Differentiate Assurance From Non-Assurance Engagements

1. Differentiate assurance from non-assurance engagements.
 An Assurance Engagement is a commitment in which a practitioner demonstrates

a conclusion aimed at improving the level of assurance of the expected users
other than the responsible party in the results of an appraisal of the subject matter
against criteria. On the other hand, Non-assurance Engagements are those that do
not result in a conclusion that gives a level of assurance by the practitioner’s
expression. The practitioner does not express any certainty about the authenticity
of an argument to the expected users.
2. Research on one of the Big Four global accounting firms. Classify the services it
offers according to the following categories, where applicable:
Deloitte
 Assurance services
 Audit and Assurance
 Risk and Financial Advisory
 Cyber Risk
 Strategy
 Non-assurance services
 Tax
 Tax Management Consulting services
 International Tax
 Business tax services
 Indirect Tax Services
 Mergers and Acquisition
 Service Operations
 HR Transformation
 Related services
 Analytics
3. Discuss the objective, key features, and general principles relative to financial statement
auditing.
Objective
The audit seeks to authorize the auditor to have an opinion as to whether the
financial statements in compliance with the identified financial reporting system are
prepared in all material respects.
Key features
The key features relative to financial statement auditing includes: 1. The Audit
process: It is a process that follows a systematic sequence of activities, Accepting an
Engagement – Auditing Planning – Considering Internal Control – Performing
substantive Tests – Completing the Audit – Issuing a report, which are logical structured
and organized. 2. Three party-relationship: The shareholder, managers and auditors
involves in auditing process or practice. 3. Subject matter: Auditors offer assurance on a
particular subject. However, such as data, systems or processes and behaviors, the
subject matter can vary considerably. 4. Evidence: In order to carry out the audits, it is
important to capture and review financial and non-financial records. 5. Established
criteria: The evidence must be tested in terms of defined requirements like International
Accounting Standards, International Financial Reporting Standards, and Generally
Accepted Accounting Principles. 6. Opinion: The auditor shall express his view on the
financial statements of the company as fairly guaranteed.
General Principles
The auditor shall specify the procedures necessary for performing audits in
conjunction with PSAs, the appropriate professional associations, laws, rules, and where
relevant the terms of engagement and reporting criteria. For financial auditing, PSA 200
offers the following guidance: 1. The auditor must comply with the Code of Ethics for
CPAs promulgated by the Board of Accountancy (BOA):Auditors must uphold the
principles of ethical practice that represent, show honesty, objectivity and public
consideration, rather than self-interest in order to preserve public confidence in the
credibility of the auditors' work. 2. The auditor must conduct an audit in accordance w/
Philippine Standards on Auditing (PSAs): These requirements include the basic
principles and protocols to be adopted by the auditor. The criteria also contain
introductory content and other resources which are meant to aid auditors in the
understanding and execution of audit standards rather than being prescriptive. 3. The
auditor must plan & perform the audit with professional skepticism, recognizing that
circumstances may exist which may cause the financial statements to be materially
misstated: A professional skepticism attitude means that the auditor tests, in a sensitive
way, the authenticity of proof gathered and is alert to audit data, which undermines or
challenges the credibility of records or representations of management. The auditor
should not believe that management is fair in preparing and undertaking an audit.
Therefore, management representations are not a substitution for proper audit facts that
can render fair decisions on the basis of the audit opinion.
4. Describe the role of the various stakeholders in a financial statement audit.
Management
The role of management is to maintain internal control and prepares
reports. They need to understand the profitability, liquidity and cash flows in
order to make an operational and financing decisions about the firm.
Suppliers
The role of Suppliers is to determine if the business can comfortably
expand its credit using the financial statements.
Creditors
The role of Creditors is to estimate the ability of the borrower to pay back
all loaned funds and related interest charges.
Employee
The role of Employees is to help to improve staff engagement and
awareness of the company.
Government
The role of Government is to decide that the corporation spends the
correct amount of taxes and related legislation, a jurisdiction for which a
company is based would require financial statements.
Customers
The role of Customer is to judge the financial ability of a supplier to
remain in business long enough to provide the goods or services mandated in the
contract.
Trade Unions
The role of Trade unions is to evaluate the ability of a business to pay the
due compensation to the union members that it represents.
Investors
The role of an Investor is to look the financial statements whether it is
reliable or not, in order to know if they want to invest or not.

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1. Differentiate assurance from non-assurance engagements.

 An Assurance Engagement is a commitment in which a practitioner demonstrates

4. Describe the role of the various stakeholders in a financial statement audit.

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