Docsity
Docsity
Prepare for your exams
Prepare for your exams

Study with the several resources on Docsity

Earn points to download
Earn points to download

Earn points by helping other students or get them with a premium plan

Guidelines and tips
Guidelines and tips
Sell on Docsity
Sell on Docsity
Docsity AI
Docsity AI
Log inSign up

Prepare for your exams

Study with the several resources on Docsity

Find documents

Prepare for your exams with the study notes shared by other students like you on Docsity

Search for your university

Find the specific documents for your university's exams

Docsity AINEW

Summarize your documents, ask them questions, convert them into quizzes and concept maps

Explore questions

Clear up your doubts by reading the answers to questions asked by your fellow students

Earn points to download

Earn points by helping other students or get them with a premium plan

Share documents
download point icon20 Points

For each uploaded document

Answer questions
download point icon5 Points

For each given answer (max 1 per day)

All the ways to get free points
Get points immediately

Choose a premium plan with all the points you need

Study Opportunities

Choose your next study program

Get in touch with the best universities in the world. Search through thousands of universities and official partners

Community

Ask the community

Ask the community for help and clear up your study doubts

Free resources

Our save-the-student-ebooks!

Download our free guides on studying techniques, anxiety management strategies, and thesis advice from Docsity tutors

Assurance Engagements, Schemes and Mind Maps of Auditing

Central Luzon State University (CLSU)Auditing

The definition and elements of assurance engagements. Assurance engagements are three-party contracts in which practitioners express a conclusion to enhance the degree of confidence of intended users about the outcome of the evaluation or measurement of a subject matter against criteria. the three parties involved, the appropriate subject matter, suitable criteria, sufficient appropriate evidence, and a written assurance report. It also notes the characteristics of a subject matter to be considered appropriate.

Typology: Schemes and Mind Maps

2021/2022

Available from 02/05/2023

seokshinim
seokshinim ๐Ÿ‡ต๐Ÿ‡ญ

4 documents

1 / 5

Toggle sidebar

This page cannot be seen from the preview

Don't miss anything!

bg1
ASSURANCE ENGAGEMENTS
Fundamental Principles of Assurance Services
Definition
โ—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.
โ—Assurance services are three-party contracts in which insurers report on (or improve)
the quality of information.
โ—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.
As depicted in Exhibit 1-1, the following are the elements of an assurance engagement
(3SECC):
A. A three-party relationship involving a practitioner, a responsible Party and intended
users;
B. An appropriate Subject matter;
C. Suitable Criteria;
D. Sufficient appropriate Evidence; and
E. A written assurance report (Conclusion) in the form appropriate to a reasonable
assurance engagement or a limited assurance engagement.
A. Three-Party Relationship:
An assurance engagement involves three separate parties, namely
a. The practitioner
โ—‹is 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
โ—‹must be independent of both the responsible party and the intended users
โ—‹is governed by ethical requirements (i.e. professional competence) regarding
the conduct of the engagements
โ—‹may use the work of persons from other professional disciplines, referred to as
experts for engagements requiring specialised skills and knowledge beyond
those ordinarily possessed by an individual practitioner e responsible for
determining the nature, timing, or extent of procedures required by the
engagement
b. The responsible party
pf3
pf4
pf5

Partial preview of the text

Download Assurance Engagements and more Schemes and Mind Maps Auditing in PDF only on Docsity!

ASSURANCE ENGAGEMENTS

Fundamental Principles of Assurance Services Definition โ— 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. โ— Assurance services are three-party contracts in which insurers report on (or improve) the quality of information. โ— 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. As depicted in Exhibit 1-1, the following are the elements of an assurance engagement (3SECC) : A. A three-party relationship involving a practitioner, a responsible Party and intended users; B. An appropriate Subject matter; C. Suitable Criteria; D. Sufficient appropriate Evidence; and E. A written assurance report (Conclusion) in the form appropriate to a reasonable assurance engagement or a limited assurance engagement. A. Three-Party Relationship: An assurance engagement involves three separate parties, namely a. The practitioner โ—‹ is 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 โ—‹ must be independent of both the responsible party and the intended users โ—‹ is governed by ethical requirements (i.e. professional competence) regarding the conduct of the engagements โ—‹ may use the work of persons from other professional disciplines, referred to as experts for engagements requiring specialised skills and knowledge beyond those ordinarily possessed by an individual practitioner e responsible for determining the nature, timing, or extent of procedures required by the engagement b. The responsible party

โ—‹ is the person/s responsible for the subject matter, the subject matter information, or both โ—‹ may or may not be the engaging party to the practitioner โ—‹ may or may not be from the same organisation as the intended users โ—‹ may be one of the intended users, but should not be the only one c. The intended users โ— are the person/s for whom the practitioner prepares the assurance report. The assurance report shall be addressed to all users whenever practical. โ— 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 common interests. โ— 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 parties identified. B. Appropriate Subject Matter The subject matter is โ— nature of the assertion the practitioner gathers sufficient evidence. โ— On the other hand, subject matter information pertains to the outcome of the evaluation or measurement of the subject matter against criteria. โ— It is for which the practitioner gathers sufficient appropriate evidence to provide a reasonable basis for expressing a conclusion in an assurance report Furthermore, subject matters have different characteristics, including the degree to which information about them is: โ— qualitative versus quantitative; โ— objective versus subjective: โ— historical versus prospective; and โ— 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 โ— An appropriate subject matter is: a. Identifiable, and capable of consistent evaluation or measurement against the identified criteria, and

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 - contribute to clear, comprehensive conclusions, and not subject to significantly different interpretations. c. Neutrality - contribute 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 โ— 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. D. Sufficient Appropriate Evidence โ— Evidence pertains to all information gathered by the practitioner in evaluating the subject matter against the criteria, on which the conclusion is based.

โ— The practitioner performs the engagement with an attitude of professional) scepticism to obtain sufficient appropriate evidence about whether the subject matter information is free from material misstatement. โ— 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. Sufficiency vs. Appropriateness โ— 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 โ— Risk of the subject matter information being materially misstated (the greater the risk, the more evidence is likely to be required), and โ— 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 reliability. โ— 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 judgement and by exercising professional scepticism. โ— 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. โ— In addition, conclusions provided on processes ordinarily are limited to the period covered by the engagement. T โ— the practitioner provides no conclusion about whether the process will continue to function in the specified manner in the future. Materiality โ— 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. The assessment of materiality and the relative importance of quantitative and qualitative factors in a particular engagement are matters for the practitioner's judgement.