AUDTHEO: Introduction to Assurance and Non-assurance Engagements

Which Philippine Standards are to be applied to compilation engagements, agreed-upon procedures and other related standards as specified by the AASC?

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PSRSs

These are issued to provide interpretative guidance and practical assistance to professional accountants in implementing PSAs and to promote good practice.

PAPSs

Assurance engagement

Is an engagement intended to enhance the credibility of information about a subject matter by evaluating whether the subject matter conforms in all material respects with suitable criteria, thereby improving the likelihood that the information will meet the needs of an intended user.

The single feature that most clearly distinguishes auditing, attestation, and assurance is

Scope of services

It refers to the auditor's satisfaction as to the reliability of an assertion being made by one party for use by another party.

Assurance

The three types of attestation services are:

Audits, reviews, and other attestation services

Assurance engagement include the following, except

a. An engagement conducted to provide a high level of assurance that the subject matter conforms in all material respects with identified suitable criteria.

b. An engagement conducted to provide a moderate level of assurance that the subject matter is plausible in the circumstances.

c. An engagement in accordance with the Philippine Standard on Assurance Engagement(s) issued by the Auditing and Assurance Standard Council as approved by the Board of Accountancy/Professional Regulation Commission.

d. An engagement to perform agreed-upon procedures.

An engagement to perform agreed-upon procedures.

Objective of a review engagement

Reporting whether material modifications should be made to such financial statements to make them conform with generally accepted accounting principles.

Unlike consulting services, assurance services:

Report on quality information

The primary goal of the CPA in performing the attest function is to

Determine whether the client's assertions are fairly stated

Criteria that is unique to the independent practitioner's attest function

Independence

Ultimately, the decision about whether or not an practitioner is independent must be made by

Practitioner

With regard to independence, which of the following statements is correct?

Audit engagements provide assurance to a wide range of potential users; consequently, both independence in mind and independence in appearance are of particular importance.

least likely a characteristic to be possessed by responsible party

may or may not be the only intended user

According to Preface on Assurance Engagements, these are the standards or benchmarks used to evaluate or measure the subject matter of an assurance engagement:

Criteria

The criteria for evaluating quantitative information vary. For example, in the audit of historical financial statements by CPA firms, the criteria are usually

GAAP

The Philippine Framework for Assurance Engagements identifies two types of assurance engagement a practitioner is permitted to perform: a reasonable assurance engagement and a limited assurance engagement. What is the objective of a reasonable assurance engagement?

A reduction in assurance engagement risk to an acceptably low level that is acceptable in the circumstances of the engagement as a basis for a positive form of expression of the practitioner’s conclusion.

In an engagement to perform agreed –upon procedures, an auditor is engaged to

Carry out those procedures of an audit to which the auditor and the entity and any appropriate third parties have agreed and to report on factual findings.

What is the report based on agreed-upon-procedures?

The report is restricted to those parties who have agreed to the procedures to be performed.

According to Philippine Standard on Auditing, the procedures employed in doing compilation are:

Not designed to enable the accountant to express any form of assurance.