AN OVERVIEW ON THE AUDITING AND ASSURANCE PRINCIPLES
Accountants final output – Financial Statements
External auditor yung report niya ay nakaanchor sa ginagawa ng accountant which is the
Financial Statements
Paano mo ba malalaman na ang financial statements ay fairly presented? – no bias, objective
We should not only rely what the accountants say as users of financial reports. Very concern ang
mga primary users because they have to make an economic decision.
FS is fairly presented if it complies with all the requirements and provisions of the accounting
standards unless otherwise, immaterial (will not affect the economic decision making) standards
referring to PFRS
Independent / External Auditor – not affiliated with the company. Independent body that will verify
if FS complies to the accounting standards.
Auditors final output - Audit Opinion / Audit Report – after all the procedures done by the
independent auditor, magbibigay na siya ng audit opinion at mahalagang makita ng mga users
ng FS na may nakaattatch certifying that it is fairly presented in all material respect.
Ang primary purpose ng isang auditor ay para magbigay ng opinion if the financial statements are
fairly presented.
Audit is a systematic process as well. Para kang nagiimbestiga para magkaroon ka ng conclusion.
Bago makapagbigay ng audit opinion, dadaan a rin sa systematic process dahil may tinatawag
na PSA – Philippine Standards on Auditing.
Meron ka dapat Sufficient Appropriate Evidence.
Sufficient -dapat tama ang number or quantity ng documents mo.
Evidences – conract, invoices, supporting documents
Appropriate- dapat tama ang kinukuha mong mga dokumento ; it pertains to the quality of the
evidence
BY DEFAULT, FS ARE FAIRLY PRESENTED BECAUSE EVERYONE IS CONSIDERED TO BE
INNOCENT UNLESS OTHERWISE PROVEN. We just need to check in order to verify if it
complies to the PFRS. You need to know the applicable accounting standards and its provisions.
You need to know the Philippine Standards on Auditing so that you will know the
recommendations.
Mas concern ang mga clients sa tax. Kahit di ka expert, mapipilitan ka na maging expert in that
field kaya tayo nag-aaral ng law. Dapat alam mo ang mga ganung klaseng mga batas because
it will affect the FS presentation.
HINDI PRIMARY PURPOSE NG ISANG AUDITOR TO DISCOVER FRAUD BECAUSE IT
COMES ALONG THE WAY. May separate siyang engagement sa mga fraud audit. Ang scope
ng independent audit ay ang fairness ng FS sa standards.
Auditing and Assurance – It is major, dito lalabas ang expertise mo sa IA, CFAS, Business Law
and Taxation.
INTRODUCTION TO AUDITING AND ASSURANCE PRINCIPLES AND CONCEPTS
Introduction to Assurance Engagement
Assurance – guarantee ; may kasiguraduhan ; refers to practitioner’s (Independent CPAs, Auditor,
Practicing Accountant) satisfaction as to the reliability of an assertion (management
representation kagaya ng accountant na nagsasabing fairly presented and kaniyang mga FS)
being made by one party for the use of another party.
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Dapat satisfied si practitioner sa reliability ng sinasabi ng management.
May tatlong engage – practitioner, management, and another party (who will make an
economic decision)
The role of the practitioner is to make a conclusion or opinion regarding the reports if it is
clearly presented so that the intended users will be confident to use them in making
economic decisions (has something to do with the financial) because someone checked
it (check and balance)
Assurance Engagement or Services –It is an engagement where the practitioner expresses
conclusion. It is designed to enhance the degree of confidence of the intended users (other than
responsible party). It is about the outcome of the evaluation or measurement of a subject matter
(Financial Report) against a criteria (PAS / PFRS).
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Auditor should be knowledgable regarding the criteria.
Practitioner engage to give conclusion regarding the reliability and fair presentation of FS
para tumaas confidence level ng mga intended users.
Auditing is an assurance engagement because it gives conclusion. It is just one
engagement under assuranace
Objective of Assurance Engagements or Services
It is to evaluate or measure the subject matter (Financial Statements) that is responsibility of
another party (management na nagpapatakbo ng company) against identified suitable criteria
(PFRS) and express a conclusion that provides the intended user with level of assurance about
the subject matter.
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Confident enough that the intended user made a correct economic decision since
someone checked it and evaluated the FS and it is reliable. Nacheck and balance yung
FS.That is the concept of assurance and auditing.
Elements of Assurance Engagement
 Three party relationship (practitioner, responsible party and intended users)
This is unlike the non-assurance engagement – mga engagement na hindi naman
kailangang magbigay ng conclusion or opinion. Two part (practitioner and responsible
party) kasi it is more on internal
 Appropriate subject matter – may ginagawa na report na chinecheck ni practitioner.
 Suitable Criteria – Accounting standards , PFRS
 Sufficient Appropriate Evidence and;
 Written Assurance Report (Conclusion) in the form to:
Reasonable Assurance Engagement – example is auditing
Limited Assurance Engagement – hindi full blown procedures, kapag review
engagement lang
There is no 100 % assurance / guarantee