What is “Assurance”? Explain the value we obtain from lay man’s assurance.

A promise to tell someone something confidently or firmly, or a pledge to remove

uncertainty from someone's mind.
A promise that something will happen or is true, made especially to make
someone less worried.
Assurance is a type of financial insurance that pays out in the case of a specified
occurrence. The terms assurance and insurance are frequently used interchangeably.
Insurance, on the other hand, refers to coverage for a specific length of time, whereas
assurance refers to continuous coverage for a longer period or until death. Validation
services given by accountants and other professionals may sometimes be referred to as
assurance.
What is an Assurance Engagement?

A practitioner's assurance engagement is one in which he expresses an opinion

about the measurement of a subject matter against a set of criteria. The users'
confidence in the measurement of subject matter related to the criteria under
consideration is boosted by practitioners' expressions of opinion.

Why do we conduct Assurance Engagements? Why is it an essential function in the

practice of our profession?

We perform assurance engagements to acquire sufficient acceptable evidence to

express a decision, offering reasonable or limited assurance, as to whether the audited
body has complied in all material ways with the stipulated requirements of the
appropriate legislation the 'criteria'.

It is an important function in our profession's activity since it aims to improve the

quality and transparency of the information we provide as practitioners. The level of
assurance offered by the professional accountant's conclusion indicates the level of
trust that the intended user has in the subject matter's credibility. It also allows
professionalism to reign supreme in the industry. It is also in the public interest that the
Code of Ethics is followed, and that the interests of enterprises and assurance firms are
put aside by both parties' independence.
Differentiate the following:

Reasonable Assurance Engagement and Limited Assurance Engagement

Reasonable assurance is usually expressed in the affirmative. It's also known as

positive assurance. This sort of assurance engagement conveys their judgment that the
assurance engagement risks have been reduced to an appropriate low level for the
subject matter that the firm is expressing. On the other hand, limited assurance
engagements are usually expressed in the negative form, and the finest example of this
sort of assurance is financial statement review engagements and indicates a risk level
greater than the level of reasonable assurance.

Assertion-based Engagements and Direct Reporting Engagements

In an attestation (also known as assertion-based engagement), the responsible

party carries out the measurement or evaluation of the subject matter and reports the
information. The responsible party's assertion (for example, "The subject matter
information is fairly stated as of date/month/year") is included in this subject matter
information. The practitioner's job is to provide an assurance conclusion on this claim.

In a direct (direct reporting) engagement, the responsible party does not present
the subject matter information in a report in a direct engagement. Instead, the
practitioner reports directly on the subject matter and issues an assurance report
containing the subject matter information to the intended users.

What are the Elements of an Assurance Engagement? Give and explanation and
include why such element is necessary in the completion of such engagement.

The practitioner, a responsible party, and the intended users of the assurance
report form a three-party relationship. The responsible party is in charge of the
information used by the practitioner to reach a conclusion.

Appropriate subject matter. The subject matter of an assurance engagement can

take many forms, such as: financial performance or conditions (for example, historical or
prospective financial position, financial performance and cash flows) for which the
subject matter information may be the recognition, measurement, presentation and
disclosure represented in financial statements.

Suitable criteria are necessary because they provide the frame of reference for a
consistent assessment or measurement of a subject matter. Suitable criteria exhibit the
following characteristics: relevance, completeness, reliability, neutrality and
understandability. The criteria that will be used as a yardstick to measure the
compliance of the subject matter and on which the opinion will be based are the
financial statement provided by the company and Philippine Financial Reporting
Standards (PFRS). Criteria need to be reliable to the intended users to allow them to
understand how the subject matter has been evaluated or measured.

Sufficient, appropriate evidence to support the conclusion. With a skeptical

mindset, the practitioner develops and executes an assurance engagement in order to
gather sufficient acceptable evidence concerning whether the subject matter information
is misstated.

A conclusion in a written report that expresses the level of confidence in the

subject matter material. It contains the practitioner's conclusion, which can be either a
positive (reasonable) or negative (limited) assurance that certifies the outcome of the
assurance engagement. The practitioner considers other reporting responsibilities,
including communicating with those charged with governance when it is appropriate to
do so.

What are non-assurance services? Give examples and explain.

CPAs that provide non-assurance services write reports that do not include an
opinion or conclusion on the subject (for example, financial statements).

Agreed-upon Procedures services

When a firm or customer employs an outside party to undertake an audit on a
specific test or business process, they must follow an agreed-upon procedure. The
methods, known as audit standards, are designed and agreed upon by both the auditing
entity and any appropriate third parties. The auditor delivers only factual findings in an
audit conducted according to agreed-upon methods, and does not offer opinions,
judgments, or assurances in the final report. Instead, the auditor's report simply states
the facts, leaving the audit facilitators to form their own judgments based on the
findings.

Compilation of Financial or other information

In a compilation engagement, the accountant is engaged to gather, classify, and
summarize financial data using accounting expertise rather than auditing expertise.

Management consulting / advisory services

Management advisory services are consulting services performed by a

specialist organization for its clients. These services are designed to provide
guidance on a client's operations and finances.

Tax Service

Due to the complicated nature of tax laws and their constant change,
accountants are entrusted with examining a client's tax liability, doing tax planning, and
assisting in the preparation of tax returns.
 References
Cabrera, E. & Cabrera, G.(2020-2021ed.) Principles of auditing and assurance services
Fundamentals of Assurance services.152-169.
Cambridge dictionary. Assurance
https://dictionary.cambridge.org/us/dictionary/english/assurance
Cole, B. Agreed-upon procedures (AUP)
https://searchcompliance.techtarget.com/definition/agreed-upon-procedures-AUP
Clean energy regulator. Levels of assurance explained
http://www.cleanenergyregulator.gov.au/Infohub/Audits/Pages/Forms%20and
%20resources/Audit%20determination%20handbook/Levels-of-assurance-
explained.aspx
Fazal, H. What is an Assurance engagement in auditing?
https://pakaccountants.com/assurance-engagements-meaning-auditing/
ICAEW (2021). The five elements of an assurance engagement.
https://www.icaew.com/technical/audit-and-assurance/assurance/process/
scoping/assurance-decision/the-five-elements
ICAEW (2021). Attestation vs direct reporting
https://www.icaew.com/technical/audit-and-assurance/assurance/process/
scoping/assurance-decision/attestation-vs-direct-reporting
Kagan, J. (2021, July 17). Assurance. Assurance Definition (investopedia.com)
https://www.investopedia.com/terms/a/assurance.asp
Management advisory services definition
https://www.accountingtools.com/articles/2017/5/9/management-advisory-
services
Wiki accounting. What is the objective of assurance engagement?
https://www.wikiaccounting.com/what-is-the-objective-of-assurance-engagement/