PSA 120

Philippine Standard on Auditing 120 which entitled “Framework of Philippine

Standards on Auditing”, discusses the distinctions between audit and other related services.
Also, the scope covered of the said services.
Auditing emphasizes the given opinion by the auditor using the phrase “present
fairly, in all material aspects”. Expressing a high, but not absolute, level of assurance. It
emphasizes the credibility of a financial statements. On the other hand, the scope of other
related services could be reviews, agreed-upon procedures, and compilations. When the
auditor provided a moderate assurance, it refer to as a review. Meaning, it expresses a negative
assurance on assertions. While, agreed-upon procedures, it is when the auditor, client and any
appropriate parties agreed to report the factual findings of procedure. Lastly, compilations,
providing a much lesser data to become more understandable without giving an assurance at
all.
Financial Statements are presented and prepared annually, wherein it serves as
the major source of information for the intended users. Hence, the objective of PSA 120 is to
identify and describe the appropriate framework concerning the services which is performed by
the auditor. PSA 120 enhances the truthfulness and fairness of a financial statement by the
provided services of an auditor such as auditing and other related services.
 Philippine Standard on Auditing established appropriate standards in conducting
an audit and provide set of guidelines on the auditor’s report issued. This standard explicitly
explains the nature and scope of an audit in order to meet the overall objective of the
independent auditor. It also includes the requirements that are applicable in all audits
pertaining to the general responsibilities of the independent auditor. The effectivity date for
the Philippine Standards on Auditing 200 (Redrafted and Revised), entitled “Overall Objective of
the Independent Auditor and the Conduct of an Audit in accordance with Philippine Standards
on Auditing, is for audits of financial statements for periods beginning on or after December 15,
2009.
In this standard, it enables the auditor to express a reasonable assurance with
regards to the preparation of the financial statement, to properly conclude that it is free from
any material misstatement and considering the fact that it is in accordance with an appropriate
financial reporting framework. An unqualified opinion cannot be applied in all cases, if the
auditor doesn’t have a sufficient evidences to prove the latter then he could expressly obtained
a qualified opinion, or a disclaimer, and even withdraw from the engagement.
PSA 200, discusses compliance with ethical requirements concerning the
auditors’ independence which relates to audit engagement. These are the following
requirements: 1. Professional skepticism; when performing an audit the external auditor must
have a questioning mind that recognizes possible events that could make a financial statement
materially misstated; 2. Professional judgement; this ethical requirement will be gained through
experiences that will enable the auditor to make a decisions that are relevant in such
circumstances; 3. Sufficient Appropriate Audit Evidence and Audit Risk; meaning, the auditor
must provide enough evidences that could possibly reduce audit risks to an acceptable low
level; and 3. Conduct of an Audit in Accordance with PSAs; performing an audit in conformity
with all PSAs.
Philippine Standards on Auditing 200, aims the independent auditor to have a
deeper understanding about all the PSAs, to understand its objectives and to apply its
requirements properly, including its application and other explanatory material. And to identify
accurate audit procedures in planning and performing the audit.