SRE 2400 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A review is a lighter engagement than an audit: the practitioner mainly asks questions and analyses the numbers, then reports a conclusion that gives limited assurance. Part 1 of this article covers what SRE 2400 (Revised) is, when it applies, how the engagement is accepted and what the review procedures are; part 2 covers subsequent events, representations, the conclusion and the report. Management accounts that are ready on time make a review far smoother, which is where our virtual CFO services help.
SRE 2400 (Revised), effective for reviews of financial statements for periods beginning on or after April 1, 2016 (paragraph 13). ICAI may revise standards, so check the current text on icai.org.
SRE 2400 (Revised) applies when the practitioner is not the auditor of the entity's financial statements (paragraphs 1 and 2). It is a limited assurance engagement, done primarily by inquiry and analytical procedures (paragraphs 5 to 7). The practitioner must accept the engagement only on proper terms, set materiality for the statements as a whole, understand the entity, and perform additional procedures if something suggests a material misstatement (paragraph 57).
Who may use it, and what it is
Paragraph 1 says the standard covers the responsibilities of a practitioner engaged to review historical financial statements when the practitioner is not the entity's auditor, and the form and content of the report. Paragraph 2 excludes a review of financial statements or interim information performed by the entity's own independent auditor: for that, see our article on SRE 2410. Paragraph 3 allows the standard to be adapted to other historical financial information.
Paragraphs 5 to 8 describe the engagement as limited assurance. The practitioner's conclusion is meant to raise the confidence of intended users and rests mainly on inquiry and analytical procedures. If the practitioner becomes aware of a matter that suggests the statements may be materially misstated, further procedures follow. Under paragraph 14 the objective is to obtain limited assurance and express a conclusion on whether anything has come to the practitioner's attention that makes the practitioner believe the statements are not prepared in all material respects under the applicable framework. Paragraph 15 requires a disclaimer of conclusion or, where possible, withdrawal if limited assurance cannot be obtained and a qualified conclusion is not enough.
Paragraph 17(f) defines limited assurance as a level where engagement risk is acceptable in the circumstances but higher than in a reasonable assurance engagement, with enough work to give a meaningful level of assurance. Our hub article on audit, review, agreed-upon procedures and compilation places this against the other engagements.
Conduct, ethics and quality
The practitioner must understand the entire SRE (paragraph 18), comply with each relevant requirement and not claim compliance unless all relevant requirements are met (paragraphs 19 and 20). Paragraph 21 requires compliance with relevant ethical requirements, including independence; paragraph 22 requires professional skepticism, recognising that statements may be materially misstated; and paragraph 23 requires professional judgment. The engagement partner needs competence in assurance skills and financial reporting (paragraph 24) and takes responsibility for quality, supervision, the report and the firm's acceptance procedures (paragraph 25). Paragraphs 26 to 28 deal with information that would have led to declining the engagement, ethical breaches by the team, and the results of the firm's monitoring.
Acceptance and continuance (paragraphs 29 to 41)
Paragraph 29 lists when a review must not be accepted unless the law requires it. In summary:
- the practitioner is not satisfied there is a rational purpose or that a review suits the circumstances;
- ethical requirements, including independence, will not be met;
- information needed is likely to be unavailable or unreliable;
- management's integrity is in doubt in a way that affects the review;
- management limits the scope so much that the practitioner expects to disclaim a conclusion.
Before accepting, the practitioner determines whether the reporting framework is acceptable and obtains management's agreement to its responsibilities: preparing the statements under the framework, internal control it considers necessary, and giving access to information and people (paragraph 30). If any precondition fails and cannot be fixed, the practitioner should not accept, and an engagement done anyway does not comply with the SRE and cannot refer to it in the report (paragraph 31). Paragraphs 33 to 35 cover reports whose wording is prescribed by law.
Terms are agreed before work begins and recorded in an engagement letter or other written form (paragraphs 36 and 37). The record covers use and distribution, the framework, objective and scope, the responsibilities of both sides, a statement that the engagement is not an audit and no audit opinion will be expressed, and the expected report. On recurring engagements the terms are reconsidered (paragraph 38); a change to terms needs reasonable justification (paragraph 39), and a request to reduce to a no-assurance engagement must be judged on whether there is reasonable justification (paragraph 40). Changed terms are recorded (paragraph 41), and matters of importance are communicated to management and those charged with governance on a timely basis (paragraph 42).
Performing the review (paragraphs 43 to 57)
| Area | What the practitioner does | Paragraph |
|---|---|---|
| Materiality | Set it for the statements as a whole, use it in designing procedures and evaluating results, revise it if new information would have led to a different amount | 43, 44 |
| Understanding | Understand the entity, its environment and the framework to find where material misstatements are likely: industry and external factors, nature of the entity, accounting systems and records, accounting policies | 45, 46 |
| Procedures | Design and perform inquiry and analytical procedures covering all material items, including disclosures, and focusing on likely misstatement areas | 47 |
| Inquiries | Ask about estimates, related parties, unusual transactions, fraud or non-compliance, subsequent events, going concern, commitments and non-monetary transactions | 48 |
| Analytics | Consider whether accounting data is adequate for the analytical procedures | 49 |
| Specific areas | Stay alert to undisclosed related parties; inquire about unusual transactions; communicate fraud or non-compliance indications and consider outside reporting; cover the going concern assessment period | 50 to 54 |
| Others' work | Satisfy yourself that work by another practitioner or an expert is adequate | 55 |
| Tie-out | Obtain evidence that the statements agree to the accounting records | 56 |
| Extra work | If something suggests material misstatement, do enough additional procedures to resolve it | 57 |
Analytical procedures here mean evaluating information by analysing plausible relationships among financial and non-financial data, including investigating fluctuations that differ from expectations (paragraph 17(a)). Our post on SA 520 deals with the same technique in an audit.
Worked example (illustrative)
Rohan Logistics Pvt Ltd, an invented company whose auditor is a different firm, wants a review by another CA firm for an investor. Illustrative figures: revenue Rs 8.4 crore against Rs 6.9 crore the year before; gross margin falling from 18 per cent to 14 per cent. The practitioner confirms the framework is acceptable, agrees in an engagement letter that the work is a review and not an audit, and sets an illustrative materiality. The analytics flag the margin fall; inquiries reveal that a related party was given a discount on freight. The practitioner asks about the related-party arrangement, checks that it is disclosed, reconciles the statements to the ledger and asks for the contract. The matter is explained and disclosed, so no further procedures are needed. Had the explanation not held, paragraph 57 would have required additional procedures.
Common lapses
- Treating a review as a quick audit, or an audit as a review.
- Accepting without a written engagement letter that says the work is not an audit.
- Doing analytics without checking whether the data are adequate.
- Ignoring unusual year-end transactions or related parties.
- Not documenting how the statements reconcile to the books.
Need help getting ready for a review?
A review goes quickly when schedules, ledgers and explanations are ready and the management responsibilities in the engagement letter are understood. Our team can prepare management accounts, schedules and ratio analysis, and act as your finance partner; see our virtual CFO services.
Key takeaways
- SRE 2400 (Revised) applies when the practitioner is not the entity's auditor.
- A review is limited assurance, mainly by inquiry and analytics.
- Terms are agreed and written down before the work starts.
- Materiality is set for the statements as a whole and revised if needed.
- Extra procedures follow whenever the statements may be materially misstated (paragraph 57).
Read next
- SRE 2400 (Revised), part 2: conclusion and review report
- SRE 2410, review of interim financial information
- Audit, review, agreed-upon procedures and compilation compared
- SA 520, analytical procedures
Disclaimer: Based on the Standards on Auditing, the review, assurance and related services standards, the Compendium of Standards on Internal Audit (as on 1 October 2022) and the Compendium of Forensic Accounting and Investigation Standards (as on September 2025) issued by the Institute of Chartered Accountants of India, in the versions named in the article, as consulted on 4 October 2026. ICAI revises standards from time to time; check the current text and effective dates on icai.org and the Companies Act provisions referred to. This article is general information, not legal advice; check the official text before acting.