Assurance

Engagements and
Related Services
Macatangay, Marielle A.
Depuno, Richard Vince M.
 01 AUDIT

REVIEW 02
Four Types of
Services Normally
03 COMPILATIO Performed
N
AGREED-UPON 04
PROCEDURES

2
Audit of FS
￮ High level of assurance (reasonable assurance)

￮ Sufficient appropriate audit evidence to be

gathered by specific audit procedures
￮ Express as opinion about the fair presentation of
the financial statements (positive assurance)

3
Review of FS
￮ Objective:
To enable an auditor to state whether, on the
basis of procedures which do not provide all the
evidence that would be required in an audit,
anything has come to the auditor’s attention that
causes the auditor to believe that the financial
statements are not prepared, in all material respects,
in accordance with an identified financial reporting
framework.

4
Review of FS
￮ Moderate level of assurance (negative
assurance)

￮ Inquiry and analytical procedures

￮ Does not ordinarily involve an assessment of
accounting and internal control systems, tests of
records and of responses to inquiries

5
Review of FS:
Reporting Responsibility
Unmodified
Modification of the Review Report
Review Report

The auditor believes Material Misstatements Scope Limitations

that, based on the
The report should describe
evidence obtained, The report should describe
those matter, and either:
there are no material the limitation and either:
modifications that • Express qualification of
should be made to the the negative assurance • Express qualification of
FS in order for these the negative assurance
• If material and pervasive,
FS to conform with give an adverse statement. • If material and pervasive,
PFRS. do not provide any
assurance.

6
Compilation of FS
￮ Objective:
To enable the accountant to use accounting
expertise to collect, classify and summarize financial
information.

7
Compilation of FS
￮ No assurance

￮ Procedures: read the compiled information

￮ Does not ordinarily require the accountant to
make any inquiries of management, assess
internal control, verify any matter and verify any
explanations.

8
Compilation of FS: Reasons
for Withdrawal
￮ If the accountant becomes aware that the
information provided by the management is
incorrect, incomplete or otherwise
unsatisfactory, and the management refuse to
supply additional information

￮ If the accountant becomes aware of

misstatements, and the management does not
made amendments

9
Compilation of FS:
Reporting Responsibility
Modification of the Review Report

The accountant’s Material Misstatements Scope Limitations

compilation report
The accountant should
should identify the FS Scope limitations will
disclose the nature of the
compiled and should normally cause the
misstatement in a separate
clearly indicate that no accountant to withdraw from
paragraph of the report.
assurance is provided the engagement.
on the FS. The accountant may
withdraw from the
engagement.

10
Agreed-Upon Procedures
Engagement
￮ Objective:
To enable the auditor to carry out procedures
of an audit nature to which the auditor and the entity
and any appropriate third parties have agreed and to
report on factual findings.

11
Agreed-Upon Procedures
Engagement
￮ No assurance is expressed

￮ Restrictions on the distribution of report

￮ There should be a clear understanding regarding
the agreed procedures and the conditions of the
engagement.
￮ Procedures: As agreed

12
Agreed-Upon Procedures
Engagement:
Reporting Responsibility
The report needs to describe the purpose and
the agreed-upon procedures of the
engagement as sufficient detail to enable the
reader to understand the nature and the extent
of the work performed.

13
Assurance
Engagementts
These are intended to enhance the credibility of
information about a subject matter by evaluating
whether such subject matter conforms in all material
respects with suitable criteria.

PSAE 3000

14
 Levels of Assurance
2 Engagement

01 Reasonable
Assurance
Assurance
engagements can be Engagement
classified according
to the level of
assurance that the
practitioner gives to
parties who may rely
Limited
Assurance
02
on the report.
Engagement
 1
A
th
re
e
pa
rt
y
re
l at
io
ns
h ip

2
A
n
ap
pr
op
ri
ta
Engagement

e su
bj
ec
tm
at
te
r

3
Su
it a
bl
e
cr
i te
ri
a
4
Elements of an Assurance

Su
ffi
ci
en
ta
pp
ro
pr
i at
e
ev
id
en
ce
5

A
w
itt
en
as
su
ra
nc
e
re
po
rt
16
Three Party Relationship Party
Responsible

Parties

Competent
Professional
Accountant

Intended Users

17
Subject Matter

Physical Characte-
Data Systems &
Behavior ristics
Processes

FORMS OF SUBJECT MATTER

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Subject Matter To be considered
appropriate, the subject
matter must be:
• Identifiable
ASSERTIONS-BASED ENGAGEMENTS
• Capable of consistent
The evaluation of the subject matter is performed by
evaluation and
the responsible party and the outcome is in the form of
an assertion by the responsible party that is made measurement against
available to intended users. suitable criteria
• In the form that can be
subjected to procedures
DIRECT REPORTING ENGAGEMENTS for gathering evidence
The practitioner either directly performs the evaluation
of the subject matter, or obtains a representation from
the responsible party that has performed the evaluation
that is not available to intended users.
19
Criteria

Criteria are the standards or benchmark used to

evaluate or measure the subject matter of an
assurance engagement.

20
Evidence

The practitioner should plan and perform the

engagement to obtain sufficient appropriate
evidence to determine whether the assertions
are free of material misstatements.

21
Assurance Report

The professional accountant expresses a

conclusion that provides a level of assurance as
to whether the subject matter conforms in all
material respects with identifiable criteria.

22
Agreed-upon Management
Compilation
procedures Consulting

Not Assurance
Engagements
Preparation of tax Other advisory
returns & Tax services
Consulting

23
 Reports on Prospective
Financial Information
Prospective financial information
means financial information based on
assumptions about events that may occur in
the future and possible actions of the entity. T
Forecasts
Y
P
E Projections
S
24
 Auditor’s Responsibility
The auditor should evaluate the completeness and reasonableness of the underlying
assumptions as disclosed in the prospective financial information. The auditor
normally provides only a moderate level of assurance when reporting on the
reasonableness of management’s assumptions.

25
 When examining prospective financial information, according to PSAE 3400, the
auditor should obtain sufficient appropriate evidence that:

Management’s best The prospective The prospective The prospective

estimate assumptions financial information is financial information is financial information is
are reasonable and, in properly prepared on properly presented and prepared on a
the case of hypothetical the basis of the all material consistent basis with
assumptions, such assumptions. assumptions are historical financial
assumptions are adequately disclosed. statements.
consistent with the
purpose of the
information.

26
Thank you!!
I have fought the good fight, I
have finished the race, I have
kept the faith.
2 Timothy 4: 7 27
 Assurance
Engagements and
Related Services
Macatangay, Marielle A.
Depuno, Richard Vince M.