Non-audit engagements

Question 1

What is a non-audit engagement

Answer 1

• Not statutory audit of historic financial information financial statements/prospective information (forecasts) internal control and corporate governance processes environmental, social and sustainability reports regulatory compliance
• Terms agreed between client and assurance firm (not ISAs)

Question 2

Prospective Financial Information (Forecasts)

Answer 2

• Engagement letter includes intended use of information and distribution nature of assumptions caveat that actual results likely to be different from forecast

Question 3

Greenhouse Gas Statement

Answer 3

• Reasonable assurance on whether statement in accordance with criteria
• Limited assurance

Question 4

Controls at Service Organisation

Answer 4

• Reasonable assurance on whether controls are service organisation operating as described
• Type 1 report: report on description and design of controls
• Type 2 report: report on description, design and effectiveness of controls

Question 5

Audit vs non-audit engagements

Answer 5

Audit/Non-Audit

Assurance

Reasonable/high level
Limited/moderate level

Opinion Expression
Positive: in our opinion the FS give a T&F view
Negative: nothing has come to our attention

Subject

Historic: can be verified to a greater degree
Forecasts: based on uncertain assumptions

Procedures

Inspection, External confirmation
Enquiry, APs, Written Reps

Practitioner Risk

Lower: higher level of assurance can be given
Higher: lower level of assurance to reduce risk

Question 6

Due Diligence

Answer 6

Reduces information asymmetry between the two parties in an acquisition, the seller has more information about the company
• DD attempts to provide an independent assessment to: confirm the accuracy of the information provided by the other party identify risks
• Only include procedures which are relevant to the specific scenario

Question 7

Agreed-Upon Procedures

Answer 7

Auditor obtains factual evidence but does not express conclusion

• Can be used for ongoing assurance: ensuring suppliers/business partners comply with contractual terms: Monitor controls and conditions at suppliers to ensure regulatory compliance (labour/data/environmental) Review internal policies and procedures at supplier Conduct surveys of employee welfare
Document revenue and costs earned by business partner

• Description of findings only: no opinion expressed/no assurance given