to indicate that it is in
accordance with your understanding of the arrangements for our review of the
AUDITOR
Acknowledged on behalf of ABC Entity by
(signed)
Name and Title
Date
Appendix 2
Analytical Procedures the Auditor May Consider When Performing a Review

of Interim Financial Information
Examples of analytical procedures the auditor may consider when performing a review
of interim financial information include the following:
• Comparing the interim financial information with the interim financial

information of the immediately preceding interim period, with the interim
financial information of the corresponding interim period of the preceding
financial year, with the interim financial information that was expected by
management for the current period, and with the most recent audited annual
• Comparing current interim financial information with anticipated results, such

as budgets or forecasts (for example, comparing tax balances and the
relationship between the provision for income taxes to pretax income in the
current interim financial information with corresponding information in (a)
budgets, using expected rates, and (b) financial information for prior periods).
• Comparing current interim financial information with relevant non-financial

information.
- 25 - PSRE 2410
• Comparing the recorded amounts, or ratios developed from recorded amounts,

to expectations developed by the auditor. The auditor develops such
expectations by identifying and applying relationships that are reasonably
expected to exist based on the auditor’s understanding of the entity and of the
industry in which the entity operates.
• Comparing ratios and indicators for the current interim period with those of
entities in the same industry.
• Comparing relationships among elements in the current interim financial

information with corresponding relationships in the interim financial
information of prior periods, for example, expense by type as a percentage of
sales, assets by type as a percentage of total assets, and percentage of change
in sales to percentage of change in receivables.
Appendix 2
• Comparing disaggregated data. The following are examples of how data may be
disaggregated:
o By period, for example, revenue or expense items disaggregated into quarterly,
monthly, or weekly amounts.
o By product line or source of revenue.
o By location, for example, by component.

By attributes of the transaction, for example, revenue generated by
o
designers, architects, or craftsmen.
o By several attributes of the transaction, for example, sales by product and month.
- 26 - PSRE 2410
Appendix 3
Example of a Management Representation Letter
The following letter is not intended to be a standard letter. Representations by

management will vary from entity to entity and from one interim period to the next.
(Entity Letterhead)
(To Auditor) (Date)
Opening paragraphs if interim financial information comprises condensed financial

statements:
This representation letter is provided in connection with your review of the condensed
balance sheet of ABC Entity as of March 31, 20X1 and the related condensed
statements of income, changes in equity and cash flows for the three-month period
then ended for the purposes of expressing a conclusion whether anything has come to
your attention that causes you to believe that the interim financial information is not
prepared, in all material respects, in accordance with [indicate applicable financial
reporting framework, including a reference to the jurisdiction or country of origin of
the financial reporting framework when the financial reporting framework used is not
Philippine Financial Reporting Standards].
We acknowledge our responsibility for the preparation and presentation of the interim
financial information in accordance with [indicate applicable financial reporting
framework].
Opening paragraphs if interim financial information comprises a complete set of

general purpose financial statements prepared in accordance with a financial reporting
framework designed to achieve fair presentation:
This representation letter is provided in connection with your review of the balance
sheet of ABC Entity as of March 31, 20X1 and the related statements of income,
changes in equity and cash flows for the three-month period then ended and a
summary of the significant accounting policies and other explanatory notes for the
purposes of expressing a conclusion whether anything has come to your attention that
causes you to believe that the interim financial information does not present fairly, in
all material respects, the financial position of ABC Entity as at March 31, 20X1, and of
- 27 - PSRE 2410
its financial performance and its cash flows in accordance with [indicate applicable
financial reporting framework, including a reference to the jurisdiction or country of
origin of the financial reporting framework when the financial reporting framework
used is not Philippine Financial Reporting Standards].
Appendix 3
We acknowledge our responsibility for the fair presentation of the interim financial
information in accordance with [indicate applicable financial reporting framework].
We confirm, to the best of our knowledge and belief, the following representations:
• The interim financial information referred to above has been prepared and
presented in accordance with [indicate applicable financial reporting
framework].
• We have made available to you all books of account and supporting

documentation, and all minutes of meetings of shareholders and the board of
directors (namely those held on [insert applicable dates]).
• There are no material transactions that have not been properly recorded in the
accounting records underlying the interim financial information.
• There has been no known actual or possible noncompliance with laws and
regulations that could have a material effect on the interim financial
information in the event of noncompliance.
• We acknowledge responsibility for the design and implementation of internal

control to prevent and detect fraud and error.
• We have disclosed to you all significant facts relating to any known frauds or
suspected frauds that may have affected the entity.
• We have disclosed to you the results of our assessment of the risk that the
interim financial information may be materially misstated as the result of fraud.
• We believe the effects of uncorrected misstatements summarized in the

accompanying schedule are immaterial, both individually and in the aggregate,
to the interim financial information taken as a whole.
• We confirm the completeness of the information provided to you regarding the

identification of related parties.
- 28 - PSRE 2410
• The following have been properly recorded and, when appropriate, adequately
disclosed in the interim financial information:
o Related party transactions, including sales, purchases, loans, transfers, leasing
arrangements and guarantees, and amounts receivable from or
payable to related parties;
Appendix 3
o Guarantees, whether written or oral, under which the entity is

contingently liable; and
o Agreements and options to buy back assets previously sold.
• The presentation and disclosure of the fair value measurements of assets and
liabilities are in accordance with [indicate applicable financial reporting
framework]. The assumptions used reflect our intent and ability to carry
specific courses of action on behalf of the entity, where relevant to the fair
value measurements or disclosure.
• We have no plans or intentions that may materially affect the carrying value or
classification of assets and liabilities reflected in the interim financial
information.
• We have no plans to abandon lines of product or other plans or intentions that

will result in any excess or obsolete inventory, and no inventory is stated at an
amount in excess of realizable value.
• The entity has satisfactory title to all assets and there are no liens or
encumbrances on the entity’s assets.
• We have recorded or disclosed, as appropriate, all liabilities, both actual and

contingent.
• [Add any additional representations related to new accounting standards that

are being implemented for the first time and consider any additional
representations required by a new Philippine Standard on Auditing that are
relevant to interim financial information.]
To the best of our knowledge and belief, no events have occurred subsequent to the
balance sheet date and through the date of this letter that may require adjustment to
or disclosure in the aforementioned interim financial information.
__________________________
- 29 - PSRE 2410
(Senior Executive Officer)
__________________________
(Senior Financial Officer)
Appendix 4
Examples of Review Reports on Interim Financial Information
Complete Set of General Purpose Financial Statements Prepared in Accordance with a

Financial Reporting Framework Designed to Achieve Fair Presentation (see paragraph
43(i))
Report on Review of Interim Financial Information
(Appropriate addressee)
Introduction
We have reviewed the accompanying balance sheet of ABC Entity as of March 31, 20X1
and the related statements of income, changes in equity and cash flows for the
threemonth period then ended, and a summary of significant accounting policies and
other explanatory notes.3 Management is responsible for the preparation and fair
presentation of this interim financial information in accordance with [indicate
applicable financial reporting framework]. Our responsibility is to express a conclusion
on this interim financial information based on our review.
Scope of Review
We conducted our review in accordance with Philippine Standard on Review

Independent Auditor of the Entity.” A review of interim financial information consists
of making inquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with Philippine Standards on
3 The auditor may wish to specify the regulatory authority or equivalent with whom the interim financial
information is filed.
- 30 - PSRE 2410
Auditing and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Appendix 4
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that
the accompanying interim financial information does not present fairly, in all material
respects, the financial position of the entity as at March 31, 20X1, and of its financial
performance and its cash flows for the three month period then ended in accordance
with [applicable financial reporting framework, including a reference to the jurisdiction
or country of origin of the financial reporting framework when the financial reporting
framework used is not Philippine Financial Reporting Standards].
AUDITOR
Date
Address
- 31 - PSRE 2410
Appendix 4
Other Interim Financial Information (see paragraph 43(j))
Introduction
We have reviewed the accompanying [condensed] balance sheet of ABC Entity as of

March 31, 20X1 and the related [condensed] statements of income, changes in equity
and cash flows for the three-month period then ended. 4 Management is responsible
for the preparation and presentation of this interim financial information in
accordance with [indicate applicable financial reporting framework]. Our
responsibility is to express a conclusion on this interim financial information based on
our review.
Scope of Review

Conclusion
Based on our review, nothing has come to our attention that causes us to believe that
the accompanying interim financial information is not prepared, in all material
respects, in accordance with [applicable financial reporting framework, including a
reference to the jurisdiction or country of origin of the financial reporting framework
when the financial reporting framework used is not Philippine Financial Reporting
Standards].
- 32 - PSRE 2410
AUDITOR
Date
Address
- 33 - PSRE 2410
Appendix 5
Examples of Review Reports with a Qualified Conclusion for a


43(i))
Introduction
We have reviewed the accompanying balance sheet of ABC Entity as of March 31,
20X1 and the related statements of income, changes in equity and cash flows for the
applicable financial reporting framework]. Our responsibility is to express a
conclusion on this interim financial information based on our review.
Scope of Review

matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with Philippine
Standards on Auditing and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be identified in an audit.
The auditor may wish to specify the regulatory authority or equivalent with whom the interim financial
- 34 - PSRE 2410
Appendix 5
5
Basis for Qualified Conclusion
Based on information provided to us by management, ABC Entity has excluded from

property and long-term debt certain lease obligations that we believe should be
capitalized to conform with [indicate applicable financial reporting framework]. This
information indicates that if these lease obligations were capitalized at March 31,
20X1, property would be increased by P______, long-term debt by P______, and net
income and earnings per share would be increased (decreased) by P________,
P_________, P________, and P________, respectively for the three-month period
then ended.
Qualified Conclusion
Based on our review, with the exception of the matter described in the preceding
paragraph, nothing has come to our attention that causes us to believe that the
accompanying interim financial information does not present fairly, in all material
performance and its cash flows for the three month period then ended in accordance
with [indicate applicable financial reporting framework, including the reference to the
jurisdiction or country of origin of the financial reporting framework when the
financial reporting framework used is not Philippine Financial Reporting Standards].
AUDITOR
Date
Address
- 35 - PSRE 2410
Appendix 5
Introduction

and cash flows for the three-month period then ended.6 Management is responsible
our review.
Scope of Review

matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with Philippine
Standards on Auditing and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be identified in an audit.
Based on information provided to us by management, ABC Entity has excluded from

property and long-term debt certain lease obligations that we believe should be
capitalized to conform with [indicate applicable financial reporting framework]. This
information indicates that if these lease obligations were capitalized at March 31,
20X1, property would be increased by P______, long-term debt by P______, and net
income and earnings per share would be increased (decreased) by P________,
P_________, P________, and P________, respectively for the three-month period
then ended.
- 36 - PSRE 2410
Appendix 5
6
- 37 - PSRE 2410
Appendix 5
Based on our review, with the exception of the matter described in the preceding
paragraph, nothing has come to our attention that causes us to believe that the
accompanying interim financial information is not prepared, in all material respects, in
accordance with [indicate applicable financial reporting framework, including a
Standards].
AUDITOR
Date
Address
- 38 - PSRE 2410
Appendix 6
Examples of Review Reports with a Qualified Conclusion for a

Limitation on Scope Not Imposed By Management

43(i))
Introduction
Scope of Review
Except as explained in the following paragraph, we conducted our review in

accordance with Philippine Standard on Review Engagements 2410, “Review of
Interim Financial Information Performed by the Independent Auditor of the Entity.” A
review of interim financial information consists of making inquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with Philippine Standards on Auditing and consequently
does not enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
- 39 - PSRE 2410
Appendix 6
7
As a result of a fire in a branch office on (date) that destroyed its accounts receivable
records, we were unable to complete our review of accounts receivable totaling
P________ included in the interim financial information. The entity is in the process
of reconstructing these records and is uncertain as to whether these records will
support the amount shown above and the related allowance for uncollectible
accounts. Had we been able to complete our review of accounts receivable, matters
might have come to our attention indicating that adjustments might be necessary to
Except for the adjustments to the interim financial information that we might have
become aware of had it not been for the situation described above, based on our
review, nothing has come to our attention that causes us to believe that the
accompanying interim financial information does not present fairly, in all material
performance and its cash flows for the three-month period then ended in accordance
with [indicate applicable financial reporting framework, including a reference to the
jurisdiction or country of origin of the financial reporting framework when the
financial reporting framework used is not Philippine Financial Reporting Standards].
AUDITOR
Date
Address

- 40 - PSRE 2410
Appendix 6
Introduction

and cash flows for the three-month period then ended.8 Management is responsible
our review.
Scope of Review
Except as explained in the following paragraph, we conducted our review in

accordance with Philippine Standards on Review Engagements 2410, “Review of
Interim Financial Information Performed by the Auditor of the Entity.” A review of
interim financial information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an audit conducted in
accordance with Philippine Standards on Auditing and consequently does not enable
us to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit opinion.
As a result of a fire in a branch office on (date) that destroyed its accounts receivable
records, we were unable to complete our review of accounts receivable totaling
P________ included in the interim financial information. The entity is in the process
of reconstructing these records and is uncertain as to whether these records will
support the amount shown above and the related allowance for uncollectible
accounts. Had we been able to complete our review of accounts receivable, matters
might have come to our attention indicating that adjustments might be necessary to
- 41 - PSRE 2410
Appendix 6
Except for the adjustments to the interim financial information that we might have
become aware of had it not been for the situation described above, based on our
review, nothing has come to our attention that causes us to believe that the
accompanying interim financial information is not prepared, in all material respects, in
accordance with [indicate applicable financial reporting framework, including a
Standards].
AUDITOR
Date
Address
- 42 - PSRE 2410
Appendix 7
Examples of Review Reports with an Adverse Conclusion for a


43(i))
Introduction
Scope of Review

Auditor of the Entity.” A review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less in
scope than an audit conducted in accordance with Philippine Standards on Auditing
and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
- 43 - PSRE 2410
Appendix 7
Basis for Adverse Conclusion
Commencing this period, management of the entity ceased to consolidate the

financial statements of its subsidiary companies since management considers
consolidation to be inappropriate because of the existence of new substantial non-
controlling interests. This is not in accordance with [indicate applicable financial
reporting framework, including a reference to the jurisdiction or country of origin of
the financial reporting framework when the financial reporting framework used is not
Philippine Financial Reporting Standards]. Had consolidated financial statements
been prepared, virtually every account in the interim financial information would have
been materially different.
Adverse Conclusion
Our review indicates that, because the entity’s investment in subsidiary companies is
not accounted for on a consolidated basis, as described in the preceding paragraph,
this interim financial information does not present fairly, in all material respects, the
financial position of the entity as at March 31, 20X1, and of its financial performance
and its cash flows for the three-month period then ended in accordance with [indicate
applicable financial reporting framework, including a reference to the jurisdiction or
country of origin of the financial reporting framework when the financial reporting
framework used is not Philippine Financial Reporting Standards].
AUDITOR
Date
Address
- 44 - PSRE 2410
Appendix 7
Introduction

and cash flows for the three-month period then ended.5 Management is responsible for
the preparation and presentation of this interim financial information in accordance with
[indicate applicable financial reporting framework]. Our responsibility is to express a
Scope of Review

Independence Auditor of the Entity.” A review of interim financial information consists
Basis for Adverse Conclusion
Commencing this period, management of the entity ceased to consolidate the financial
statements of its subsidiary companies since management considers consolidation to
be inappropriate because of the existence of new substantial non-controlling interests.
This is not in accordance with [indicate applicable financial reporting framework,
including the reference to the jurisdiction or country of origin of the financial reporting
framework when the financial reporting framework used is not Philippine Financial
Reporting Standards]. Had consolidated financial statements been prepared, virtually
- 45 - PSRE 2410
every account in the interim financial information would have been materially
different.
Appendix 7
Adverse Conclusion
Our review indicates that, because the entity’s investment in subsidiary companies is
not accounted for on a consolidated basis, as described in the preceding paragraph, this
interim financial information is not prepared, in all material respects, in accordance
with [indicate applicable financial reporting framework, including a reference to the
jurisdiction or country of origin of the financial reporting framework when the financial
reporting framework used is not Philippine Financial Reporting Standards].
AUDITOR
Date
Address
- 46 - PSRE 2410
CONFORMING AMENDMENTS TO OTHER PSAS
PSA 210, “Terms of Audit Engagements”
The following bullet point will be added to paragraph 6:
• Management’s responsibility for establishing and maintaining effective internal

control.
PSRE 2400, “Engagements to Review Financial Statements”
1. The purpose of this Philippine Standard on Review Engagements (PSRE) is to establish standards
and provide guidance on the practitioner’s professional Deleted: auditor’s responsibilities when a
practitioner, who is not the auditor of an entity, undertakes
an engagement to review financial statements and on the form and content of the Deleted: is undertaken,
report that the practitioner issues in connection with such a review. A Deleted: auditor
practitioner, who is the auditor of the entity, engaged to perform a review of
interim financial information performs such a review in accordance with PSRE
2410, “Review of Interim Financial Information Performed by the Independent
Auditor of the Entity.”
All references to “auditor” in PSRE 2400 will be replaced by the term “practitioner.”
- 47 - PSRE 2410
This PSRE 2410 was unanimously approved for adoption in the Philippines on
December 5, 2005 by the members of the Auditing Standards and Practices Council:
Benjamin R. Punongbayan, Chairman Antonio P. Acyatan, Vice Chairman
Felicidad A. Abad David L. Balangue
Eliseo A. Fernandez Nestorio C. Roraldo
Joaquin P. Tolentino Editha O. Tuason
Joycelyn J. Villaflores Horace F. Dumlao
Ester F. Ledesma Manuel O. Faustino
Erwin Vincent G. Alcala Froilan G. Ampil
Eugene T. Mateo Flerida V. Creencia
Roberto G. Manabat
- 48 - PSRE 2410
50

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Philippine Standard on Review Engagements 2410

REVIEW OF INTERIM FINANCIAL INFORMATION

PSA 210, Terms of Audit Engagements

PSRE 2400, Engagements to Review Financial Statements

PHILIPPINE STANDARD ON REVIEW ENGAGEMENTS 2410

(Effective for reviews of interim financial information for

General Principles of a Review of Interim Financial Information....................... 4-6

Objective of an Engagement to Review Interim

Agreeing the Terms of the Engagement ............................................................. 10-11

Procedures for a Review of Interim Financial Information ................................. 12-29

Evaluation of Misstatements................................................................................ 30-

Auditor’s Responsibility for Accompanying Information .................................. 36-37

Effective Date ...................................................................................................... 65

Acknowledgment ………………………………………………………………. 66-67

Appendix 1: Example of an Engagement Letter for a Review

Appendix 2: Analytical Procedures the Auditor May Consider When

Appendix 3: Example of a Management Representation Letter

Appendix 4: Examples of Review Reports on Interim Financial Information

Appendix 5: Examples of Review Reports with a Qualified Conclusion for

Appendix 6: Examples of Review Reports with a Qualified Conclusion

Appendix 7: Examples of Review Reports with an Adverse Conclusion

Philippine Standard on Review Engagements (PSRE) 2410, “Review of Interim Financial

Review of Interim Financial Information Performed by the

1. The purpose of this Philippine Standard on Review Engagements (PSRE) is to

2. For purposes of this PSRE, interim financial information is financial information

3. The auditor who is engaged to perform a review of interim financial

General Principles of a Review of Interim Financial Information

Objective of an Engagement to Review Interim Financial

7. The objective of an engagement to review interim financial information is to

8. The objective of a review of interim financial information differs significantly

9. A review, in contrast to an audit, is not designed to obtain reasonable

• The objective of a review of interim financial information.

• The scope of the review.

• Management’s responsibility for the interim financial information.

• Management’s responsibility for establishing and maintaining effective

• Management’s responsibility for making all financial records and related

• Management’s agreement to provide written representations to the

• The anticipated form and content of the report to be issued, including

• Management’s agreement that where any document containing interim

• Reading the documentation, to the extent necessary, of the preceding

• Considering materiality with reference to the applicable financial

• Considering the nature of any corrected material misstatements and

• Considering significant financial accounting and reporting matters that

• Considering the results of any audit procedures performed with respect

• Considering the results of any internal audit performed and the

• Inquiring of management about the results of management’s

• Inquiring of management about the effect of changes in the entity’s

• Inquiring of management about any significant changes in internal

• Inquiring of management of the process by which the interim financial

17. In order to plan and conduct a review of interim financial information, a

Inquiries, Analytical and Other Review Procedures

21. The auditor ordinarily performs the following procedures:

• Reading the minutes of the meetings of shareholders, those charged

• Considering the effect, if any, of matters giving rise to a modification of

• Communicating, where appropriate, with other auditors who are

• Inquiring of members of management responsible for financial and

o Whether there have been any changes in accounting principles

Whether any new transactions have necessitated the application of a new

− Employees who have significant roles in internal control;