Aud 01- Overview of Auditing and Other Assurance Services

Assurance Engagement means an engagement in which a practitioner expresses a conclusion designed

to enhance the degree of confidence or credibility of information about a subject matter by evaluating
whether the subject matter conforms in all material respects with suitable criteria.

Elements of Assurance Engagements

1. Three Party Relationship

An assurance engagement involves three (3) separate parties:
a) Practitioner is the person who provides assurance to the intended users about a subject
matter. He gathers evidence to obtain assurance and provide a conclusion.
b) Responsible Party is the one responsible for the subject matter of the assurance
engagement.
c) Intended Users are the one to whom the report is being addressed.
2. An Appropriate Subject Matter
Forms Characteristics
 Financial Performance  Identifiable
 Non-Financial Performance  Capable of consistent
 Physical characteristics evaluation
 Systems and Processes  Capable of measurement
 Behavior against the identified criteria
3. Suitable Criteria
Criteria are the standards or benchmark used to evaluate or measure the subject matter of an
assurance engagement.
4. Sufficient Appropriate Evidence
a) Professional Skepticism means the practitioner makes a critical assessment, with a
questioning mind, of the validity of evidence obtained that contradicts or brings into
question the reliability of documents or representations.
b) Professional Judgment
c) Sufficiency and Appropriateness
Sufficiency is the measure of the quantity of evidence.
Appropriateness is the measure of the quality of evidence that is its relevance and reliability.
d) Materiality
In considering materiality, the practitioner understands and assesses what factors might
influence the decisions of the intended users.
e) Assurance Engagement Risk
AR=IR*CR*DR
5. A written assurance report