note - Assurance An assurance engagement is an engagement in which an assurance practitioner aims to obtain sufficient appropriate evidence in order to

note - Assurance An assurance engagement is an engagement...

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Assurance: An assurance engagement is an engagement in which an assurance practitioner aims to obtain sufficient appropriate evidence in order to express a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the measurement or evaluation of an underlying subject matter against criteria. 5 Key Elements of an Assurance Engagement A three party relationship Responsible party – party issuing the statement/report Intended user – external parties intending to use the report Assurance provider - the objective auditor/reviewer An appropriate subject matter – the material being commented on Suitable criteria – against which the material is evaluated the relevant reporting standards Most common GAAP Usually: IFRS Sufficient appropriate evidence – information gained by the assurance provider using a systematic process. Should be obtained by the assurance practitioner to prove that the subject matter information is free of material misstatement. Written assurance report with opinion / conclusion statement Audit: Engagement to provide an independent opinion on financial information to shareholders/members. Is an assurance engagement – highest level of assurance. Express independent opinion on the true and fairness of the financial statements to enhance the confidence of the stakeholders. Objective of audit: Objective is for an auditor to express an opinion on whether the subject material complies with the relevant criteria and in doing so adds credibility to the subject material. Limitations of Audits Engagements Is an opinion not a guarantee – provides reasonable assurance not absolute assurance of the compliance with reporting requirements Is not designed to detect all fraud. Audit relies on information provided by responsible party (preparer of the financial statements). Involves the use of judgement/ Relies on sampling Therefore, is not a guarantee and statements may still contain material error and misstatements Auditor’s Rule: to obtain reasonable assurance about whether the financial report is true and fair. Audit Reasonable assurance (“In our opinion …)  Unrestricted scope of work – fairly intensive  Acceptably low level of audit risk  Provides High but not absolute assurance – Opinion Review  Limited/ moderate assurance (“Nothing has come to our attention/ we have not become aware …)  Still unrestricted scope of work BUT less intensive  Greater level of engagement risk than for Audit. Lower level of assurance than an Audit – Conclusion No assurance  Scope of work – restricted to terms agreed w client  No opinion or no third party Agreed Upon Procedures Engagement Work to be done is agreed between the parties Accountant is not free to decide what work to complete Results are reported (may be to a third party) No judgement is provided – facts are reported i.e the results of the procedures completed Provides no assurance
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recipients make their own conclusion on basis of information received.
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