Inquiries and the other procedures a review requires

In this lesson you will

Conduct the inquiries required by AR-C 90.29 with the right people
Apply the related party, fraud and going concern procedures in AR-C 90
Respond to subsequent events and subsequently discovered facts
Decide when to perform additional procedures or withdraw

Who you ask and what you ask

AR-C 90.29 requires inquiry of members of management with responsibility for financial and accounting matters, and others in the entity as appropriate, about:

whether the statements follow the framework consistently, including how management decided significant estimates are reasonable
related parties and related party transactions, including their purpose
significant, unusual or complex transactions: changes in operations, changes in contract or debt covenant terms, significant journal entries, transactions near period-end, the status of prior-review uncorrected misstatements, and related party effects
questions that arose while applying review procedures
actual, suspected or alleged fraud or noncompliance, including laws with a direct effect such as tax and pension laws
subsequent events requiring adjustment or disclosure
the basis for management's going concern assessment and conditions that cast doubt
material commitments, contractual obligations and contingencies
material nonmonetary transactions or transactions for no consideration
communications from regulators
litigation, claims and assessments through the date of management's response
actions at owner, board and committee meetings
anything else you consider necessary

Write the questions and answers down with the name and title of the person and the date. A checklist with "Yes" ticks and no respondent is the most common inquiry finding.

Specific circumstances

Related parties. AR-C 90 requires you to stay alert for undisclosed related party relationships. When you identify significant transactions outside the normal course of business, AR-C 90 requires inquiry about their nature and whether related parties could be involved.
Fraud and noncompliance. When there is an indication of fraud or noncompliance, AR-C 90 requires communication to the appropriate level of management or those charged with governance, a request for management's assessment of the effect, consideration of the effect on your conclusion, and a determination of any duty to report outside the entity. AR-C 90 requires direct communication with those charged with governance when senior management is involved or the result is a material misstatement.
Going concern. When the framework requires management's evaluation (as US GAAP does), AR-C 90 requires review procedures on whether the going concern basis is appropriate, management's evaluation, management's plans and the disclosures. AR-C 90 also covers frameworks without that requirement.
Agreeing to records. AR-C 90 requires evidence that the statements agree or reconcile with the accounting records.
Other accountants. AR-C 90 requires you to obtain and read reports of other accountants on significant components.

Subsequent events and later discoveries

When information about subsequent events comes to your attention, AR-C 90 requires you to ask management to consider whether each is properly reflected. You have no duty to perform procedures after the report date, but if a subsequently discovered fact reaches you before the report release date, you discuss it and determine whether revision is needed. If management revises, AR-C 90 requires procedures on the revision and either a later report date or dual dating. AR-C 90 also covers facts discovered after release, including steps to prevent use of the report.

Additional procedures and withdrawal

AR-C 90 requires additional procedures when you believe the statements may be materially misstated. AR-C 90 requires you to evaluate whether you have sufficient appropriate review evidence and perform more procedures if not. AR-C 90 says that if you cannot obtain enough evidence to form a conclusion, you should withdraw. There is no disclaimer option in a review.

Common findings

Inquiry list copied from the prior year with the same answers and no new date.
No going concern procedures despite recurring losses.
No evidence the statements were agreed to the trial balance.

The inquiries and analytics guide and the going concern checklist support this work.

Worked example

An inquiry that changes the file at Harborview Marine Supply, Inc.

During the AR-C 90.29 inquiries for Harborview Marine Supply, Inc.'s December 31, 2026 review, the CFO says the company sold a forklift and a boat lift to Bayline Storage, LLC in December for $185,000, recognizing a gain of $64,000. Net book value was $121,000 ($185,000 - $121,000 = $64,000).

The sale is significant and outside the normal course of business, so AR-C 90 requires you to ask about its nature and whether related parties are involved. The CFO confirms Bayline is owned by the CEO's brother. Bayline paid with a note receivable, no cash.

Analysis: pretax income is $410,000; the gain is 15.6% of it ($64,000 / $410,000). Materiality is $25,000. The related party relationship was not previously disclosed, and the note's collectibility is uncertain.

Actions: you obtain the bill of sale and note, ask management to evaluate collectibility and the related party disclosure, and request a specific written representation on the transaction. Management adds the disclosure and records an allowance of $30,000 on the note after Bayline missed its first payment in January 2027. The file documents the inquiry, respondent, date and resolution.

Self-check

Answer each question before you open the answer.

Must you corroborate management’s answer that there is no pending litigation?
Show answer
No. AR-C 90 does not require corroboration, but you consider whether the answer is consistent with other results, such as legal expense analytics and board minutes. An inconsistency leads to further inquiry or procedures.
The CFO tells you a bookkeeper may have diverted cash. What does AR-C 90 require?
Show answer
Under AR-C 90, communicate the suspected fraud to an appropriate level of management above those involved or to those charged with governance, request management’s assessment of the effect, consider the effect on your conclusion, and determine whether you must report outside the entity.
You cannot get enough evidence to conclude on inventory. Can you issue a review report disclaiming a conclusion?
Show answer
No. AR-C 90 has no disclaimer of conclusion. If you cannot obtain sufficient appropriate review evidence, AR-C 90 requires withdrawal.
Management revises the statements for a fact you learned after the report date but before release. How do you date the report?
Show answer
AR-C 90 requires you to perform procedures on the revision and either date the report as of a later date or dual-date it for the revision only.

Sources

Back to the syllabus

Standards are paraphrased from the primary sources listed above; read the source before relying on a requirement. This lesson is training material, not professional advice. Report an error