INTRODUCTION TO ASSURANCE
Decision-making has been a normal part of our lives. The countless number of decisions
made every day can significantly affect the lives of every person and every organization.
To have a favorable outcome, decision-makers heavily rely on information available that,
more often than not, is prepared or provided by other persons or organizations. However, in
most instances, the interests of the providers of information contradict those of the users of
the information. Thus, creating the need for an objective evaluation of the information to
have more reliable information.
In business, reliable information becomes an essential aspect of decision-making.
Decision-makers gather relevant and reliable information before making any economic
decisions that normally include the following
USERS:
1.​ Potential and Existing Investors
✓ to decide when to buy, hold, or sell an equity investment
✓ to assess the stewardship or accountability of management
✓ to determine distributable profits and dividends (for Board of Directors - BOD
2.​ Lenders and other creditors
✓ to assess the security for amounts lent to the entity
3.​ Employees
✓ to assess the ability of the entity to pay and provide other benefits to its employees
4.​ Government
✓ to determine taxation policies
✓ to prepare and use national income statistics
✓ to regulate the activities of entities
Commonly, these users will rely on the financial information embodied in the financial
statements presented and prepared by the entity where they plan to invest, grant a loan,
request salary increases or additional benefits, or change taxation policies. This situation
created the need for an independent Certified Public Accountant (CPA) who is equipped with
the appropriate skills and knowledge to objectively evaluate the information. The CPA is
expected to provide reasonable assurance as to the fairness of the preparation and
presentation of the financial information.
Such an assurance will be expressed in the form of an opinion or conclusion which will later
be communicated in a written assurance report.
What is assurance?
Assurance refers to the practitioner's satisfaction as to the reliability of an assertion being
made by one party for use by another party.
Simply stated, assurance means how sure the practitioner is that the representation made
by a particular party is reliable.
Assurance engagement (or services) means an engagement in which a
practitioner expresses a conclusion designed to enhance the degree of confidence of the
intended users other than the responsible party about the outcome of the evaluation or
measurement of a subject matter against criteria.
Assurance services are three-party contracts in which assurers report on (or improve) the
quality of information. It is used to describe the broad range of information enhancement
services that are provided by CPAs.
These services are performed by an independent professional designed to improve the
quality or enhance the credibility of the subject matter of the engagement.
The objective and elements of assurance engagements
The objective of an assurance engagement is for a practitioner to evaluate or measure a
subject matter that is the responsibility of another party against identified suitable criteria and
express a conclusion that provides the intended user with a level of assurance about that
subject matter.
A. Three-Party Relationship:
An assurance engagement involves three separate parties, namely
a. The practitioner
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Broader than the term auditor as used in Philippine Standards on Auditing (PSAS)
and Philippine Standards on Review Engagements (PSRES), which relates only to
practitioners performing audit and review engagements concerning historical financial
information
must be independent of both the responsible party and the intended users
is governed by ethical requirements (i.e. professional competence) regarding the
conduct of the engagements
may use the work of persons from other professional disciplines, referred to as
experts for engagements requiring specialized skills and knowledge beyond those
ordinarily possessed by an individual practitioner
responsible for determining the nature, timing, or extent of procedures required by
the engagement
So as not to be confused with the terms professional accountant, practitioner, and auditor,
the following explains the uses of these terms.
Professional Accountant - Certified Public Accountant engaged in any scope of practice of
the accountancy profession
Practitioner - CPA rendering professional services (assurance or non-assurance)
Auditor - A practitioner rendering audit and review services
b. The responsible party
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is the person/s responsible for the subject matter, the subject matter information, or
both
may or may not be the engaging party to the practitioner
may or may not be from the same organization as the intended users
may be one of the intended users, but should not be the only one
c. The intended users
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are the person/s for whom the practitioner prepares the assurance report. The
assurance report shall be addressed to all users whenever practical,
in case of a broad range of interests by the readers of the assurance report, the
intended users may be limited to major stockholders with significant and comman
interests.
may be identified by agreement between the practitioner and the responsible party or
engaging party, or by law. Once identified, the report to be issued must be restricted
only to the parties identified.
B. Appropriate Subject Matter
The subject matter is the nature of the assertion for which the practitioner gathers sufficient
evidence. On the other hand, subject matter information pertains to the outcome of the
evaluation or measurement of the subject matter against a criteria. It is for which the
practitioner gathers sufficient appropriate evidence to provide a reasonable basis for
expressing a conclusion in an assurance report
The subject matter and subject matter information of an assurance engagement can take
many forms. The table below summarizes the illustration given in the Philippine Framework
for Assurance Engagements.
Furthermore, subject matters have different characteristics, including the degree to which
information about them is:
✔ qualitative versus quantitative,
✓ objective versus subjective,
✓ historical versus prospective, and
✓ relates to a point in time or covers a period.
Such characteristics affect the:
a. Precision with which the subject matter can be evaluated or measured against criteria,
and
b. The persuasiveness of available evidence. The assurance report notes characteristics of
particular relevance to the intended users.
Characteristics of a subject matter to be considered appropriate
An appropriate subject matter is:
a. Identifiable, and capable of consistent evaluation or measurement against the identified
criteria, and
b. Such that the information about it can be subjected to procedures for gathering sufficient
appropriate evidence to support a reasonable assurance or limited assurance conclusion, as
appropriate
c. Criteria
The benchmarks used to evaluate or measure the subject matter include, where relevant,
benchmarks for presentation and disclosure. Criteria may be classified as follows:
a. Formal
➤ PFRS-preparation of the financial statement
➤Established internal control framework (e.g. COSO) or internal control objectives
specifically designed for the engagement reporting on internal controls
➤ Applicable laws, regulations, or contracts compliance reporting for
b. Less formal
➤Internally developed code of conduct (e.g. entity's by-laws)
➤ Agreed level of performance (e.g. the number of times a particular committee is expected
to meet in a year)
c. Established
➤ those embodied in laws or regulations or issued by authorized or recognized bodies of
experts that follow a transparent due process
➤ associated with formal criteria
d. Specifically developed
➤those designed for the engagement
➤associated with less formal criteria
Suitable criteria are required for reasonably consistent evaluation or measurement of a
subject matter within the context of professional judgment. Without the frame of reference
provided by suitable criteria, any conclusion is open to individual interpretation and
misunderstanding.
Suitable criteria are context-sensitive, that is, relevant to the engagement circumstances.
Even for the same subject matter, there can be different criteria. For example, one
responsible party might select the number of customer complaints resolved to the
acknowledged satisfaction of the customer for the subject matter of customer satisfaction;
another responsible party might select the number of repeat purchases in the three months
following the initial purchase.
Characteristics of suitable criteria: (RUN CR)
a.​ Reliability - reliable criteria allow reasonably consistent evaluation or measurement of
the subject matter including, where relevant, presentation and disclosure when used
in similar circumstances by similarly qualified practitioners.
b.​ Understandability - contributes to clear, comprehensive conclusions, and not subject
to significantly different interpretations.
c.​ Neutrality - contributes to conclusions that are free from bias.
d.​ Completeness - criteria are sufficiently complete when relevant factors that could
affect the conclusions in the context of the engagement circumstances are not
omitted. Complete criteria include, where relevant, benchmarks for presentation and
disclosure.
e.​ Relevance - relevant criteria contribute to conclusions that assist decision-making by
the intended users
Communication of criteria to intended users
Criteria need to be available to the intended users to allow them to understand how the
subject matter has been evaluated or measured. Criteria are made available to the intended
users in one or more of the following ways:
a. Publicly.
b. Through inclusion in a clear manner in the presentation of the subject matter information.
c. Through inclusion in a clear manner in the assurance report.
d. By general understanding, for example, the criterion for measuring time in hours and
minutes.
Furthermore, in certain assurance engagements, if the criteria are made available only to
specific intended users or are relevant to a specific purpose, the use of the report should be
restricted to those users or for that purpose.
D. Sufficient Appropriate Evidence
Evidence pertains to all information gathered by the practitioner in evaluating the subject
matter against the criteria on which the conclusions are based.
The practitioner plans and performs the engagement with an attitude of professional
skepticism to obtain sufficient appropriate evidence about whether the subject matter
information is free from material misstatement.
Without the evidence, the practitioner will not be able to attain the objective of an assurance
engagement which is formulating and expressing an opinion or conclusion.
Considerations in Planning and Performing the Engagement
The following are the practitioner's considerations when planning and performing the
engagement (determining the nature, timing, and extent of evidence-gathering procedures).
Sufficiency vs. Appropriateness
Two characteristics must be possessed by the evidence to be gathered in an assurance
engagement. These are sufficiency and appropriateness.
Sufficiency is the measure of the quantity of evidence. The quantity of evidence needed is
affected by the
✓ Risk of the subject matter information being materially misstated (the greater the risk, the
more evidence is likely to be required), and
✔ Quality of such evidence (the higher the quality, the less may be required).
Appropriateness (previously called competence) is the measure of the quality of evidence,
that is, its relevance and its rellobility.
Accordingly, the sufficiency and appropriateness of evidence are Interrelated. However,
merely obtaining more evidence may not compensate for its poor quality.
What is sufficient and appropriate shall be determined by the practitioner using his or her
professional judgment and by exercising professional skepticism.
In terms of obtaining sufficient appropriate evidence, it is generally more difficult to obtain
assurance about subject matter information covering a period than about subject matter
information at a point in time.
In addition, conclusions provided on processes ordinarily are limited to the period covered by
the engagement. The practitioner provides no conclusion about whether the process will
continue to function in the specified manner in the future.
Materiality
Materiality is relevant when the practitioner determines the nature, timing, and extent of
evidence-gathering procedures, and when assessing whether the subject matter information
is free of misstatement.
When considering materiality, the practitioner understands and assesses what factors might
influence the decisions of the intended users. For example, when the identified criteria allow
for variations in the presentation of the subject matter information, the practitioner considers
how the adopted presentation might influence the decisions of the intended users.
The assessment of materiality and the relative importance of quantitative and qualitative
factors in a particular engagement are matters for the practitioner's judgment.
Assurance engagement risk is the risk that the practitioner expresses an inappropriate
conclusion when the subject matter information is materially misstated.
Managing assurance engagement risk
The practitioner may reduce assurance engagement risk to a lower level by increasing the
assurance level provided by the procedures performed. To be meaningful, the level of
assurance obtained by the practitioner is likely to enhance the intended users' confidence
about the subject matter information to a degree that is more than inconsequential.
Inherent risk - The susceptibility of the subject matter information to a material misstatement,
assuming that there are no related controls.
Control risk - The risk that a material misstatement that could occur will not be prevented, or
detected and corrected, on a timely basis by related internal controls.
Detection risk - The risk that the practitioner will not detect a material misstatement that
exists.
Risk of material misstatement - The risk that the subject matter Information is materially
misstated
The three general components of assurance engagement risk are depicted in Exhibit 1-3.
However, not all of these components will necessarily be present or significant for all
assurance engagements. The extent to which the practitioner considers each of these
components depends on the circumstances of the engagement, especially the nature of the
subject matter and whether it is a reasonable assurance or limited assurance engagement.
Materiality and assurance engagement risk (audit risk) will be discussed in further detail in
Chapter 5 Planning an Audit of Financial Statements.
Cost-benefit Consideration
In performing evidence-gathering procedures, the practitioner is expected to observe
cost-benefit considerations. This means that "the benefits that will be derived from obtaining
the evidence should exceed the cost of obtaining it".
The practitioner considers the relationship between the cost of obtaining evidence and the
usefulness of the information obtained. However, the matter of difficulty or expense involved
alone is not a valid basis for omitting evidence-gathering procedures for which there is no
alternative
To simplify, in case there is a significant evidence-gathering procedure that is required but
involves high cost or high level of difficulty, the practitioner may:
1. Identify and perform alternative procedures that can minimize the associated cost or level
of difficulty.
2. In the absence of alternative procedures, the practitioner is still required to perform the
procedures as long as he/she believes that performance of it is necessary and beneficial to
the entire engagement.
Professional skepticism is defined as the attitude that includes a questioning mind being
alert to conditions which may indicate possible misstatement due to error or fraud, and a
critical assessment of audit evidence.
The practitioner plans and performs an assurance engagement with an attitude of
professional skepticism recognizing that circumstances may exist that cause the subject
matter information to be materially misstated.
This means the practitioner makes a critical assessment, with a questioning mind, of the
validity of the evidence obtained and is alert to evidence that contradicts or brings into
question the reliability of documents or representations by the responsible party.
Simply put, professional skepticism dictates that whenever the practitioner gathers
information, he/she considers the possibility that the information received might contain
misstatement. The practitioner will then validate the information received by performing
additional procedures to exhibit professional skepticism. Accordingly, the more the
practitioner intends to exhibit the attitude of professional skepticism, the more procedures
will be required.
The auditor often exhibits professional skepticism in the following ways
1. Vitality of professional skepticism
An attitude of professional skepticism is necessary throughout the Angagement process for
the practitioner te reduce the risk of engagoking suspicious circumstances, over-generalizing
when drawing conclusions from observations, and using faulty assumptions in determining
the nature, timing, and extent of evidence-gathering procedures and evaluating the results
thereof.
2. Authentication of documentation
An assurance engagement rarely involves the authentication of documentation, nor is the
practitioner trained as or expected to be an expert in such authentication. However, the
practitioner considers the reliability of the information to be used as evidence, for example,
photocopies, facsimiles, filmed, digitized, or other electronic documents, including
consideration of controls over their preparation and maintenance where relevant.
3. Consistency of information from different sources
The practitioner typically gains greater assurance from consistent evidence obtained from
different sources or of different natures than from evidence considered individually.
When confronted with contradicting information from different sources, the practitioner
ordinarily performs procedures to identify possible causes of the discrepancies (e.g., bank
reconciliation, subsidiary and general ledgers reconciliation, and inquiries with involved
parties to account for the differences).
However, if the practitioner had already exhausted all possible means to identify the
differences but still there are items unaccounted for, the following generalizations about the
reliability of evidence may be useful.
a. External vs. internal source
Evidence is more reliable when it is obtained from independent sources outside the entity.
b. Effective internal control
Evidence that is generated internally is more reliable when the related controls are effective.
c. Directly vs. indirectly obtained by the practitioner
Evidence obtained directly by the practitioner (for example, observation of the application of
a control) is more reliable than evidence obtained Indirectly or by inference (for example,
inquiry about the application of a control).
d. Written vs. oral representations
Evidence is more reliable when it exists in documentary form, whether paper, electronic, or
other media (for example, a contemporaneously written record of a meeting is more reliable
than a subsequent oral representation of what was discussed).
e. Original vs. reproduced copies
Evidence provided by original documents is more reliable than evidence provided by
photocopies or facsimiles.
E. Written Assurance Report
The practitioner provides a written report containing a conclusion or an opinion that conveys
the assurance obtained about the subject matter information. In addition, the practitioner
considers other reporting responsibilities, including communicating with those charged with
governance. The opinion to be expressed by the practitioner may include either of the
following.
Types of Opinion
1.​ Unmodified/Unqualified - Present fairly, in all material respect
2.​ Qualified - Except for
3.​ Adverse - Do not present fairly, in all material respect
4.​ Disclaimer of opinion - We do not express a conclusion
Levels and forms of assurance
The levels (high or moderate) and forms (positive or negative) of assurance provided by the
practitioner are dependent on the type of assurance engagement being rendered.
The following are types of assurance engagement as to the level of assurance provided:
1. Reasonable assurance engagement the objective is a reduction in assurance
engagement risk to an acceptably low level in the circumstances of the engagement as the
basis for a positive form of expression of the practitioner's conclusion. Such a form conveys
"reasonable assurance".
Example of expressing an opinion in reasonable assurance engagement:
"In our opinion, internal control is effective, in all material respects, based on XYZ criteria.”
2. Limited assurance engagement
the objective is a reduction in assurance engagement risk to a level that is acceptable in the
circumstances of the engagement, but where the risk is greater than for a reasonable
assurance engagement, as a basis for a negative form of expression of the practitioner's
conclusion. This form conveys "limited assurance".
Example of expressing an opinion in limited assurance engagement "Based on our work
described in this report, nothing has come to our attention that causes us to believe that
internal control is not effective, in all material respects, based on XYZ criteria.
Moreover, the following are types of assurance engagement as to structure.
Assurance Engagements as to structure
The following are the assurance engagements according to the structure.
A. Attestation engagements
Attestation engagement is an engagement in which a practitioner is engaged to issue, or
does issue, a written communication that expresses a conclusion about the reliability of a
written assertion that is the responsibility of another party.
Main characteristics
a. In an attestation, the responsible party carries out the measurement or evaluation of the
subject matter and reports the information.
b. The subject matter information contains the responsible party's assertion.
For example:
The financial statements of ABC Company are fairly stated as of December 31, 2024.
C. The practitioner's main task is to provide assurance through the expression of a
conclusion on this assertion.
For example:
"In our opinion, the accompanying financial statements present fairly, in all material respects,
the financial position of ABC Company as at December 31, 2024, and its financial
performance and its cash flows for the period ended December 31, 2024, in accordance with
Philippine Financial Reporting Standards (PFRSs).
d. Attestation engagements are also known as assertion-based engagements.
Assertion-based engagements are assurance engagements that which the evaluation or
measurement of the subject matter is performed by the responsible party, and the subject
matter information is in the form of an assertion by the responsible party that is made
available to the intended users.
With this, in an attestation, both the subject matter information including the responsible
party's assertion and the practitioner's assurance report are made available together to the
intended users.
However, at times, the responsible party may engage another third party to conduct the
measurement or evaluation of the subject matter. The assurance practitioner will need to
understand the split of responsibilities between the responsible party and the third-party. For
example, the auditor needs to assess if management should bear the responsibility for the
third party's assessment. The purpose of this is to decide on the best way to contract and
structure the engagement.
Common types of attestation engagements are:
a. Audit engagement is an engagement in which the auditor provides a reasonable (but not
absolute) level of assurance that the subject matter is free from material misstatements.
b. Review engagement is an engagement in which the auditor provides a moderate level of
assurance that the information subject to the engagement is free of material misstatement
Practitioners more commonly perform attestation engagements. This is because, ultimately,
management (as the responsible party) is responsible for their business and, therefore,
should be in a position to present relevant assertions in the subject matter information. They
are also in a better position to understand who would use the information, what users want
to see, in what format, and for what purpose.
B. Direct engagements
Direct engagement is a residual definition of assurance engagement as to structure.
In a direct engagement, the responsible party does not present the subject matter
information. Instead, the practitioner reports directly on the subject matter and provides the
intended users with an assurance report containing the subject matter information.
Because of this attribute, direct engagements are also called direct reporting engagements.
Auditing standards define direct reporting engagements as assurance engagements in that
the practitioner 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 in the assurance reports.
An example of a direct engagement would be an engagement to report on the effective
control over the financial reporting process.
A direct assurance conclusion would be constructed as follows:
"In our opinion, the company maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2024, based on the criteria established in the
Internal Control Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).”
NON-ASSURANCE ENGAGEMENTS
Non-assurance engagements lack one or more of the elements of assurance engagements.
Common examples include:
A. Agreed-upon procedures
✓ The auditor is engaged to carry out those procedures of an audit nature to which the
auditor and the entity and any appropriate third parties have agreed and to report the
findings
✓ Recipients of the report must form their own conclusions from the report by the auditor.
✓ The report is restricted to those parties who have agreed to the procedures to be
performed
B. Compilation of financial and other information
✔ An accountant is engaged to use accounting expertise as opposed to auditing expertise
to collect, classify, and summarize financial information ordinarily entails detailed data in a
manageable and understandable form
✓ an accountant will not express any assurance on the financial information
✓ intended users derived some benefits as a result of the accountant's involvement
C. Some tax services where no conclusion is expressed, and tax consulting
The practitioner provides advice on income tax and business strategies
✓ Develop tax strategies to minimize businesses' tax liability and worries
D. Management consulting and other advisory services
✓ The practitioner provides advice or recommendations for the improvement of the client's
use of its capabilities and resources to achieve the objective of the client's organization.
Needless to say, non-assurance engagements do not provide assurance to intended users.
NOTE: The details of agreed-upon procedures and compilation engagements will be
discussed in Chapter 15 Special Purpose Audit Engagements and Audit-related Services.
SUMMARY OF DIFFERENCES BETWEEN ASSURANCE AND NON-ASSURANCE
ENGAGEMENTS
Assurance engagements
Non-assurance engagements
✓ Designed to improve the quality or
enhance the credibility of the subject matter
✓ Designed to provide comments,
suggestions, or recommendations on how
to use the information
✓ Should be provided by an independent
professional
✓ Independence is not required
✓ Common examples include
✓ Common examples include
a. Audit,
b. Review, and
c. examination of prospective financial
information
a. agreed-upon procedures,
b.compilation,
c. preparation of tax returns, and d.
management advisory services
✓Three-party contract
✓Two-party contract
✓Output: assurance in the form of an
opinion
✓Output: recommendation on how to use
the information
Attestation
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Audit
Review
Others
Other Services
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Performanc
e review
Examination
of forecasts
- compilation of bookkeeping
- management services
- agreed-upon procedures
- tax services where no conclusion is
expressed
GLOBAL ORGANIZATIONS AND STANDARD-SETTING BOARDS OF THE
ACCOUNTANCY PROFESSION
The International Federation of Accountants (IFAC) is the global organization for the
accountancy profession. The organization was founded in 1977 and is comprised of 180
member and associate organizations in 135 countries and jurisdictions, representing nearly
3 million professional accountants. It supports the development, adoption, and
implementation of high-quality international standards¹.
To pursue its purpose, it supports four independent standard-setting boards namely:
1. International Auditing and Assurance Standards Board (IAASB)"
2. International Accounting Education Standards Board (IAESB)™ 2
3. International Ethics Standards Board for Accountants (IESBA)*
4. International Public Sector Accounting Standards Board (IPSASB)*
Exhibit 1-6 presents a diagram of the structure of these organizations and their respective
roles and pronouncements.
IFAC
Role: Through its member organizations, IFAC serves the public interest by enhancing the
relevance, reputation, and value of the global accountancy profession.
IAASB
Role: To set high-quality international standards for auditing, assurance, and quality
control that strengthen public confidence in profession.
IAESB
Role: To set high-quality international standards that shape quality accountancy
education
IESBA
Role:To set high-quality, internationally appropriate ethics standards for professional
accountants, including auditor independence requirements
IPSASB
Role: To improve public sector financial reporting worldwide through the development
high-quality standards for use by governments and other public sector entities around
the world.
STANDARDS GOVERNING THE PROFESSIONAL SERVICES OF CPAS IN THE
PHILIPPINES
The table below lists the different professional standards containing basic principles and
essential procedures (together with related guidance in the form of explanatory and other
material, including appendices), which are used by CPAs as guidelines in rendering
professional services. All these standards are issued by the Auditing and Assurance
Standards Council (AASC; formerly known as Auditing Standards and Practices Council ASPC). Refer to Chapter 3 Practice and Regulation of the Accountancy Profession for the
full discussion of AASC
At present, AASC pronouncements are mainly adopted from the standards and practice
statements issued by the IAASB. Country-specific standards and practice statements are
developed to address specific auditing issues not covered by the IAASB pronouncements.
IMPORTANT NOTES:
a. PSAS, PSRES, PSAES, and PSRSs are known as engagement standards.
b. These standards require professional accountants to exercise professional judgment in
applying them.
C. Practice Statements are issued to provide interpretive guidance and practical assistance
to professional accountants in implementing the related engagement standards and to
promote good practice.
d. A professional accountant shall be aware of and consider the applicable practice
statements to the engagement. In exceptional circumstances, a professional accountant may
judge it necessary to depart from a basic principle or essential procedure of an engagement
standard to achieve the objective of the engagement. When such a situation arises, the
professional accountant should be prepared to justify the departure.
ADOPTION OF PHILIPPINE STANDARDS AND PRACTICE STATEMENTS
The AASC undertakes a review of existing international pronouncements and those that may
be issued in the future to make them Philippine-specific. Changes to international
pronouncements to make them Philippine-specific are made clear in the AASC exposure
draft and final Philippine Standards or Practice Statements.
AASC Working Procedures
1.​ AASC members are assigned to
workgroups
Each workgroup has a designated leader
2.​ Preparation of Exposure Drafts
Each workgroup is assigned specific IS and
PS or IAASB's exposure drafts to review on
the proposed PH Standard or PS for
consideration by the AASC en banc.
*Majority of the council should approve
before exposure
3.​ Exposed to the Public
The draft shall also be published in the
PICPA Accounting Times and ACPAPP
Bulletin to give it further exposure.
Exposure period:
Generally, not shorter than 90 days for each
exposure draft to be considered by the
organizations and persons to whom it is
sent for comment.
*Interpretations, if issued by the AASC,
need not be exposed for comment
4.​ Comments, Suggestions, Revisions
and Final Draft
The comments and suggestions received
are then considered by AASC and the
exposure draft is revised as appropriate.
When the revised draft is approved*** by
the AASC, It is issued as a final PH
Standard or PS.
***requires approval of at least ten (10)
AASC members
5.​ Final Approval and Effectivity
Each final PH Standards and PS,
interpretation, if deemed oppropriate, shall
be submitted to the PRC through BOA
Publication to Official Gazette:
The pronouncement shall be published in
the official gazette and becomes operative
from the effective date stated therein.
THE PHILIPPINE FRAMEWORK FOR ASSURANCE ENGAGEMENTS
In addition to the engagement standards, ethical principles, and quality management
standards, professional accountants performing assurance engagements are also governed
by the Philippine Framework for assurance engagements.
The Framework serves as the foundation of concepts related to assurance engagements. It
is the primary reference of this Chapter discussing, among other items, the following:
✓ Definition and objective of an assurance engagement
✓ Scope of the Framework distinguishing assurance engagements from other engagements
(consulting services, compilation, and agreed-upon procedures)
✓ Engagement acceptance requirement for assurance engagements
✓ Elements of an assurance engagement
Presented below is a summary of general concepts related to the Framework:
1. It identifies engagements to which PSAS, PSRES, and PSAEs apply.
2. It deals with assurance engagements conducted by practitioners, and it provides a frame
of reference for both practitioners and other stakeholders involved in assurance
engagements, such as the engaging party.
3. It provides a reference to the IAASB in its development of ISAS, ISRES, and ISAES, and,
consequently, the AASC in its adoption of said standards for application in the Philippines.
It should be noted that the Framework is not an engagement standard.
It does not establish or provide procedural requirements for the performance of assurance
engagements. The engagement standards contain basic principles, essential procedures,
and related guidance (consistent with the concepts of the Framework) for the performance of
assurance engagements.