1. Assurance Framework

Question 1

1. What are the 5 elements of Assurance Engagement?

Answer 1

1 Three-party relationship 
 -responsible party 
- assurance practitioner 
- users
2 Underlying subject matter
3 Suitable criteria
4 Evidence
5 Assurance report

Question 2

1. What is the difference between Attestation and Direct Engagement?

Answer 2

Attestation - assurance party does not present the opinion or evaluates the underlying subject matter
Direct - Assurance party evaluates the underlying subject matter and presents the opinion to the intended users

Question 3

1. What are the two levels of assurance that an assurance practitioner may perform?

Answer 3

The International Framework divides assurance engagements into two types:
•• Reasonable assurance engagements. (would be an audit, Express a ‘positive’ conclusion, “In our opinion”)
•• Limited assurance engagements. (Would be a review, express a ‘negative’ conclusion, “Nothing has comne to our attention”)
•• None. (Related Services, do not express opinion or conclusion)

Question 4

1. What two regulatory boards does International Federation of Accountants (IFAC) oversee?

Answer 4

• • International Auditing and Assurance Standards Board (IAASB).
• • International Ethics Standards Board for Accountants (IESBA).

Question 5

1. In ISA 200 what is the three components in the ‘audit risk model’?

Answer 5

(Inherent Risk x Control Risk) x Detection Risk = Audit Risk

Question 6

1. in ISA 200 what are the 5 key requirements of the auditor conducting an audit? Clue E P P S C

Answer 6

1. Ethics.
2. Professional scepticism.
3. Professional judgement.
4. Sufficient appropriate audit evidence and audit risk.
5. Conduct of an audit in accordance with ISAs.

Question 7

1. What are some common methods of gaining evidence for an audit?

Answer 7

Inspection
Observation
External Confirmation
Recalulation
Reperformace
Analytical Procedures
Enquiry