Which of the following is a key difference between a Review engagement and an Audit engagement regarding fraud?

Answer options:

In a review, the accountant must detect all material fraud.

A review does not contemplate obtaining an understanding of internal control or assessing fraud risk, whereas an audit does.

In a review, the accountant is not required to inquire about fraud.

An audit provides absolute assurance regarding fraud, while a review provides reasonable assurance.

How to approach this question

Review = Inquiry + Analytics. No Internal Control work. No Fraud Risk Assessment (though you must ask 'has there been fraud?').

Full Answer

B.A review does not contemplate obtaining an understanding of internal control or assessing fraud risk, whereas an audit does.✓ Correct

A review does not contemplate obtaining an understanding of internal control or assessing fraud risk, whereas an audit does.

A review engagement (SSARS) consists primarily of Inquiry and Analytical Procedures. It does NOT involve obtaining an understanding of internal control, testing controls, or assessing fraud risk (SAS 99/AU-C 240 procedures), which are central to an audit.

Common mistakes

Thinking you don't ask about fraud in a review (you do ask management, but you don't do a full risk assessment).

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