Scribd
Upload
122 views1 page

Assurance Engagements Overview

This document outlines key concepts related to assurance services. It discusses the origin and advantages of assurance, defining assurance engagements as having a three party relationship involving intended users, a responsible party, and a practitioner. It also describes the levels of assurance as limited/moderate or reasonable/high, and explains why absolute assurance cannot be provided due to inherent limitations including the nature of financial statements, audit procedures, time and cost constraints, and limitations of internal controls.

Uploaded by

Arslan Ahmad
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
122 views1 page

Assurance Engagements Overview

This document outlines key concepts related to assurance services. It discusses the origin and advantages of assurance, defining assurance engagements as having a three party relationship involving intended users, a responsible party, and a practitioner. It also describes the levels of assurance as limited/moderate or reasonable/high, and explains why absolute assurance cannot be provided due to inherent limitations including the nature of financial statements, audit procedures, time and cost constraints, and limitations of internal controls.

Uploaded by

Arslan Ahmad
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
  • Customer Engagement Overview

CAF 08: Audit and Assurance

Outlines: Premium Content


Chapter 1: Introduction to Assurance Services
Introduction to Assurance Engagements, Its Types and Limitations. (For Spring 2022)
Secret Sheet for Quick Revision
(For students of Muhammad Asif, FCA)

LO 1: ORIGIN AND ADVANTAGES OF ASSURANCE LO 2: DEFINITION AND ELEMENTS OF


SERVICE ASSURANCE ENGAGEMENT

Origin of Assurance Services Relationship between shareholders Advantages of Audit/Assurance Engagement Elements of Assurance Engagement:
and directors 1. Three party relationship (Intended users, Responsible
party, Practitioner)
Statutory audit means audit 1. Increases credibility of F/S. 2. A subject matter (information prepared by responsible
required by law. Steward: Directors look after the assets of the 2. Confirms management is performing its duties. party e.g. F/S)
Non-Statutory audit means audit shareholders. 3. Deficiencies internal control are identified. 3. A Suitable Criteria (framework/basis used to prepare F/S)
conducted voluntarily due to its Agent: Directors act in accordance with 4. Assists in sale or purchase of business. 4. Evidence (information on which his report is based)
advantages. instructions and in best interest of shareholders. 5. Assists in obtaining loan. 5. Written Assurance Report (provided by practitioner to
Accountable: Directors show their users, and includes conclusion)
accountability to shareholders by preparing F/S.

LO 3: LEVELS OF ASSURANCE AND WHY ABSOLUTE


ASSURANCE CANNOT BE PROVIDED

Limited (Moderate/Negative) Assurance: Reasonable (High/Positive) Assurance: Why Absolute Assurance cannot be provided:
It is a moderate level of assurance, expressed in negative It is a high, but not absolute, level of assurance expressed (inherent limitations of audit)
form of conclusion i.e. in positive form of conclusion i.e. 1. Nature of financial statements (estimates,
judgments and uncertainties).
“Based on our review, nothing has come to our attention that “In our opinion, financial statements give true and fair 2. Nature of audit procedures
causes us to believe that accompanying financial statements view of financial position of ABC Limited at December 31, a. No complete information r.
do not give true and fair view in accordance with IFRSs.” 20X1 and its financial performance and cash flow for the b. No legal powers.
year then ended in accordance with IFRS.” c. Collusion and complex techniques.
Example: review of historical financial statements, review of 3. Time and Cost limitation.
cash flow forecast. Example: audit of historical F/S. 4. Procedures based on judgment.
5. Limitations in internal control.
6. Staff may not be available always.

Outlines: Introduction to Assurance Engagements, Its Types and Limitations. Premium Content (For Spring 2022) CAF 08: Audit

You might also like