Question

What are the general types of procedures performed during a review of the quarterly financial statements of a company that has audits of its annual financial statement?

Answer 1

Explanation :

Quarterly financial statement are presented by the company after every 3 months (i.e in each quarter) of financial year.

Quarterly reports are reported to ensure the investor about financial health of the organisation in small intervals.

The quarterly reports are not required to be audited by law for the companies whose financial statements are audited annually.
The quarterly reports provide information about

1. overview of sales
2. expenses  
3. net income of that quarter.

The auditor has to follow the following procedure to review the quarterly statement:

• The auditor has to determine that the organisation has presented the actual sales, expenses, profits figures of the particular quarter rather than on weighted average basis.
• The auditor performs audit procedures to ensure that the figures are presented are related to that quarter as there is no opinion to be found by the auditor on the quarterly financial statement.
• The auditor has to further ensure this quarterly reports have been presented along with comparatives of previous quarters.
• auditor must calculate net increase or decrease in cash and cash equivalent account for the quarter.
• The auditor performs further audit procedure to check that the quarterly reports has been filed with "securities and exchange commission".