Which statement about a review engagement is false?

A review engagement is generally characterized by the provision of limited assurance about the financial statements, which means that it is not as comprehensive as an audit. Each of the statements relating to review engagements offers different insights into their purpose and nature.

The statement that a review engagement requires an audit of financial statements is incorrect. In fact, a review engagement is typically considered less intensive than an audit and does not include the same level of detailed examination. Review engagements aim to provide credibility to financial statements through analytical procedures and inquiries rather than the rigorous methodology employed in an audit. Therefore, the assertion that a review engagement requires an audit implies a misunderstanding of the distinct roles and processes of each type of engagement.

Understanding the context of these statements is essential. Review engagements serve to enhance the reliability of financial statements, but their primary function is not to perform an audit or provide the highest level of assurance. One of their key aspects is that they can be used for various purposes, including internal use, and they focus on limited assurance based on analytical procedures conducted by the practitioner.