Auditing And Assurance Flashcards
5 elements of an assurance engagement (CREST)
Criteria Report Evidence Subject Matter Three party relationship(responsible party, user, practitioner)
Three-party relation is comprised of?
The intended user who is the person that requires the assurance report.
The responsible party, which is the organization responsible for preparing the subject matter to be reviewed.
The practitioner (ie the accountant) who is the professional who will review the subject matter and provide assurance.
Subject Matter?
The subject matter is the data which the responsible party has prepared and which requires verification.
(Suitable) Criteria?
This subject matter is then evaluated or assessed against suitable criteria in order for it to be assessed and have an opinion provided.
Evidence?
The practitioner must ensure that they have gathered sufficient appropriate evidence in order to give the required level of assurance.
Assurance report?
An assurance report provides the opinion which is given by the practitioner to the intended user.
Other examples of assurance engagement?
A review of the effectiveness of an entity’s internal control or computer systems.
A review of threats to and entity’s going concern.
A review of an entity’s half year results.
Assertions?
Financial statement assertion:
Classes of transactions (OCCCAP)
Account balances (RECCAP)
Classes of Transactions (OCCCAP)
Occurrence: transactions and events that have been recorded, have occurred and relate to the entity.
Completeness: All transactions and events that should have been recorded have been recorded.
Cur-Off: Transactions and events have been recorded in the correct accounting period.
Classification: Transactions and events have been recorded in the proper accounts.
Accuracy: Amounts and other data relating to recorded transactions and events have been recorded appropriately.
Presentation: Transactions and events are appropriately aggregated or disaggregated and are clearly described, and related disclosures are relevant and understandable in the context of the requirements of the applicable financial reporting framework.
Account Balances? (RECCAP)
Existence: Assets, Liabilities, and equity interest exist.
Completeness: All assets, liabilities and equity interest that should have been recorded have been recorded.
Rights and Obligation: The entity holds or controls the rights to assets, and liabilities are the obligations of the entity.
Classification: Assets, liabilities and equity interests have been recorded in the accountants.
Accuracy, Valuation and Allocation: Assets, Liabilities and equity interests are included in the financial statements at appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded.
Presentation:
Transactions and events are appropriately aggregated or disaggregated and are clearly described, and related disclosures are relevant and understandable in the context of the requirements of the applicable financial reporting framework.
