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Activity Sheet - Module 2

This document provides an overview of key concepts in auditing and assurance. It discusses 1) the objectives of assurance engagements in validating financial statements and internal controls, 2) the three parties involved - the practitioner, responsible party, and intended users, 3) suitable criteria for measuring and evaluating the subject matter, and 4) the differences between reasonable and limited assurance and attestation versus direct engagements. The document also notes that absolute assurance is not possible due to inherent limitations.

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Chris Jackson
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67 views

Activity Sheet - Module 2

This document provides an overview of key concepts in auditing and assurance. It discusses 1) the objectives of assurance engagements in validating financial statements and internal controls, 2) the three parties involved - the practitioner, responsible party, and intended users, 3) suitable criteria for measuring and evaluating the subject matter, and 4) the differences between reasonable and limited assurance and attestation versus direct engagements. The document also notes that absolute assurance is not possible due to inherent limitations.

Uploaded by

Chris Jackson
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Activity Sheet - Module 2

1.)

 Auditing and assurance principles is the first auditing subject that an accountancy student
encountered which help us to understand the guidelines for us to guarantee the fair
representation of financial statements.
 It deals with assurance engagements performed by the professionals.
 It also helps to improve the internal system of a business.
 It would help accountants in practicing their profession on how we perform assurance
managements.
 It is also about the guidelines for the Philippine standards on auditing.
 It gives us knowledge on how we analyze the process in using the assessments of from
accounting records.

2.)

 Assurances refers to financial coverage that provides remuneration for an event that is
certain to happen, it also applies to validate the services provided by the professionals.
Assurance engagement is by giving a conclusion from a professional practitioner to boost
the confidence of the intended users in reading the financial statements and helps in
deciding a certain outcome.

3.)

 The objective of the assurance engagement is to ensure that the recognition,


measurement, presentation, and disclosure is fairly represented in the financial
statements. It also about the effectiveness of internal control in applying the framework.
And it reduces the risk of errors in financial statements as well as the poor decision
making by the intended users.

4.)
 Business Performance Measurement are about the analyzation process on how we allow
the management to assess our business. It gives us knowledge how the different areas in
the business is valuable that will help us to manage the performance of the business.
 Health Care Performance Measurement is an important mechanism for organizational
accountability for us to improve processes of care. It is used to enhance quality and clear
understanding on subsequent financial result.
 Elder Care Plus is on how the professionals use their skills to assure clients the financial,
medical, and residential needs of their parents and other elderly relatives are met.

 Risk Assessment Services is the process on identifying the significant hazards, reducing
the risk of errors by deciding what control measure needed on the risk of acceptable level.
 CPA WebTrust is an assurance services that gives security, availability, integrity,
privacy, and confidentiality to promote confidence and trust between the consumers and
companies conducting business online.
 Information Systems Reliability is about how it affects in the business because
organizations use to collect, filter, process, create and distribute data in the system. It is
important to be secured as it affects your whole business because it helps to control the
performance of the business processes.

5.)

 A three-party relationship has three separate parties which is a practitioner, a responsible


party, and intended users. The practitioner is engaged to perform an assurance
engagement in relation to the subject matter. The responsible party provides information
for the benefit of the users it is also responsible for the subject matter over which
assurance is sought. The intended users are person for whom a practitioner prepares the
assurance report to help them decide on the subject matter.
 Subject matter is information that can be use by a practitioner in preparing assurance
report. The subject matter has many forms such as financial performance for which the
subject matter may be the recognition, measurement, presentation, and disclosure
represented in financial statements. For non-financial performance, the subject matter
information may be key indicators of efficiency and effectiveness. In physical
characteristics, the subject matter information may be a specifications document. In
Systems and processes, the subject matter information may be an assertion about
effectiveness. And in behavior, the subject matter information maybe a statement of
compliance or a statement of effectiveness.
 Criteria is the standards where assurance engagements require the practitioner to express
an overall conclusion on the subject matter assessed in reference to specified criteria. Its
required for reasonably consistent evaluation or measurement of a subject matter within
the context of professional judgment.
 Evidence helps to reduce the risk of a practitioner in planning and performing assurance
engagement by having an attitude of professional skepticism to obtain sufficient evidence
about the subject matter. The practitioner also considers materiality, assurance
engagement risk, and the quantity and quality of available evidence when planning and
performing the engagement, when determining the nature, timing, and extent of evidence-
gathering procedures.
 Assurance report it is the written report made by the practitioners containing a conclusion
with the subject matter information that is for the intended users.

6.)

 Suitable criteria are essential because it requires reasonably consistent measurement or


evaluation of an underlying subject matter within the context of professional judgment.
Without suitable criteria results the conclusion in assurance report to have
misunderstanding. Suitable criteria for a subject matter have relevance, completeness,
reliability, neutrality, and understandability.

7.)

 Reasonable level engagement is to obtain sufficient appropriate evidence to reduce in


assurance engagement risk to an acceptable low level in the circumstances of the
engagement that has the basis for a positive form of expression of the practitioner’s
conclusion in an assurance report.
 Limited level engagement is to obtain sufficient appropriate evidence to reduce in
assurance engagement risk to an acceptable low level in the circumstances of the
engagement that has the basis for a negative form of expression of the practitioner’s
conclusion in an assurance report. Also, the evidence-gathering procedures is deliberately
limited relative to a reasonable assurance engagement.
 Attestation engagements are where the responsible party carries out the measurement or
evaluation of the subject matter and reports the information. In which the subject matter
information contains the responsible party’s assertion. And the practitioner performs to
give an assurance conclusion on the assertion.
 Direct engagements are where the practitioner reports directly on the subject matter and
provides the intended users with an assurance report containing the subject matter
information.

8.)

 Absolute assurance is not possible because of inherent limitations that are faced by the
practitioners such as use of judgement in establishing estimates for reporting purposes,
time and cost limitation, existence of situations at present or in future that may cause an
entity to stop being a going concern, human error, existence of fraud committed by
entity’s management, and etc.

9.)

 Attestation is proving the subject matter information has credibility with the conclusion
of the practitioner that has evidence.

Examples of attest engagements

 Reporting on financial projections made by a client


 Reporting on pro forma financial information formulated by a client
 Reporting on how well the internal controls in a client process function
10.)

 Agreed-upon procedures engagements is an attestation engagement in which a practitioner


performs specific procedures on subject matter and reports the findings without providing
an opinion or conclusion. The subject matter may be financial or non-financial
information.
 Compilation of Financial or Other Information Engagements are for the accountants
to use accounting expertise, as opposed to auditing expertise, to collect, classify
and summarize financial information. Compilation engagements ordinarily
include preparation of financial statements. In which the procedures employed
are not designed to enable the accountant to express any assurance on the financial
information.
 Tax services is also a non-assurance engagement in which the preparation of tax
returns where no conclusion conveying assurance is expressed.

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