Professional Documents
Culture Documents
ASSURANCE
Refers to the auditors satisfaction as
to the reliability of an assertion being
made by one party for use by
another party - PFAE
AE
An engagement in which a
practitioner expresses a conclusion
designed to enhance the degree of
confidence that intended users can
have about the evaluation or
measurement of a subject matter
that is the responsibility of a party,
other than the intended users or the
practitioner, against criteria.
OBJECTIVE of AE
For a professional accountant to
evaluate or measure a subject matter
that is the responsibility of another party
against identified suitable criteria, and to
express a conclusion that provides the
intended users with a level of assurance
about the subject matter.
Intended to enhance credibility of
information about a subject matter
Types of AE
Reasonable assurance engagement
Limited assurance engagement
Reasonable AE
An engagement that aims to reduce
the AE risks to an acceptably low
level in the circumstances of the
engagement as the basis for a
positive form of expression of the
practitioners conclusion
Ex. Independent audit of FS
Limited AE
An engagement that aims to reduce the
AE risks to a level that is acceptable in the
circumstance of the engagement but
where that risk is greater than for a RAE
as a basis for a negative form of
expression of the practitioners
conclusion.
Ex. Review of non financial performance
indicators- review of HR practices, Internal
control
Audit
Independent fs audit/external audit
An AE to provide high, but not
absolute, level of assurance that the
FS are free of material misstatement
give a true and fair view
present fairly, in all material
respects
Review
Limited investigation of much narrower scope
than an audit (interim, forecast, projections)
obj-to enable an auditor to state whether on
the basis of procedures w/c do not provide all
the evidence required in an audit, nothing has
come to the auditors attention that causes
the auditor to believe that the fs are not
prepared, in all material respects, in
accordance with an identified financial
reporting framework
Non-assurance Services
-No conclusion/opinion
Agreed-upon procedures
Compilation of financial or other
information
Preparation of tax returns, tax
consulting
Management consulting
Agreed-upon procedures
An engagement, in which the party
engaging the professional accountant or the
intended users determines the procedures
to be performed and the prof.acct provides
a report of factual findings as a result of
undertaking those procedures.
No conclusion
The intended users assesses the procedures
and findings and draws his/her own
conclusions
Compilation
Presenting in the form of FS that is
the representation of management
(owners) without undertaking to
express any assurance on the
statements
Assist in preparation and
presentation of FS
Used of accounting expertise , as
opposed to audit expertise, to
collect, classify, and summarize
Elements of an AE - TSSER
Three party
Practitioner the person who
provides the assurance to the
intended users, who gathers
evidence and provide conclusion.
Broader than auditor.
Responsible party
Intended users
Subject Matter
Information which is responsibility of
other party to be verified by the
practitioner
SMInfo- the outcome of the
evaluation or measurement of
subject matter
Appropriate SM
Identifiable, and capable of
consistent evaluation or
measurement against the identified
criteria
Such that info about it can be
subjected to procedures for
gathering sufficient appropriate
evidence to support a RA or LA
conclusion
Criteria
Are the benchmarks used to evaluate
or measure the subject matter
*RCRUN
Relevance
Completeness
Reliability
Understandability
Neutrality
Evidence
The information obtained by the
practitioner
With an attitude of PROFESSIONAL
SKEPTICISM the practitioner makes
a critical assessment, with a
questioning mind, of the validity of
evidence obtained and is alert to
evidence that contradicts or brings
into question the reliability of
documents or representation by the
Assurance Report
The practitioner provides a written
report containing a conclusion that
conveys the assurance obtained
about the subject matter information