[Opinion] Auditor’s Responsibility in Limited Review | Equal Accountability as Statutory Audit

CA Bharat Sonkhiya & Rahul Soni – [2025] 170 taxmann.com 196 (Article)

“Keeping your numbers healthy until the year-end check-up!”

AS-25 and Ind AS 34 issued by Institute of Chartered Accountants of India provide guidelines for preparing and presenting interim financial statements, but they do not mandate companies to do so. While the Companies Act, 2013 provides a general financial reporting framework, it also does not require interim statements.

However, Regulation 33 of SEBI (LODR) Regulations, 2015 mandates listed companies to prepare quarterly and half-yearly results as per AS-25 or Ind AS 34.

In addition, the regulation requires these interim financial statements to be subjected to a limited review by an independent auditor who has subjected himself to the peer review process of Institute of Chartered Accountants of India and holds a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

This article discusses the key aspects of interim financial reporting, management responsibilities, and the auditor’s role in ensuring financial reporting quality.

Sometimes, this confusion arises in the mind of management as well as auditors that responsibilities of both parties are substantially lower than statutory audit or audit of annual financial statement. To resolve and clarify the issue, this article provides guidance on the same.

1. Interim Financial Report & Limited Review

Interim financial report means a financial report containing either a complete set of financial statements or a set of condensed financial statements for an interim period shorter than a full financial year, such as quarterly or half-yearly. It is different from annual financial statements since it cover a full year of 12 months.

A limited review is a quarterly or half-yearly review of financial statements, which is narrower in scope than a statutory audit. In statutory audit, auditor provides an audit opinion, however, in Limited Review instead of providing an audit opinion, the reviewer has to provide conclusion on interim financial information and states they have no reason to believe that the statements are materially misstated.

2. Management’s Responsibility in Interim Financial Reporting

Management must prepare and present interim financial information as per AS 25/Ind AS 34, ensuring accuracy, reliability, and internal controls. They must provide auditors with the necessary information and disclose material events after the interim period but before the review report.

A common question is whether the management’s responsibilities for preparing and presenting interim financial statements differ from those for annual financial statements.

In interim reporting, the focus is on providing timely, concise updates with limited disclosures and ensuring compliance with interim standards. In contrast, annual financial statements require comprehensive reports with full disclosures and are subject to a detailed year-end audit. Interim reports highlight material changes, while annual statements present a complete financial overview.

However, Management’s responsibilities for both annual and interim financial statements are similar in ensuring accuracy, compliance with standards, maintaining internal controls, disclosing material information, applying judgment and estimates, and preparing consistent financial reports. While the scope may differ, the core responsibility for accurate, compliant, and transparent reporting remains the same for both.

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