Required:
(a) What level of assurance is provided by the financial report review?
A review provides limited assurance. The auditor does adequate work to report whether or not anything came to their attention, which would lead them to conclude that the information being assured is not true and fair. Less work is done for a review than for an audit. The auditor provides a negative opinion (nothing came to their attention…) for a review.
You might like to check what the Framework for Assurance Engagements (in your handbook, or check the AUASB site if it is not) offers so you can appreciate early on that all these differences and definitions and terminology are present in your Handbook so if you get to finding your way around, it save the temptation to try to memorise them!! Remember, there is nearly always a Definitions paragraph in standards.
Note also from your Handbook Table of Contents that there are standards for different types of assurance & non-assurance services … ASREs, ASAEs, ASRSs … the guiding principles are very similar to what you will learn in some detail for the provision of audit of historical financial statements services (one type of assurance service) that are our focus in this unit.
(b) Why would a review be appropriate for a set of half-yearly financial reports?
To be able to comment on the appropriateness of a review for half-yearly reports, the differences between an audit and a review (and annual and half-yearly reports) should be identified.
Assurance: reasonable vs. limited
Opinion: positive vs. negative
Procedures: nature, timing and extent – review procedures are a subset of those performed for an audit
Reports: annual reports vs. half-year – AASB 134 requires a limited set of disclosures for half-yearly (interim) reporting, and ASRE 2410 requires a limited level of work for a review of interim reports.
Half-yearly reporting is more limited than annual reporting and thus a lower level of assurance is appropriate.