ASSURANCE ENGAGEMENTS AND RELATED SERVICES
4 Types of Services
1.
2.
3.
4.
Audit
Review
Compilation
Agreed-Upon Procedures
Audit of Financial Statements
 Enable the auditor to express
an opinion on the entity’s
financial statements.
 High level of assurance
(Reasonable Assurance) free
from material misstatements.
 Specific audit procedure –
Auditor
 Gather sufficient appropriate
audit evidence about fair
presentation of the financial
statements.
Review of Financial Statements
 Limited assurance
 Inquiry and Analytical
procedures
 Moderate level of assurance or
limited assurance
 Limited assurance – negative
assurance
 Continual dynamic process
 Does not ordinarily involve:
1. Assessment of
accounting and internal
control system,
2. Tests of records and of
responses to inquiries
by obtaining
corroborating evidence
thru inspection
3. Observation
4. Confirmation and
computation
 Inquiry and Analytical
procedures
1. All material items
2. Area of high-risk material
misstatement
3. Related party relationships
and transaction
4. Fraud and non-compliance
with laws and regulations
5. Entity going concerns
 If materially misstated - carry
out additional or more
extensive procedures
 Clear written expression of
negative assurance
 Unmodified conclusion –
limited assurance
 Material Misstatements –
should describe the impair a
fair presentation of financial
statements
 Possible effects on Financial
Statements:
1. Express qualified
conclusion
2. If material and pervasive –
express an adverse
conclusion
 Limitation:
1. Express qualified
conclusion – regarding
possible adjustments that
had the limitation not
existed
2. Disclaim a conclusion – no
level of assurance can be
provided
ASSURANCE ENGAGEMENTS AND RELATED SERVICES
Compilation of financial Statements
 Entities turn to professional
accountant to assist them in
the preparation and
presentation of their financial
statements.
 Perform the compilation
engagements:
1. Entity’s business
operations, accounting
systems & accounting
records
2. Applicable Financial
reporting framework &
entity’s industry
 Assemble the financial
information:
1. Records
2. Documents
3. Explanations
4. And other information
5. Significant judgments
provided by the management.
 Not an assurance engagement
 Do not require verify the
accuracy and completeness
 If misstated or misleading –
propose appropriate
amendments
 If they decline – withdraw
Agreed-upon Procedures and
Engagements