Assurance Services Flashcards
Describe assurance services.
Independent professional services intended to enhance the credibility of information to meet the needs of an intended user.
What are the characteristics of suitable criteria (5)?
Relevance: relevant criteria contribute to conclusions that assist decision-making by the intended users.
Completeness: criteria are sufficiently complete when relevant factors that could affect the conclusions in the context of the engagement circumstances are not omitted. Complete criteria include, where relevant, benchmarks for presentation and disclosure.
Reliability: reliable criteria allow reasonably consistent evaluation or measurement of the subject matter including, where relevant, presentation and disclosure, when used in similar circumstances by similarly qualified practitioners.
Neutrality: neutral criteria contribute to conclusions that are free from bias.
Understandability: understandable criteria contribute to conclusions that are clear, comprehensive, and not subject to significantly different interpretations.
In an assurance engagement, the outcome of the evaluation or measurement of a subject matter against criteria is called _________.
Subject matter information
In some assurance engagements, the evaluation or measurement of the subject matter is performed by the responsible party, and the subject matter information is in the form of an assertion by the responsible party that is made available to the intended users. These are called…
Assertion-based engagements
What type of assurance engagement is involved when the practitioner express a positive form of conclusion?
Reasonable assurance engagement
What type of assurance engagement is involved when the practitioner express a negative form of conclusion?
Limited assurance engagement
What is meant by sufficient appropriate audit evidence and how is it obtained?
Sufficiency is the measure of quantity of audit evidence i.e. the amount of evidence obtained must be enough that it can be used and considered by the auditor. The quantity of audit evidence required depends on the assessment of risk conducted by the auditor. If the risk of material misstatement is high, then higher quantity of audit evidence is required.
Appropriateness on the other hand is the measure of quality of audit evidence. Audit evidence is said to be appropriate if it is relevant and reliable in the given set of circumstances. However, the appropriateness of audit evidence is affected by the time, source and the circumstances under which such evidence is obtained.
However, the two features of evidence are NOT independent and isolated rather they are closely interrelated. A quality audit evidence, even if it is in small quantity, might be enough in some situation i.e. higher the quality lesser the amount of evidence required, however, a large quantity of audit evidence cannot be a substitute for inappropriateness of audit evidence i.e. poor quality of audit evidence cannot be rectified by merely increasing the amount of evidence.
The risk that the practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated
Assurance engagement risk
(T/F) The Philippine Framework for Assurance Engagements establishes standards and provides procedural requirements for the performance of assurance engagements.
False. The Framework defines and describes elements and objectives of assurance engagements, and identifies engagements to which PSAs, PSREs and PSAEs apply.
