3

C. Adverse – Do not present fairly, in all material aspect.

D. Disclaimer – We do not express a conclusion. (usually with insufficient evidence)

Circumstance Material but not pervasive Material and pervasive

FS are materially misstated Qualified opinion Adverse opinion
Inability to obtain sufficient Qualified opinion Disclaimer of opinion
appropriate audit evidence

Levels (high or moderate) and Forms (+ or -) of Assurance

I. Reasonable Assurance engagement (ex. Audit) – reduction in assurance engagement risk
to an ACCEPTABLY LOW LEVEL; Positive form of expression.
Procedures performed:
a. Inquiry
b. Observation
c. Inspection
d. Analytical Procedures
e. Confirmations
f. Reperformance
g. Recalculation
II. Limited Assurance engagement (ex. Review) – reduction in assurance engagement risk
to a level that is ACCEPTABLE in the circumstances, but where the risk is greater than for a
reasonable engagement. Negative form of expression.
Procedures performed:
a. Inquiry
b. Analytical Procedures

Non-Assurance Engagements (Independence is not required; two party contract)

A. Agreed-upon procedures – carry out procedures to which auditor, the entity, and any appropriate
parties have agreed and to report the findings.
B. Compilation of financial and other information – entails data in a manageable and understandable
form.
C. Tax services/consulting – provides advice on income tax and business strategies.
D. Management consulting and other advisory services – provides advice or recommendations for the
improvement of the client’s use of its capabilities and resources to achieve the objective of the
organization.

Attestation Services
 An attestation service is a type of assurance service in which a practitioner is engaged to
issue a written communication that expresses a conclusion about the reliability of a written
assertion that is the responsibility of another party.
 Attestation generally refers to an expert’s written communication of a conclusion about the
reliability of someone else’s assertions.

Subject Matter of Attestation Services

 Financial and Non-financial in nature
 Future-oriented financial information (examination of prospective financial information)
 Management’s discussion and analysis
 Effectiveness of an internal control (Direct Engagement)
 Compliance with statutory, regulatory, and contractual obligations

Common Types of Attestation Engagements

a. Audit Engagement – Auditor provides a reasonable (but not absolute) level of assurance that
the SM is free from material misstatements.
b. Review Engagement – Auditor provides moderate level of assurance…