Chapter 1.5 - Types & Level Of Assurance And Reporting

Question 1

Type of Assurance

Answer 1

1. Assurance
   Services: External audit, Review engagement, Internal Audit
2. Non-assurance
   Service: Agreed upon procedure, Compilation engagement

Question 2

Assurance Engagement

Answer 2

• practitioner aims to obtain sufficient appropriate evidence
• to express conclusion designed
• enhance the degree of confidence of the intended users
• about the outcome of the measurement or evaluation of underlying subject matter against criteria

Question 3

5 elements to an assurance engagements (CREST)

Answer 3

Criteria - subject matter is evaluated/measured against to reach an opinion
Report - an assurance report
Evidence
Subject matter
Three parties (User, responsible party, practitioner)

Question 4

What is assurance?

Answer 4

• Refers to practitioner satisfaction as to the reliability of the assertion made by responsible party for use by the intended users

Question 5

What is assurance? 2

Answer 5

• Different assurance engagements provide different level of assurance
• Assurance can be reasonable/limited
• Reasonable assurance engagements provide higher level of assurance than limited assurance engagements
• Assurance obtained can NEVER be absolute

Question 6

Inherent Limitation of External Audit

Answer 6

• Limitation in the acctg system and ctrl system
• Not all transaction tested (materiality)
• Time constraint
• Auditing requires judgement to be made
• Auditor’s report has limitations
• Audit evidence may indicate what’s probable. Not certain
• Auditor’s report ossued a while after the reporting date