What are a ‘Hot’ and a ‘Cold’ file Review?

Share the Post:

As discussed in this post titled “Who Inspects the Auditor’s work to ensure that they are doing it correctly?“, audit firms are frequently subjected to mandatory reviews of their audit work by either their professional body regulatory inspectors [The Audit Oversight Board (“AOB”)] or both.

In addition, the audit firm may either be forced to have a sample of its audit files evaluated independently, or they may opt to do so to ensure that the audit work they are carrying out complies with the appropriate levels of standards.

In general, there are two types of file reviews:

  • A “hot” file review; and
  • A “cold” file review.

Hot Review

A hot file review may be carried out either by the in-house team at the audit firm or by an external independent third party.

A hot review is performed before the signing of the audit report. The primary objective of such a review is to ensure that the firm’s audit work is adequate and that sufficient and appropriate audit evidence supports the material areas of the financial statements.

This review takes place before the audit report is signed.

Therefore, the objective is to identify any more work that may be necessary, and the reviewer may also analyse the final draft financial statements to confirm that disclosures are appropriate if they so choose.

After the review, the reviewer will customarily create a report to emphasise their findings and provide recommendations for any additional audit processes that they believe may be required.

Even in cases where audit firms are not required to submit their files for independent review by their respective professional bodies, it is considered good practice for such firms to do so. This is because independent reviews help to highlight any deficiencies, which in turn allows for them to be addressed on time.

Cold Review

A cold file review can either be carried out internally within the audit firm or again by an external file reviewer.

After the audit report has been signed, the cold file review is carried out.

Even though it may be too late to carry out additional audit procedures in the case of a cold file review, this review is carried out in the primary interest of ensuring that the firm’s audit quality has been maintained at an acceptable level.

The review will focus on ensuring that sufficient appropriate audit evidence has been obtained for the material areas of the financial statements and that the planning and completion sides of the audit have been appropriately carried out.

Once again, the reviewer will prepare a report summarising their findings and providing suggestions for any necessary adjustments.

Our website's articles, templates, and material are solely for you to look over. Although we make every effort to keep the information up to date and accurate, we make no representations or warranties of any kind, either express or implied, regarding the website or the information, articles, templates, or related graphics that are contained on the website in terms of its completeness, accuracy, reliability, suitability, or availability. Therefore, any reliance on such information is strictly at your own risk.

Keep in touch with us so that you can receive timely updates |


1. Website ✍️ 2. Telegram ✍️ 3. Facebook ✍

4. Blog ✍ 5. Google ✍

6. LinkedIn ✍

Share the Post:

Related Posts