What is an assurance engagement in auditing?
“Assurance engagement” means an engagement in which a practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria.
What is the purpose of assurance engagement in auditing?
The objective of an assurance engagement is to obtain sufficient appropriate evidence to express a conclusion, providing reasonable or limited assurance, as to whether the audited body has complied with the specified requirements of the appropriate legislation (the ‘criteria’) in all material respects.
What is an assurance engagement examples?
For example, an audit on financial statements is an example of the reasonable assurance engagement. Auditors will express their opinion based on the result of their examination. Those opinions will be based on a positive form. … The opinion that the audit would express for this kind of engagement is in negative form.
What are the five elements of an assurance engagement?
The five elements of an assurance engagement
- A three-party relationship, involving: the practitioner, a responsible party and intended users.
- Appropriate subject matter.
- Suitable criteria.
- Sufficient, appropriate evidence to support the conclusion.
- A conclusion contained within a written report.
What are the two types of assurance engagement?
What Are Some Examples of Assurance Engagements? There are two primary examples of assurance engagements. These include external audits and review engagements. Both of these differ from each other due to the level of assurance that auditors or practitioners provide.
What are two examples of assurance providers?
Examples of some internal assurance providers are identified as environmental compliance groups, quality management functions that focus on manufacturing activities, internal control teams that assess controls over financial reporting, and IT governance groups.
What are the types of assurance?
Types of assurance
- Procurement and tendering. Procurement and tendering processes must be robust and fair to all the parties involved, such as contractors, consultants, and purchasers. …
- Contract management. …
- Probity. …
- Managing projects. …
- Managing risks. …
- Managing assets. …
- Governance. …
- Information systems.
What is the purpose of assurance?
The main aim of assurance is to check the accuracy of financial reports. It also assures all the stakeholders that there is no misrepresentation done in financial records, no misuse of funds, no fraud, and no fraudulent activities done in a company or done by the company.
What is the difference between positive and negative assurance?
Negative assurance is a confirmation from an auditor that certain facts are accurate because there is no evidence to the contrary. When positive assurance (the proof of facts) is not applicable, negative assurance is used. The purpose of negative assurance is to confirm that no fraud or violations have been found.
What is subject matter in assurance engagement?
The subject matter of an assurance engagement is to be identifiable, capable of consistent evaluation or measurement against suitable criteria and in a form that can be subjected to procedures for gathering evidence to support that evaluation or measurement.
What are the three phases of the assurance engagement process?
The three phases of the assurance engagement process are planning, performing, and communicating. 3. The steps included in the planning phase of an assurance engagement are: • Determine engagement objectives and scope.
What are the components of assurance?
Assurance encompasses five key elements: relationship, subject matter, criteria, evidence, and conclusion. Audits are one type of assurance service and are subject to international standards.
What are the components of assurance engagement risk?
Engagement risk refers the overall risk associated with an audit engagement and it consists of three components: client’s business risk, auditor’s business risk, and audit risk.