Advisory — Reporting
An independent read of your draft statements and the schedules behind them — presentation, disclosure, internal consistency, and the questions a reviewer would put. You get a ranked list of observations while there is still time to act on them. It is not an audit and no assurance is expressed.
Most finance teams meet their statements only twice: once when they build them, and once when somebody else takes them apart. This engagement inserts a read in between. The points that come back are the ordinary ones — a disclosure that has not kept up with the framework, a note that does not agree with the face of the statement, a schedule that supports a balance but not in a form anyone else can follow — and they are easier to deal with in December than in the middle of an audit.
If your concern is less the audit process and more the accounting, disclosure and consistency inside the reporting package itself, that is a different engagement: Financial Reporting Review.
Last year’s adjustment list ran to two pages, and most of it was presentation and disclosure rather than anything substantive.
Your auditor asks for the same three schedules every year, and every year they are built from scratch.
Somebody new is signing the statements this year and would like a second pair of eyes before they do.
The trigger is usually a bad experience rather than a plan.
The close was on time and the audit was not. Nobody has since worked out which part of it was the finance team’s and which part was not.
Something appeared in the report that the board asked about, and there is an appetite to know early whether it is likely to appear again.
Inheriting a close nobody has documented, and preferring to find out what is in it before the auditor does.
The pack goes to the parent on one basis and the statutory statements are prepared on another, and the reconciliation between them has become somebody’s private spreadsheet.
The parent has moved the date, and the process that just about worked before will not.
The work is reading. There is no tool that does it.
Schedule III has separate Divisions for companies applying Accounting Standards, companies applying Indian Accounting Standards, and non-banking financial companies. We agree which one applies before we start, and read against that.
Notes to the face of the statements, the cash flow statement to the movements it claims to explain, comparatives to last year’s signed set, and cross-references that actually go where they say.
Whether the significant balances are supported in a form somebody outside the team can follow, and where they are not, what would make them so.
Related party identification and disclosure, segment information, going concern disclosure, estimates and the basis given for them. Not a conclusion on any of them, but the question, early, in writing.
Where the same point recurs, the cause is usually upstream of the statements. We say so, and what changing it would involve.
Written to be worked through, not filed.
Observations ranked high, medium and low. Each one states what was found, what it affects and what would resolve it. For your use, not for issue.
What the CFO or the audit committee actually needs to see, on one page, without the detail underneath it.
Forty-five minutes to work through the list, disagree with any of it, and decide what you are going to do before your auditor arrives.
It is not an audit. It is not a review engagement under SRE 2400 (Revised), Engagements to Review Historical Financial Statements, or SRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. No opinion is given, no assurance conclusion is expressed, and nothing produced under it may be issued, filed or held out to a third party as assurance. It does not reduce the scope of your statutory audit and it is not a substitute for any part of it.
We do not prepare the statements we review, pass entries, build schedules or maintain records. And the engagement is not available to our own audit clients: Section 144 of the Companies Act 2013 lists services a statutory auditor may not provide to a company it audits, accounting and book-keeping services among them, and the restriction extends to that company’s holding and subsidiary companies.
We make no claim about what your audit will cost, how long it will take, or what your auditor will conclude.
Public if you are listed, and in any case already prepared. We read them and come back with what a review of the current year would cover.
Which Division, which entities, whether the group reporting pack is in or out, and the date the draft will exist.
Fixed fee against an agreed scope, with the boundary in the engagement letter rather than assumed.
CA Kiren Kumar K, FCA, ICAI membership number 223478, of Kiren & Co, Chartered Accountants, Bengaluru, FRN 031392S. The work described here draws on three years of reviewing the financial statements of entities listed on Indian stock exchanges and issuing review comments on them; on several years leading teams preparing financial statements under frameworks equivalent to IFRS and standardising audit readiness across group entities; and on eight years of statutory audit before that. More about the practice →
An independent read of your draft financial statements and the schedules behind them, before your auditor starts. We work through presentation and disclosure against the reporting framework that applies to you, check the statements agree with themselves and with the underlying schedules, and give you a ranked list of the points a reviewer would raise. You then deal with them on your own timetable rather than during the audit.
No. It is not an audit, and it is not a review engagement under SRE 2400 (Revised), Engagements to Review Historical Financial Statements, or SRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. No opinion and no assurance conclusion is expressed. What you receive is a memorandum of observations for your own use, and it is not a document that can be filed, issued or relied on as assurance by anyone else.
Timing and role, mostly. Your auditor forms an opinion, and does so on a statutory timetable that generally starts once your numbers are ready. This happens before that, it produces observations rather than an opinion, and nothing in it substitutes for the audit or narrows its scope. Some organisations find that dealing with presentation and disclosure points in advance changes what the audit period is spent on. We make no claim about what your audit will cost or how long it will take.
Whichever one applies to you. Schedule III to the Companies Act 2013 has three Divisions: Division I for companies applying Accounting Standards, Division II for companies applying Indian Accounting Standards, and Division III for non-banking financial companies. We agree at the outset which Division and which framework the review runs against, because the presentation and disclosure requirements differ between them.
No. This is a review of statements you have prepared. We do not draft the financial statements, pass entries, prepare schedules or maintain records as part of this engagement. That boundary matters for its own sake, and it also keeps the work clearly separate from services a statutory auditor is not permitted to provide.
No. Section 144 of the Companies Act 2013 lists services a statutory auditor may not provide to a company it audits, accounting and book-keeping services among them, and the restriction extends to that company's holding and subsidiary companies. If Kiren & Co holds your audit, or the audit of your holding or subsidiary company, we will tell you at the first conversation and we will not take the engagement.
Early enough that a finding can still be acted on. For a March year end that usually means the draft statements exist and the audit has not yet started. A review run in parallel with the audit is possible but much less useful, because the points come back at the same time your auditor is raising them.
The draft financial statements including the notes, the trial balance they were built from, the schedules supporting the significant balances, and last year's signed statements. If there was a long adjustment list or a query letter last year, send that as well; it is usually the most informative document in the pack.
The signed set from last year tells us more in twenty minutes than a scoping call does in an hour. We will come back with what a review would look at, what it would cost, and whether it is worth doing at all in your case.