There is a broad range of assurance engagements such as

engagements to report on a broad range of subject matters covering financial

and non-financial information.

engagements intended to provide high or moderate levels of assurance.

attest and direct reporting engagements.

engagements to report internally and externally.

engagements in the private and public sector.

But again not all engagements performed by professional accountants are assurance
engagements. This does not mean that professional accountants do not undertake such
engagements, only that these engagements are not covered by this Standard. Other
engagements frequently performed by professional accountants that are not assurance
engagements include the following.

Agreed-upon procedures.

Compilation of financial or other information.

Preparation of tax returns where no conclusion is expressed, and tax consulting.

Management consulting.

Other advisory services.

Assurance
Non-assurance
Judgment of the practitioner:
Judgment of the practitioner: Do not
Practitioner expresses a conclusion to
result in the expression of a
enhance the degree of confidence of
conclusion that provides a level of
the intended users other than the
assurance.
responsible party about the outcome
of the evaluation or measurement of
the subject matter against criteria.
1.
Ex. Preparation of Income tax returns
where no conclusion conveying assurance is
expressed (facts? maybe)

Standards: ISAs/PSAs; ISREs/PSREs;

ISAEs/PSAEs

Services: Compilation/Agreed-uponprocedures/Others
1.

Ex. Management advisory services

and Consulting. Why because it

1.

Engagement that includes rendering

of professional opinions not intended to be
an assurance report
Ex. Audit-related engagement? Maybe?
Standards: ISRSs/PSRSs

Q1: Ngano if Non-assurance dili na siya kinahanglan og conclusion sa mga practitioners?

1. Assurance services
Independent service that improves information quality for decision
makers.
Assurance services include PrimePlus, WebTrust, SysTrust these are services that would
assess the risk or tests the reliability of the information. Any services or engagement that
improves the quality of information for decision makers.
In other words, diri ang assessment sa risk, reliability of information/assertions.
Improves information quality for decision makers.
2. Attest service
An experts written communication of a conclusion about the
reliability of someones elses assertions.
When a practitioner issues an examination,review, or agreed-upon
procedures report on a subject or assertion of another party. It is also
a subcategory of assurance services. They require independence and
result in a report. Compilations are not included because they dont
require independence.
Who will conduct attestation: Practitioner
In other words: Diri ang conclusion. Gumikan sa examination,
review or called as agreed-upon procedures report nga mga
assertion gkan sa another party.
Examination (Auditing)
Subject conforms to criteria OR assertion is presented appropriately
based on criteria

Review (Assurance)
Same as examination, except you givenegative assurance (nothing
came to your attention that would indicate that stuff wasn't
conforming or appropriately based on criteria)
Agreed-upon procedures (Non-Assurance)
Practitioner gives report on findings based on a specific procedure
3. Audit services
A systematic process of objectively obtaining and evaluating
evidence regarding selected assertions about economic actions
and events to ascertain the degree of correspondence between
those assertions and established criteria and communicating
the results to interested users.
Q: Who will conduct the audit?
A: A competent, independent person
are subcategory of attestation services. They are examinations of
historical financial statements, it is about economic events
occurring in past time periods or about economic conditions or
circumstances at points in time in the past.
In other words, mao ni ang subject matter. Where in mao ni atong gi studyhan sa
atong reports. These are information from past transactions. We need this one
para ma studyhan nato kung naay bas significant reflection sa atong Financial
statements.

Demand for Audit and Assurance Services

There is potential conflict between those who prepare information and
those who use information.

 Information can have substantial economic consequences for a decision

maker.
Expertise is often required for preparing and verifying information.
Users of information frequently are prevented from directly assessing the
quality of information.
1.0 Definition of Terms
Assurance Engagements:
an engagement where a practitioner expresses a conclusion to enhance the degree of
confidence of the intended users other than the responsible party about the outcome of the
evaluation or measurement of the subject matter against criteria.
Assurance Engagement Risk:
Risk that the practitioner expresses an inappropriate conclusion when the subject matter
information is materially misstated.
Practitioner:
the person who performs the engagement. It is broader than the term auditor which
relates only to practitioners performing audit or review engagements with respect to
historical financial information
Responsible Party:
the person responsible for the subject matter in direct reporting engagement or subject
matter information (the assertion), and may be the subject matter in an assertion-based
engagement. The responsible party may or may not be the party who engages the
practitioner or the engaging party.
Intended Users:
for whom the assurance report is prepared. The responsible party can be one of the
intended users, but not the only one.
Suitable Criteria:

benchmarks used to evaluate or measure the subject matter

Professional Skepticism:
An attitude that includes a questioning mind, being alert to conditions which may indicate
possible misstatement due to error or fraud, and a critical assessment of evidence.
2.0 Assurance Engagements
2.1 Elements of Assurance Engagements
There are five elements that must all be present in order to qualify the engagement as an
assurance engagement. (TSECA)
1.

A three-party relationship involving a practitioner, a responsible party, and intended

users;

2.

An appropriate subject matter;

3.

Sufficient appropriate evidence;

4.

Suitable Criteria;

5.

A written assurance report in the form appropriate to a reasonable assurance

engagement or a limited assurance engagement.
Appropriate Subject Matter
The subject matter and the subject matter information of an assurance engagement can
take many forms, such as:

Financial performance or conditions

Non-financial performance or conditions

Physical characteristics

Systems and Processes

Behavior
An appropriate subject matter is

Identifiable and capable of consistent evaluation or measurement against the

identified criteria

Capable of being subjected to procedures for gathering sufficient appropriate

evidence to support a reasonable assurance or limited assurance conclusion, as appropriate
Sufficient Appropriate Evidence

Sufficiency is the measure of the quantity of evidence

The quantity of evidence needed is affected by the risk of the subject matter
being materially misstated.

Appropriateness is the measure of the quality of evidence, that is,

its relevanceand reliability

The reliability of evidence is influenced by its source and by its nature, and is
dependent on the individual circumstances under which it is obtained.

Generalization about the reliability of evidence evidence is more reliable if:

Obtain from independent source outside the entity

Generated internally when the related controls are effective

Obtained directly by the practitioner than indirect or by inference

Exist in documentary form

Provided by original documents

Merely obtaining more evidence may not compensate for its poor quality

The auditor should consider the cost of obtaining the usefulness of the evidence.

Suitable Criteria
The following are the characteristics of a criteria to be considered suitable:

Relevance contribute to conclusions that assist decision-making by the intended

users.

Completeness the relevant factors that could affect the conclusions are not omitted.
Includes benchmarks for presentation and disclosure

Reliability allows reasonably consistent evaluation or measurement of the subject

matter including where relevant, presentation and disclosure, when used in similar
circumstances by similarly qualified practitioners

Neutrality free from bias

Understandability contribute to conclusions that are clear, comprehensive, and not

subject to significantly different interpretations
2.2 Types of Assurance Engagements

1.
1.

As to level of assurance:
Reasonable Assurance the objective is a reduction in assurance
engagement risk to an acceptably low level as the basis for a positive form of expression of
a practitioners conclusion. (e.g., audit of historical financial statements)

2.

Limited Assurance the objective is a reduction in assurance engagement

risk to a level that is acceptable in the circumstances of the engagement, but where the risk
is greater that for a reasonable assurance engagement, as the basis for a negative form of
expression of the practitioners conclusion. (e.g., review of historical financial statements

2.
1.

As to structure of engagement:
Assertion-based the evaluation or measurement of the subject matter is
performed by the responsible party, and the subject matter information is in the form of
assertion to the intended users.

2.

Direct Reporting the practitioner either directly performs the evaluation or

measurement of the subject matter, or obtains a representation from the responsible party
that has performed the evaluation or measurement that is not available to intended users.
The subject matter information is provided to the intended users in the assurance report.
2.3 Importance of Assurance Engagements

1.

Potential bias in providing information

2.

Remoteness between a user and the organization

3.

Complexity of the transactions, information, or processing systems

4.

investors need to manage their risk and thereby minimize financial surprises as
consequences to investors, and others, of relying on inaccurate information can be quite
significant.
2.4 Limitations of Assurance Engagements

1.

Use of selective testing (sampling)

2.

Use of judgment

3.

Inherent Limitations of internal control

4.

Persuasive evidence rather than conclusive evidence

5.

Characteristics of the subject matter

3.0 Non-assurance Engagements
If an engagement lacks the five elements of assurance engagements, it is considered nonassurance (residual definition). Examples of non-assurance engagement are the following:

1.

Agreed-upon procedures

2.

Compilations engagements

3.

Preparation of Income tax returns where no conclusion conveying assurance is

expressed

4.

Management advisory services and Consulting

5.

Engagement that includes rendering of professional opinions not intended to be an

assurance report

http://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AT
-00101.pdf

https://www.youtube.com/watch?
v=rK4KhhqtBmA&list=PL6c0ylpV_Baer4a90TZnbD__15KGtlkqW&index=2
https://www.youtube.com/watch?
v=qH3_cbyefgE&list=PL6c0ylpV_Baer4a90TZnbD__15KGtlkqW&index=6
http://pakaccountants.com/what-is-the-difference-between-assurance-and-attestation-inauditing/
http://www.mia.org.my/new/downloads/professional/publications/2012/Understanding
%20Engagements%20Undertaken%20by%20Practitioners%20(Final).pdf
http://slideplayer.com/slide/4711033/
http://www.slideshare.net/zubeyirdincer/aduit-lesson
http://slideplayer.com/slide/4711487/

Relationship between services

Auditing < Attest < Assurance

Assurance services
Independent service that improvesinformation quality for decision
makers

Attest service
When a practitioner issues an examination,review, or agreed-upon
procedures report on a subject or assertion of another party.

Examination
Subject conforms to criteria OR assertion ispresented appropriately
based on criteria

Review
Same as examination, except you givenegative assurance (nothing
came to your attention that would indicate that stuff wasn't
conforming or appropriately based on criteria)

Agreed-upon procedures
Practitioner gives report on findings based on a specific procedure

Differences between General Standards

1. Adequate knowledge of subject matter
2. Subject matter is capable of evaluationagainst appropriate
criteria

Difference between Standards of Field Work

Practitioner doesn't need to understandentity's environment (incl.
internal control)

Differences between Standards of Reporting

1. Don't apply GAAP, specifically
2. Identify subject matter/assertion
3. State significant reservations
4. Restrict report when appropriate

Allowable attestation engagements for reporting on internal control

Examination (similar to audit)
Agreed-upon procedures

Financial forecasts
Expected financial position

Financial projections
Hypothetical expected financial position, based on assumptions

General use of prospective FS

Used by anyone not directly negotiating with entity

Limited use of prospective FS

Used only by those directly negotiating with entity or the entity alone

True or False: A practicioner should not issue a compilation report on

prospective FS that exclude disclosure of the summary of significant
assumptions?
True

Assurance level for compilation

No assurance

Assurance level for review

Limited assurance

Assurance level for audit

Reasonable assurance

Types of compilation reports

Compilation with Full Disclosure
Compilation That Omits Substantially All Disclosures
Compilation When the Accountant Is Not Independent

True or False: If during a review of FS, the auditor finds incorrect

stuff, he should do more work to make sure it is not material?
True

Two reasons to modify compilation OR review report

1. Departure from GAAP
2. Going concern uncertainty

SAMPLING:
https://quizlet.com/16507362/sampling-flash-cards/
https://quizlet.com/2275868/audit-flash-cards/
https://quizlet.com/87160360/ch6-auditing-flash-cards/
https://quizlet.com/45363170/audit-midterm-2-ch1-flash-cards/
https://quizlet.com/32125743/auditing-final-part-2-flash-cards/
https://quizlet.com/22893289/actg-135-chapter-8-flash-cards/
https://quizlet.com/20901087/audit-exam-ch2-flash-cards/
https://quizlet.com/49070259/auditing-flash-cards/
https://quizlet.com/36281774/audit-assurance-flash-cards/
Skills required of acc in computer issues.