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ASSURANCE
ENGAGEMENTS
AND
RELATED SERVICES
The type of procedures to be
performed and the amount of
evidence needed will depend
primarily on the nature of services
rendered and the level of assurance
that the accountant provides.
4 Types of Services Normally
Performed in Connection with the
Entitys Financial Statements
AUDIT
REVIEW
COMPILATION
AGREED-UPON PROCEDURES
AUDIT OF FS
Audit of FS is conducted primarily to
enable auditor to express an opinion
on the entitys FS. In this type of
engagement, the auditor provides
the users with a high level of
assurance ( reasonable
assurance) that the FS are free from
material misstatements.
Specific procedures to be performed
shall be determined by the auditor.
These audit procedures should
enable the auditor to gather
sufficient appropriate evidence to be
able to express an opinion (positive
assurance) about fair presentation of
the FS.
REVIEW OF FS
The objective of a review of FS is 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 auditors
attention that causes the auditor
to believe that the FS are not
prepared, in all material respects, in
accordance with an identified
financial reporting framework.
LEVEL OF ASSURANCE
Because of limited procedures performed when
reviewing FS, auditor does not provide same level
of assurance provided on audit engagements.
A review engagement can only provide moderate
level of assurance that the information subject
to review is free from material misstatements.
This moderate assurance is expressed in the
review report in the form of negative assurance
by using the negative words such as Nothing
came to my attention. or I am not aware of
any material modifications
PROCEDURES TO BE
PERFORMED
A review of FS consists primarily of inquiry
and analytical procedures.
While a review involves the application of
audit skills and techniques in gathering
evidence, it does not ordinarily involve an
assessment of accounting and internal
control systems, test of records and of
responses to inquiries by obtaining
corroborating evidence through inspection,
observation, confirmation and computation.
If the auditor has reason to believe
that the information subject to
review may be materially
misstated, the auditor should carry
out additional or more extensive
procedures as are necessary to be
able to express negative assurance
or to confirm that a modified report is
required.
REPORTING RESPONSIBILITY
The review report should contain a
clear written expression of negative
assurance. The auditor should review
and assess the conclusion drawn
from the evidence obtained as the
basis for the expression of negative
assurance.
UNMODIFIED REVIEW
REPORT
An unmodified review report is issued
when auditor believes, based on the
evidence obtained, that there are no
material modifications that should be
made to financial statements in order
for these financial statements to be
in conformity with PFRS.
MODIFICATION OF REVIEW REPORT
Material Misstatements
Express a qualification of the
negative assurance
Give an adverse statement that the
financial statements are not presented
fairly, in all material respects, in
accordance with PFRS.
Scope Limitation
Express a qualification of negative
assurance
Auditor should not provide any
COMPILATION
OF FS
Objective of compilation engagement
is for the accountant to use
accounting expertise, as opposed to
auditing expertise, to collect, classify
and summarize financial information.