1/17/2018

COURSE OUTLINE
WEEK 1

ASSURANCE SERVICES 1. Definition, nature and objectives of assurance services

John John J. Dorega, CPA, MBA
Far Eastern University – Manila
2nd Semester AY 2017-2018
2. Overview of assurance services and related services
3. Essential elements of an assurance engagement
4. Reasonable assurance engagement , limited assurance
engagement, assertion-based engagement, direct
reporting engagement
5. Concept of reasonable assurance

COURSE OUTCOMES
At the end of this lesson, the learner will be able to:

1. understand the importance, nature and objectives of

assurance services.
INTRODUCTION/OVERVIEW
2. define and differentiate assurance services and other
services offered by professional accountants.
3. identify the essential elements of assurance
engagements.
4. classify assurance engagements as to level of
assurance provided and as to structure.
5. describe the limitations of assurance services.

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THE CASE OF WORLDCOM

FACTS:
Cynthia Cooper Gene Morse found an
unsupported entry for P
500M in computer
acquisitions.

Cynthia Cooper told

Morse “Keep going!”, and
her team kept on digging.
Burned data onto CDs
because of fear the data
might be destroyed.
Gene Morse

THE CASE OF WORLDCOM THE CASE OF WORLDCOM

FACTS: FACTS:
Bernie Ebbers told Cynthia Cooper fought for respect
Cooper not to use the and more resources for the
term “internal control” Internal Audit Department.
claiming he did not
understand it. “My division could save millions of
dollars of wasteful operations with
Cynthia Cooper internal controls.”

Bernie Ebbers,
founder and CEO of WorldCom

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THE CASE OF WORLDCOM THE CASE OF WORLDCOM

FACTS: FACTS:
In late May, 2002, Cooper’s team In late June, 2002,
found a gaping hole in the books. WorldCom announced
“Had recorded billions of dollars of
that it had inflated assets
regular fees to local telephone by $ 3.8B, the largest
companies as capital assets. It turned accounting fraud in
the $ 622M loss into a $ 2.4B profit in history.
2001.”
When the investigation
Scott Sullivan asked Cooper to
Scott Sullivan, was complete, the total
delay her investigation to the
CFO of WorldCom amount of fraud had
following quarter but she
grown to an astonishing
refused.
$ 11B.

THE CASE OF WORLDCOM THE AFTERMATH

IT ILLUSTRATES THE IMPORTANCE OF
1. Company’s internal control
2. Role of internal and external auditors in detecting
fraud
Sarbanes-Oxley Act of 2002
Passed by the US Congress to address a number of weaknesses
found in corporate financial reporting in the wake of the recent
accounting scandals, particularly publicly held entities. The Act’s
major provisions include:
1. Requirement of CEO/CFO certification
of financial statements (Section 302).
2. Requirement of auditor examination of
company internal controls.
3. Creation of the Public Company
Accounting Oversight Board (PCAOB)
to serve as an auditing profession
“watchdog.”
4. Prohibition of certain client services by
firms conducting a client’s audit.
5. Improvement of corporate governance.

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Sample Statement of Management Responsibility Portion of Independent Auditor’s Report

AUDITOR’S INTEGRITY OVERVIEW OF CURRENT ENVIRONMENT

Crisis of confidence in current
financial system. Need to
consider role played by
• Accounting standards
• Corporate governance
• Ethics
• Independence of auditors
• Business complexity and
globalisation.
Auditing Profession’s responses
to crisis of confidence
• Numerous reviews and
committees
• Auditing standards revisited
• Auditing independence
revisited
• Auditor’s role in corporate
governance considered

Copyright 2003 McGraw-Hill Australia Pty Ltd

PPTs t/a Auditing and Assurance Services in Australia by Gay & Simnett
Slides prepared by Roger Simnett

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ASSURANCE SERVICES / ENGAGEMENT
NATURE AND OBJECTIVE
WHY WE NEED ASSURANCE?
1/17/2018
THE ASSURANCE FRAMEWORK
• Many parties provide reports to users as an aid to decision-
making.
• Reports may potentially be biased due to the vested
interests of the report providers.
• Users may demand that credibility of report be enhanced
by having someone who is both independent and expert
examine the report.
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Auditing and Assurance Services in Australia by Gay & Simnett
Slides prepared by Roger Simnett
ASSURANCE SERVICES
DEFINITION:
An independent professional services that improve the
quality of information for decision makers.
Notes:
1. Being independent is perceived as being unbiased
with respect to the information examined.
2. Helps improve the reliability and relevance of the
information used as the basis for their decisions.
Assurance services can help ensure that information is
reliable, credible, relevant and timely.
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ASSURANCE SERVICES
DEFINITION:
These are three party contracts in which the assurers
(such as the CPA) reports on the quality of information.
(Ricchiutte, David N., Auditing and Assurace Services 7e,
p.5)
Assurance services performed by CPAs are intended to
enhance the credibility of information about a subject
matter by evaluating whether the subject matter
conforms in all material respect with suitable criteria.
1/17/2018
ASSURANCE SERVICES
Philippine Framework for Assurance Engagements:
Paragraph 7
“Assurance engagement” means an engagement in which
a practitioner expresses a conclusion designed to enhance
the degree of confidence of the intended users other than
the responsible party about the outcome of the
evaluation or measurement of a subject matter against
criteria.”
Fig. 1.1 Diagrammatic summary of an assurance service engagement (p. 9)
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Auditing and Assurance Services in Australia by Gay & Simnett
Slides prepared by Roger Simnett
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ENGAGEMENT PROCESS
DEMAND FOR ASSURANCE
Arises because users are not in a position to establish the
credibility of the information they are presented with, due to:

• Conflict of interest — managers may present biased

information as they are also evaluated on the information.

• Consequence — information provided forms the basis of

many users’ decisions.

• Complexity — many users do not have the expertise required

to determine the quality of information presented.

The engagement process usually involves:
1. agreeing the terms of the engagement in an engagement
letter
2. deciding on a methodology for evidence gathering, and
evaluation and measurement to support a conclusion
3. agreeing the type of report to be produced at the end of the
engagement.
• Remoteness — the separation of owners from management
prevents users having assessing information quality.
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Auditing and Assurance Services in Australia by Gay & Simnett
Slides prepared by Roger Simnett

HYPOTHESIS RELATING
TO DEMAND FOR ASSURANCE

Entrust resources

Investors Managers ASSURANCE SERVICES / ENGAGEMENT

Required periodic reporting ITS ELEMENTS
on use of resources

Verification
by independent expert

Fig. 1.3 Simple diagram of agency relationship between managers and investors (p.16)

Copyright 2003 McGraw-Hill Australia Pty Ltd

PPTs t/a Auditing and Assurance Services in Australia by Gay & Simnett
Slides prepared by Roger Simnett

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ELEMENTS
OF ASSURANCE SERVICES THREE PARTY RELATIONSHIP
1. A three party relationship involving a practitioner A three party relationship involving
(CPA), a responsible party, and intended users. 1. a practitioner (CPA),
In broader term is the
2. An appropriate subject matter 2. a responsible party, and AUDITOR as used in the
3. intended users. standards who perform the
3. Suitable criteria audit or review engagement
with respect to historical
4. Sufficient appropriate evidence financial information.
5. A written assurance report in the form appropriate to
May be requested to perform
a reasonable assurance engagement or a limited assurance services on a wide
assurance engagement. range of subject matters.
The term ‘practitioner’ relates to an • Consider the competence of the
individual who provides practitioner
professional services in an audit • Ethical requirements regarding
firm (i.e. the term ‘practitioner’ is professional competence
used because assurance services
other than external audits are also
provided by audit firms).

EXTENT OF RESPONSIBILITY
THREE PARTY RELATIONSHIP OF THE RESPONSIBLE PARTY
A three party relationship involving Subject A government organization engages a
1. a practitioner (CPA), Matter practitioner to perform an assurance engagement
regarding a report about a private company’s
2. a responsible party, and The person(s) responsible Information sustainability practices that the organization has
in assurance engagement ONLY
3. intended users. for the prepared and is to distribute to intended users.
1. Subject matter, or Subject An entity engages a practitioner to perform an
2. Subject matter Matter and assurance engagement regarding a report it has
information (assertions) prepared about its own sustainability practices.
subject matter
Information
The ‘responsible party’ is the person (or persons)
who is responsible for the subject matter (in a direct
reporting engagement) or subject matter
information of the assurance engagement.

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THREE PARTY RELATIONSHIP
A three party relationship involving
1. a practitioner (CPA),
2. a responsible party, and
3. intended users.
Intended users may be
identified in different ways.
1. By agreement between
the practitioner and the
responsible party, or
the engaging party.
2. By law
RESPONSIBLE PARTIES
AND INTENDED USERS
A three party relationship involving
1. a practitioner (CPA),
2. a responsible party, and • May be from
The person(s) or class of different entities, or
3. intended users.
persons for whom the the same entities
practitioner prepares the • Needs to be viewed
assurance report. within the context of
The assurance report can be a specific
addressed to engagement
1. One of the intended users • May differ from more
2. To all intended users traditionally defined
lines of
responsibility.

RESPONSIBLE PARTIES DETERMINING ENGAGEMENT

AND INTENDED USERS REQUIREMENTS
From different • Investors May seek assistance Determined by:
entities • Creditors about the fairness of
• Government financial statements 1. Intended users, or their representatives
• Other FS users that the responsible 2. Responsible party (and the engaging party if
party (company different)
management) has
prepared for their The practitioner is responsible for determining the nature,
consumption
timing and extent of procedures to be performed in the
From the Two – tier board Supervisory board may engagement.
same entity structure: seek assurance about
• Supervisory board information provided
(intended user) by management board. Material errors can be found in the FS:
• Management board • Effect of errors on FS
of same entity • Type of report to be issues
(responsible party) https://www.dreamstime.com/royalty-free-stock-photos-man-looking-magnifying-glass-image24097578

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ASSURANCE ENGAGEMENT OR
SPECIFIC PURPOSES
1. BANKERS
• BSP Rulings

2. REGULATORS
• SEC Rulings
• BIR Rulings
• CDA Rulings

The practitioner must consider restrictions in the assurance

report that limits its use to those users or that purpose.

THE EXPECTATION GAP THE EXPECTATION GAP

Defined as: ‘the gap between society’s expectations
of auditors and auditors’ performance as perceived
by society’.

Three components:
1. The reasonableness gap: gap between what society expects
auditors to achieve and what they can reasonably be
expected to accomplish;
2. The performance gap arising from deficient standards; and
3. The performance gap arising from deficient performance by
auditors.

Fig. 1.5 Structure of the gap between audit expectation and audit performance (p.26)
Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Auditing and Assurance Services in Australia by Gay & Simnett
Slides prepared by Roger Simnett Copyright 2003 McGraw-Hill Australia Pty Ltd
PPTs t/a Auditing and Assurance Services in Australia by Gay & Simnett
Slides prepared by Roger Simnett

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FOUR MAJOR ISSUES IN

EXPECTATION GAP
1. The nature and meaning of audit report
messages; ASSURANCE SERVICES / ENGAGEMENT
2. Early warning by auditors of corporate failure; SUBJECT MATTER
3. Auditor’s responsibility for the detection and
reporting of fraud; and
4. Auditor’s ability to communicate different levels
of assurance.

Copyright 2003 McGraw-Hill Australia Pty Ltd

PPTs t/a Auditing and Assurance Services in Australia by Gay & Simnett
Slides prepared by Roger Simnett

SUBJECT MATTER SUBJECT MATTER INFORMATION

Subject matter can take many forms which
include:
1. financial performance (e.g. historical financial
information),
2. non-financial performance (e.g. key performance
indicators),
3. processes (e.g. internal control) and
4. behavior (e.g. compliance with laws and
regulations).
What is “SUBJECT MATTER INFORMATION”?
Philippine Framework for Assurance Engagements:
Paragraph 8
“…. the term “Subject Matter Information” will be used to
mean the outcome of the evaluation or measurement of a
subject matter. It is the subject matter information about
which the practitioner gathers sufficient appropriate
evidence to provide a reasonable basis for expressing a
conclusion in an assurance report.”

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SUBJECT MATTER
SUBJECT MATTER INFORMATION
CHARACTERISTICS
Philippine Framework for Assurance Engagements:
• Qualitative versus quantitative
Paragraph 9
• Objective versus subjective
Subject matter information can fail to be properly • Historical versus prospective
expressed in the content of the subject matter and the
criteria, and can therefore be misstated, potentially to a This affects the:
material extent. 1. Precision with which the subject matter can be
evaluated or measured against the criteria
Examples: 2. Persuasiveness of available evidence
1. The financial statements do not present fairly, in all material
respects its financial position, financial performance, and cash
flows in accordance with PFRS.
2. When an entity’s assertion that its internal control is effective is
not fairly stated, in all material respects, based on COSO or CoCo.

SUBJECT MATTER EXAMPLES

SUBJECT MATTER
FORM SUBJECT MATTER INFORMATION
Financial Historical or prospective Recognition,
performance or financial position, measurement, ASSURANCE SERVICES / ENGAGEMENT
conditions financial ad cash flows presentation, and SUITABLE CRITERIA
disclosure in FS
Non-financial Performance of an entity Key indicators of
performance or efficiency and
conditions effectiveness
Physical Capacity of a facility Specifications of
characteristics documents
Systems and An entity’s internal An assertion about
processes control or IT system effectiveness
Behavior Corporate governance, A statement of
compliance with compliance or a
regulation, HR practices statement of
effectiveness

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FORMALITY
TYPES OF SUITABLE CRITERIA
OF SUITABLE CRITERIA
The benchmarks used to evaluate or measure the subject
matter including, whether relevant benchmarks for These can be:
presentation ad disclosure.
1. Formal
ASSURANCE • PFRS
ENGAGEMENT APPLICABLE CRITERIA
• COSO Framework
Audit of financial Philippine Financial Reporting
• Applicable las, regulation or contract
statements Standards (PFRS)
Assurance on internal Established internal control framework
control (e.g. COSO) or individual control 2. Less formal
objectives specifically designed for the • Internally developed code of conduct
engagement.
• Agreed level of performance
Compliance audit Applicable law, regulation or contract
 The number of times a particular committee is
expected to meet in a year.

CHARACTERISTICS WOULD NOT CONSTITUTE

(A matter of judgement) SUITABLE CRITERIA
(In evaluating and measuring subject matter)
CHARACTERISTICS EXPLANATION
RELEVANCE Contributes to conclusions that assist
decision-making by the intended users. 1. Practitioner’s own expectations
COMPLETENESS Sufficiently complete when relevant factors 2. Practitioner’s own judgements
that could affect the conclusions in the context 3. Individual experience as practitioner.
of engagement circumstances are not omitted.
RELIABILITY Allow reasonably consistent evaluation or
measurement of the subject matter when used
in similar circumstances by similarly qualified
practitioners.
NEUTRALITY Free from bias.
UNDERSTANDABILITY Contribute to the conclusion that are clear,
comprehensive, and not subject to
significantly different interpretations.

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IMPORTANCE TYPES OF SUITABLE CRITERIA

Without suitable criteria, conclusion is open to individual
interpretation ad misunderstanding. 1. ESTABLISHED CRITERIA
• Embodied in laws or regulations
Notes: • Issued by authorized or recognized bodies of experts
• Suitable criteria must be relevant to the engagement that follow a transparent due process.
circumstances.
• For the same subject matter, there can be different 2. SPECIFICALLY DEVELOPED CRITERIA
criteria. • Designed for the purpose of the engagement.
• Practitioner must assess the suitability of criteria for a
particular engagement by considering whether they
reflect the characteristics previously mentioned.

WAYS OF BEING AVAILABLE CRITERIA AVAILABLE ONLY TO

TO INTENDED USERS SPECIFIC INTERNDED USERS
1. Publicly
1. Terms of contract
2. Through inclusion in a clear manner in the presentation
of the subject matter information.
2. Criteria issued by an industry association that are
3. Through inclusion in a clear manner in the assurance
available only to those in the industry.
report.
4. By general understanding, for example the criterions
for measuring time in hours and minutes. Regarding this, the use of assurance report is
restricted to those users or for that purpose.

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EVIDENCE
SUFFICIENCY AND APPROPRIATENESS

CHARACTERISTICS DESCRIPTIONS
ASSURANCE SERVICES / ENGAGEMENT
SUFFICIENT APPROPRIATE
Sufficiency The quantity of evidence.
• Affected by the risk of the subject matter
EVIDENCE information being materially misstated.

The greater the risk, the more evidence is likely to be

required.
Appropriateness The measure of the quality of evidence.
1. Relevance
2. Reliability – influence by its source and
nature, and dependent on the individual
circumstances under which it is obtained.

The higher the quality, the less may be required.

GENERALIZATIONS
ABOUT RELIABILITY OF EVIDENCE PROFESSIONAL SKEPTICISM
No. Source Generalization Condition • An important ingredient of sufficient and appropriate
1. Obtained from More reliable evidence.
independent outside
the company • The practitioner’s recognition that circumstances may
2. Generated internally More reliable When related
exist that cause the subject matter information to be
controls are materially misstated.
effective
• Means the practitioner
3. Directly obtained by More reliable than obtained
1. makes a critical assessment, with a questioning
practitioner indirectly, or by inference.
mind, of the validity of evidence obtained and is
4. When it exists in More reliable than a
documentary form subsequent oral 2. alert to evidence that contradicts of brings into
representation.
question the reliability of documents or
5. Provided by original More reliable than provided representations by the responsible party.
documents by photocopies or facsimile.

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PROFESSIONAL SKEPTICISM PROFESSIONAL SKEPTICISM

IMPORTANCE:
To reduce the following risks in determining the nature,
timing, and extent of evidence gathering procedures and
evaluating the results thereof.
1. of overlooking suspicious circumstances,
2. of generalizing when drawing conclusions from
observations, and
3. of using faulty assumptions
IT IS AN ATTITUDE
1. Evidence is inconsistent with other evidence obtained.
2. Information that calls into question:
• The reliability of documents, and
• Responses to inquiries to be used as evidence.
3. Circumstances suggest the need for procedures in addition to those
required by relevant Assurance Standards.
4. Conditions that may indicate likely misstatement.

SUFFICIENT APPROPRIATE EVIDENCE

COST-BENEFIT CONSIDERATIONS FACTORS TO CONSIDER
This is between the following: 1. Materiality
1. The cost of obtaining evidence, and 2. Assurance engagement risk
2. The usefulness of the information obtained. 3. Quantity and quality of available evidence when
planning and performing an engagement (in
determining the timing, nature and extent of evidence
gathering procedures)

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SUFFICIENT APPROPRIATE EVIDENCE SUFFICIENT APPROPRIATE EVIDENCE

FACTORS TO CONSIDER
Materiality is an expression of the 1.
1. Materiality
2. Assurance engagement relative significance or importance 2. Assurance
risk of a particular matter in the context
3. Quantity and quality of of the financial statements as a
available evidence when
planning and performing
whole.
3.
an engagement (in
determining the timing,
A matter is material if its omission
or misstatement would reasonably
nature and extent of
evidence gathering influence the economic decisions
procedures) of users taken on the basis of the
financial statements.
Materiality depends on the size of
the item or error judged in the
particular circumstances of its
omission or misstatement.
FACTORS TO CONSIDER
Materiality
engagement
risk
Quantity and quality of
available evidence when
planning and performing an
engagement (in determining
the timing, nature and
extent of evidence gathering
procedures)
It is the risk that the practitioner
expresses an inappropriate conclusion
when the subject matter information is
materially misstated.
Considered in determining the nature,
timing and extent of evidence
gathering procedures.
THE MORE EXTENSIVE THE EVIDENCE
GATHERING PROCEDURES, THE LOWER THE
CHANCES OF INAPPROPRIATE
CONCLUSIONS (ASSURANCE ENGAGEMENT
RISK) AND THE HIGHER THE LEVEL OF
ASSURANCE THAT THE PRACTITIONER CAN
PROVIDE.

CLASSIFICATION
OF ASSURANCE ENGEGAMENTS

1. According to structure (Philippine Framework for

Assurance Engagements, paragraph 10)
ASSURANCE SERVICES / ENGAGEMENT
CLASSIFICATION 2. According to level of assurance (Philippine Framework
for Assurance Engagements, paragraph 11)

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CLASSIFICATION
OF ASSURANCE ENGEGAMENTS Reasonable VS Limited Assurance
Philippine Framework for Assurance Engagements:
Paragraph 11
No. Level of Objective
assurance
1. Reasonable Reduction in assurance engagement risk to
assurance an acceptably low level in the
engagement circumstances of the engagement as the
basis for a positive form of expression of
the practitioner’s conclusion.
2. Limited Reduction in assurance engagement risk to
assurance a level that is acceptable in the
engagement circumstances of the engagement, but
where the risk is greater than for a
reasonable assurance engagement, as
basis for a negative form of expression of
the practitioner’s conclusion.

CLASSIFICATION
OF ASSURANCE ENGEGAMENTS Reasonable VS Limited Assurance

No. Level of assurance

1. Reasonable assurance engagement
2. Limited assurance engagement

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Limited Assurance Engagement Reasonable VS Limited Assurance

REASONABLE
ASSURANCE
Gathers sufficient
appropriate evidence
Concludes that the subject
matter conforms in all
material respects with
identified suitable criteria
Gives his report in the form
of positive assurance.
LIMITED ASSURANCE
Gathers sufficient
appropriate evidence to be
satisfied that the subject
matter is plausible in the
circumstances
Gives his report in the form
of negative assurance.

CLASSIFICATION CLASSIFICATION
OF ASSURANCE ENGEGAMENTS OF ASSURANCE ENGEGAMENTS

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CLASSIFICATION
OF ASSURANCE ENGEGAMENTS ATTESTATION ENGEGAMENTS
Philippine Framework for Assurance Engagements: Examples Nature
Paragraph 10 Independent audit Provides a reasonable (but not absolute)
engagements level of assurance that the subject matter
Subject matter
(such as FS) is free of material
The evaluation and information
measurement of the subject provided to misstatement.
No. Structure matter is performed by intended users Review engagements Involves limited investigation of much
1. Attestation Responsible party In the form of narrower scope than an audit and
engagement (Not by the practitioner) assertion undertaken for the purpose of providing
limited assurance that the subject matter
Examples:
is presented in accordance with identified
1. Independent audit engagement
2. Review engagement suitable criteria.
2. Direct Practitioner either In the form of
engagement 1. Directly assurance report
2. By obtaining representation
from the responsible party

ASSURANCE REPORT
It is a written report containing a conclusion that conveys the
assurance obtained about the subject matter information.
ASSURANCE SERVICES / ENGAGEMENT
ASSURANCE REPORT Practitioners consider the following:
1. The basic elements of assurance reports
2. Communicating with those charged with governance of the
entity when it is appropriate to do so.

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TRUTH AND FAIRNESS LEVEL OF ASSURANCE AND OPINION

Depending on the level of assurance being provided, the
practitioner expresses his opinion either as follows:
Form of Classification
opinion of Assurance Engagement Level of Assurance
Positive Reasonable Assurance Engagement High Level
Negative Limited Assurance Engagement Moderate level

REPORTING DIFFERENT
WHERE LIES THE DIFFERENCE? LEVELS OF ASSURANCE

The difference in level of assurance lies in the nature,

extent, and timing of procedures to gather evidence as a
basis for the practitioner’s conclusion.

“The more extensive the evidence gathering procedures,

the higher the level of assurance that a practitioner can
provide.”

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POSITIVE VERSUS NEGATIVE

FORM OF CONCLUSIONS
FORMS OF REPORT

Users derive more comfort from positive assurance than FORMS Contents Inclusion Other inclusions
negative assurance. Short form Only the basic
elements
WHAT THE CONCLUSIONS SAY? Long form The basic elements • Other information and explanations
POSITIVE FORM NEGATIVE FORM that are not intended to affect the
practitioner’s conclusion.
“Users, the information is fairly “Users, I did not find any • Details of engagement
stated.” material error.” • Criteria being used
• Findings relating to particular aspect
of the engagement
• Details of the qualifications and
experience of the practitioner and
others involved with the
engagement.
• Disclosure of materiality levels
• Recommendations

LIMITATIONS
LIMITATIONS OF
ASSURANCE ENGAGEMENTS
1. Use of selective testing
2. Inherent limitations of internal control
3. Much of the evidence available is persuasive rather
than conclusive
4. The use of judgement in gathering and evaluating
evidence and forming conclusions based on that
evidence.
5. The characteristics of the subject matter (in some
cases)

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NON-ASSURANCE
ENGAGEMENTS
NON-ASSURANCE ENGAGEMENTS
1. Agreed upon procedures –
• An auditor is engaged to carry out those
procedures of an audit nature to which the auditor
and the entity and any appropriate parties have
agreed and to report on actual findings.
• The recipients of the report must form their own
conclusions from the report by the auditor.
• The report is restricted to those parties that have
agreed to the procedures to be performed.
• No conclusion is expressed by the practitioner.
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NON-ASSURANCE ENGAGEMENTS
Not all engagements performed by CPAs are assurance
services.
NON-ASSURANCE SERVICES lack one or more of the elements
of assurance engagements.
NON-ASSURANCE ENGAGEMENTS
2. Compilation of financial or Other information
• The accountant is engaged to use accounting
expertise as opposed to auditing expertise to
collect and summarize financial information.
• It entails reducing detailed data to a manageable
and understandable form without a requirement to
test the assertions underlying that information.
• No conclusion is expressed by the practitioner.
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NON-ASSURANCE ENGAGEMENTS NON-ASSURANCE ENGAGEMENTS

3. Some tax services 4. Management consulting

• To develop tax strategies to help individuals or
businesses legally minimize tax liability.
• Two party contracts.
• Preparing tax returns
• Representation of clients to tax authorities.
• Refers to both the industry and the practice of,
helping organizations improve their performance,
primarily through a thorough analysis of existing
business problems and development of plans for
improvement.
• Two Party contracts that recommend uses for
iformation.

THANK YOU!

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