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Direct Reporting Assurance Engagements
In a direct reporting assurance engagement, the professional accountant in public
practice 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 the intended users. The subject matter information
is provided to the intended users in the assurance report.
In a direct reporting assurance engagement independence is required from the
responsible party, which is responsible for the subject matter.
Multiple Responsible Parties
In both assertion-based assurance engagements and direct reporting assurance
engagements there may be several responsible parties. For example, a public accountant
in public practice may be asked to provide assurance on the monthly circulation statistics
of a number of independently owned newspapers. The assignment could be an assertion
based assurance engagement where each newspaper measures its circulation and the
statistics are presented in an assertion that is available to the intended users.
Alternatively, the assignment could be a direct reporting assurance engagement, where
there is no assertion and there may or may not be a written representation from the
In such engagements, when determining whether it is necessary to apply the provisions
in Section 290 to each responsible party, the firm may take into account whether an
interest or relationship between the firm, or a member of the assurance team, and a 146 By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants
[Issued January 2007] APPENDICES
particular responsible party would create a threat to independence that is other than
clearly insignificant in the context of the subject matter information. This will take into
• The materiality of the subject matter information (or the subject matter) for which
the particular responsible party is responsible; and
The degree of public interest that is associated with the engagement. If the firm determines that the threat to independence created by any such relationships
with a particular responsible party would be clearly insignificant it may not be necessary
to apply all of the provisions of this section to that responsible party.
The following example has been developed to demonstrate the application of Section
290. It is assumed that the client is not also a financial statement audit client of the firm,
or a network firm.
A firm is engaged to provide assurance on the total proven oil reserves of 10
independent companies. Each company has conducted geographical and engineering
surveys to determine their reserves (subject matter). There are established criteria to
determine when a reserve may be considered to be proven which the professional
accountant in public practice determines to be suitable criteria for the engagement. The proven reserves for...
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This document was uploaded on 09/23/2013.
- Fall '13