Chapter – 1

Concept of and need for assurance

Definition: An assurance engagement is one 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.
 According to the definition, we have three things to remain:
 Practitioner (Auditor or Audit company)
 Intended user (Owner of the company)
 Responsible party (Management of the company, Like CFO, CEO, Senior Executive, etc
 Subject matter (Financial statement or other documents)
 Criteria (According to IFRS, IS Rules)
 Conclusion (Audit report)
 Key elements of assurance
 Three people or groups of people involved
 The Practitioner
 The intended users
 Responsible party
 Subject matter
 Data (Financial statement or business projections)
 Systems or processes (Internal control systems or computer systems)
 Behaviors (Social or environmental performance or corporate rules)
 Suitable criteria
 Accounting standards
 Sufficient appropriate evidence to support the assurance opinion
 Conclusion or written report
 Written form
 Contain certain specification information
 The assurance given is clear & unequivocal
 Level of assurance
 Reasonable assurance or unqualified (sufficient & appropriate documents) positive.
 Limited assurance or qualified (insufficient & inappropriate documents) negative.
 Chapter – 1
Obtaining an engagement
Matters of appointment consideration
1. Ensure the professional qualified to act
2. Ensure existing resources adequate
3. Obtain references
4. Communicate with present auditors