Under the Corporations Act, certain entities, such as Australian listed companies and registered schemes, must prepare a financial report for each half year, in addition to the annual financial report. The half year financial report includes a balance sheet, an income statement, a statement of changes in equity, a cash flow statement, and notes comprising a summary of significant accounting policies and other explanatory notes.
The report must be reviewed or audited by someone independent of the entity. Most entities choose to have the report reviewed rather than audited. The Half-year review is not as extensive as the annual audit. It involves limited procedures consisting mainly of enquiries of selected management and staff of the entity, and some analysis of financial information.
In reviewing the half-year financial report, auditors must follow those auditing standards applicable to reviews. Auditing standards are set by a government body. The review is undertaken so that auditors can report to members on whether they are aware of anything, based on the review procedures they performed, that would suggest that the financial report does not, in all material respects, meet legal requirements and financial reporting standards.
When the review is completed, auditors write a review report explaining what they have done, giving a statement drawn from their work.
In a Half-year review, auditors do not perform an audit. The extent of their procedures is significantly less than the procedures conducted during an audit. For example, when performing a review auditors do not ordinarily:
As for an audit, auditors undertaking a review do not: