$18-3$ Review of Financial Statements

Christopher Rossi, CPA, has been engaged by the Barrington Company, a nonpublicly held manufacturer of children$$s toys, to review Barrington$$s December $31,2007,$ financial statements. Rossi accepts the engagement, and performs inquiry and analytical procedures sufficient to provide a reasonable basis for expressing negative assurance that no material modifications are necessary to conform the statements with generally accepted accounting principles. While making inquiries of Barrington$$s chief financial officer, Rossi discovers that land is carried at appraised value rather than historical cost and that the company refuses to adjust the December $31,2007,$ statements. All inquiries and analytical procedures are completed on January $28,2008.$

Required: Prepare the review report Rossi would present to Barrington$$s board of directors, assuming the effect on financial statements of carrying land at appraised value has not been determined by management.

$18-4$ Interim Financial Statements

Chad Summe, who has audited the financial statements of the Ft$.$ Mitchell Group, Inc., a publicly held company, for the year ended December $31,2007,$ has been asked to perform a limited review of the unaudited interim financial statements of the Group for the quarter ending March $31,2008.$ The engagement letter states that a limited review does not provide a basis for expressing an opinion.

Required:

$1.$ Explain why Summe$$s limited review will not provide a basis for expressing an opinion.

$2.$ What are the review procedures that Summe should perform, and what is the purpose of each procedure?