Balbuena, Ederlhyn Anne S.
BSA AC301
ACCN10B
September 16, 2022
ASYNCHRONOUS ACTIVITY 1
Case No. 1
You are an accountant who has been approached by Happy Company, who wants to
invest in Company YXZ. He has asked you for assurance whether the most recent
financial statements of Company YXZ are a reliable basis for him to make his
investment decision. Identify the key elements of an assurance engagement in this
scenario, if you accepted the engagement.
If I accepted Happy Company's engagement, I would inform them that five
key elements are critical to every assurance engagement choice, whether it is an
investment decision. I'll also tell him that we, the practitioners, examine the subject
matter against predetermined criteria and express our opinion about it in the
financial statements of Company YXZ, which acts as the basis for his investment
decision. The key elements tend to be related to one another, and all of them are
important for any assurance decision.

Three Party Relationship – This is one of the key elements, along with the
practitioner, which is us, the accountant, the responsible party, who is in
charge of the subject matter, and the intended users, who are my client, the
happy company, who will get the assurance reports produced by the
practitioners.

An appropriate subject matter – Every assurance engagement decision, like an
investment decision, has a suitable subject matter that will be provided by
one of the three responsible parties. The financial statement of the Company
YXZ is the subject of this assurance engagement. This is where we, the
practitioners, step in. The outcome of the subject matter evaluation against
the criteria will be subject matter information.

Suitable Criteria – The suitable criteria are one of the elements that are
essential in this investment assurance engagement and have a strong
relationship with the other element in the assurance engagement. Reliability,
understandability, neutrality, completeness, and relevance are properties of
suitable criteria. These are the criteria used by practitioners to assess the
suitable subject matter - financial statements.

Sufficient appropriate evidence – In this case, our subject matter is the
financial statement of Company YXZ, and we require evidence for that
financial statement in the form of contacts or receipts. This is the only method
for us, as practitioners, to validate and evaluate the accuracy of the
information in the financial statements. We can back up the submitted
financial statement information with proof and analyze it using the stated
criteria.

Written Assurance Report (Conclusion) – It is a written report that summarizes
all of the key parts of this assurance engagement decision and includes a
conclusion and opinion that expresses the assurance gained on Company
YXZ's financial statements.
Case No. 2
Juan Dela Cruz has invested in shares in a private limited company that operates a
chain of music studios in the north Luzon area. There are also other investors in the
company; Garry Valdez and Martin Singson who are also directors and run the
business on a daily basis. The company has been growing rapidly over the past
three years and Juan Dela Cruz is concerned that the business might reach a stage
in its growth that he no longer has a say in what goes on in the business. He is also
concerned about his investment in the company.
Required
You are the practitioner (auditor) to the company and Juan Dela Cruz would like you
to explain what your role is with the company.
If I were the company's auditor, I would inform Mr. Dela Cruz that one of the
things an auditor does is make an assurance engagement decision based on a
subject matter - financial statements. Justifying and assessing the accuracy of the
financial statement information, as well as analyzing the provided financial statement
information with proof. I, the auditor, will also perform an audit to ensure that any
possible risks are effectively managed, especially since the organization may be
entering the growth stage.
As auditors, our goal is to assess whether or not this assertion is accurate
and whether or not the examination will be done objectively. We also may distribute
the audit findings to interested users. We also create an assurance engagement
conclusion based on investment decisions and explain the certainty obtained to the
customer. We are in charge of the Chain of Music Studios' financial accounts and
will reassure Mr. Dela Cruz that he can count on his investment and have a say
when the firm reaches its growth stage. One of our responsibilities is to deliver a
conclusion of assurance that our client's desires or demands are met, as well as to
execute procedures on this company's internal controls and to assure their financial
records.