ACCG340 Study Guide - Final Guide: Financial Audit, Audit Evidence, Internal Audit
19 Jun 2018
School
Department
Course
Professor
WK 12
Other assurance services
1. Definition and elements of an assurance engagement
a. ‘engagement in which an assurance 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’.
b. Five elements
i. Three-party relationship involving assurance practitioner, responsible party, and
intended users
ii. Subject matter
iii. Suitable criteria
iv. Sufficient appropriate evidence
v. Written assurance report
2. Relationship between audit and assurance
3. Historical financial vs. other assurance engagements
Historical financial information (audits
and reviews)
Other than those related to historical financial
information
Audits of annual general purpose financial
reports
Compliance engagement
Audits of financial reports prepared in
accordance with special purpose financial
reports
Performance engagement
Continuous audit
Single financial statements and specific
elements
Forensic auditing engagement
Summary of financial information
Audit of sustainability report
Reviews of financial reports and other
historical financial information
Special purpose report on internal controls
4. Framework: Levels of assurance
Levels of
Assurances
Type of
Report
Example
Engagement Type
Evidence
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Reasonable
assurance
engagement
Positive form of
expression of the
conclusion e.g. in our
opinion...
Financial
statement audit
Requires relatively more
evidence
Limited
assurance
engagement
Negative form of
conclusion e.g. nothing
has come to our
attention
Review
investment
schedule
Requires relatively less
evidence
5. Comparisons across assurance engagements and other services- MCs
Audit
Review
Other assurance
Other services
Focus
Financial
report (FR)
FR or other
historical
financial
information
Subject matter other
than review or audit
Many
Reporting
format
Positive form
(e.g. is ‘true
& fair’)
Negative
form
Varies depending on
level of assurance
For agreed-upon: Factual
finding report
Example
Audits of
annual
general
purpose
financial
reports
Reviews of
financial
reports and
other
historical
financial
information
Compliance engagement
Performance engagement
à
3E: economically,
effectively,
efficiently
Audit of sustainability
report
Agreed-Upon Procedures
Compilation – None assurance
Taxation Services – None
assurance
Business advisory – None
assurance
Level of
assurance
Reasonable
Limited
Reasonable OR Limited
None
6. Review engagements
a. Assurance/review engagement relating to a financial report or other historical
financial information conducted by
i. company’s independent auditor or
ii. practitioner who has no dealings with the company
Focus
Financial report or other historical financial information
Possible evaluation criteria
Legislation, AASB, ASA, ASRE 2410, ASRE 2400, ASRE 2407
Reporting format
Negative form of expression of conclusion
Level of assurance provided
Limited assurance
Potential users of report
Shareholders, Potential investors, Creditors, Regulatory
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bodies, General public
b. Example of a review engagement:
i. Review of interim financial report
7. Compliance engagements
Objective is to express an opinion on whether the entity has complied in all material respect,
with requirements as measured by the suitable criteria (ASAE 3100.9)
Focus
Policies and procedures and regulations
Possible evaluation criteria
Specific criteria under law or directives and/or internally
imposed criteria (see next slide)
Reporting format
Conclusion on compliance/non-compliance
Level of assurance provided
Reasonable or limited assurance
Potential users of report
Management or reporting authority
8. Compliance engagements examples
Examples of appropriate subject matter (ASAE 3100.34)
Risk management strategy and plan
Treasurer’s instructions
Managed investment schemes – compliance plan
Examples of internally imposed suitable criteria (ASAE 3100.38)
Organisational policies and procedures
Frameworks, eg compliance framework based on AS 3806
Examples of externally imposed suitable criteria (ASAE 3100.38)
Legislation, regulation or other statutory requirements (eg ASIC Regulatory Guides or APRA
Prudential Standards)
Ministerial directives
Industry or professional obligations (professional standards or guidance, codes of practice
or conduct)
Enforceable contractual obligations or enforceable undertakings
9. Performance engagements
Objective is to express a conclusion designed to enhance the degree of confidence of the
intended users on the assertions or information obtained directly regarding the efficiency,
effectiveness or economy of an activity against identified subject criteria (ASAE 3500.12)
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Document Summary
Three-party relationship involving assurance practitioner, responsible party, and intended users. Written assurance report: relationship between audit and assurance, historical financial vs. other assurance engagements. Other than those related to historical financial and reviews) information. Performance engagement accordance with special purpose financial reports. Special purpose report on internal controls historical financial information: framework: levels of assurance. Requires relatively more assurance expression of the statement audit evidence engagement conclusion e. g. in our opinion Requires relatively less assurance conclusion e. g. nothing investment evidence engagement has come to our schedule attention: comparisons across assurance engagements and other services- mcs. Many report (fr) historical than review or audit financial information. For agreed-upon: factual format (e. g. is true form level of assurance finding report. Compilation none assurance annual general purpose financial reports and other. None assurance: review engagements, assurance/review engagement relating to a financial report or other historical financial information conducted by. Focus company"s independent auditor or practitioner who has no dealings with the company.
