Assurance engagement risk
matter information, as prepared by the
- Risk that the practitioner expresses an
inappropriate conclusion when the subject
matter information is materially misstated.
Classification of Assurance Engagement
• According to Level of Assurance
o Reasonable Assurance Engagement –
reduction in assurance engagement risk to
an acceptably low level as the basis for a
positive form of expression of the
practitioner’s conclusion.
▪ Example: audit of historical financial
statement
o Limited assurance engagement-
reduction in assurance engagement risk to
an acceptable level as the basis for a
negative form of expression of the
practitioner’s conclusion.
▪ Example: review of financial
statement
• According to Structure
o Attestation engagement -the measurer or
evaluator, who is not the practitioner,
measures or evaluates the underlying
subject matter against the criteria.
The role of the practitioner in an attestation
engagement is to obtain sufficient
appropriate evidence in order to express a
conclusion about whether the subject
measurer or evaluator, is free from material
misstatement.
o Direct engagement- the practitioner
measures or evaluates the underlying
subject matter against the criteria and
presents the resulting subject matter
information as part of or accompanying the
assurance report.
The practitioner’s conclusion in a direct
engagement addresses the reported
outcome of the measurement or evaluation
of the underlying subject matter against the
criteria.
Attestation engagement
- 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 assertation that
is the responsibility of another party.
Four basic conditions that distinguish an attestation
engagement from other services:
1. There must be a written assertation being made by
one party, the reliability of which is of interest to
another party.
 2. There must be agreed-upon and objective criteria
that can be utilized to assess the accuracy of the
assertation.
3. There must be amenable to verification by an
independent party.
4. The accountant should prepare a written
conclusion about the reliability of the assertation/s.
Examples of attestation engagements
o Independent audit engagement –
provides a reasonable (but not absolute)
level assurance.
o Review engagement – involves a limited
investigation of much narrower scope than
an audit.
o
Other assurance services
o Business performance measurement
o Health care performance measurement
o Elder care plus
o Risk assessment services
o CPA WebTrust
o Information systems reliability