Chapter 15:

REPORTING
ON OTHER
PROFESSIONAL
ENGAGEMENTS
INTRODUCTION

• Historical financial • Management may • This chapter

information can be follow different discusses auditor
presented in various standards or present considerations for
ways based on user partial information. these types of
needs. information and
other assurance
engagements.
INTRODUCTION

• Historical financial • Management may • This chapter

information can be follow different discusses auditor
presented in various standards or present considerations for
ways based on user partial information. these types of
needs. information and
other assurance
engagements.
INTRODUCTION

• Historical financial • Management may • This chapter

information can be follow different discusses auditor
presented in various standards or present considerations for
ways based on user partial information. these types of
needs. information and
other assurance
engagements.
TYPES OF SPECIAL PURPOSE AUDIT ENGAGEMENT
TYPES OF SPECIAL PURPOSE AUDIT ENGAGEMENT

SINGLE FS/
SPECIAL SPECIFIC SUMMARY FS
PURPOSE FS ELEMENTS OF FS

Auditors may Derived from

Cater to specific
express an audited financial
users and are
opinion on a statements but
prepared using a

1 2 3
single financial contain less
special purpose
statements or detail.
framework.
specific element.
1. SPECIAL PURPOSE FINANCIAL STATEMENTS

• Some entities may present financial

statements in accordance with the
requirements of government regulators or
provisions of contractual agreements.

• caters the needs of specific users

 Prepared using a special purpose framework
P SPECIFIC USER

TAX Tax basis of accounting for a set of financial

AUTHOURITIES statements that accompany an entity’s tax return.
Examples of
special-
purpose
Cash receipts and disbursements basis of
CREDITORS accounting for cash flow information.
frameworks
depends on
the specific
Financial reporting provisions established by a
users of
regulator to meet the requirements of that
REGULATORS
regulator. financial
information
presented:
Financial reporting provisions of a contract, such
CONTRACTING
PARTIES as bond indenture, a loan agreement, or a project
grant.
 SPECIFIC USER EXAMPLE OF SPECIAL-PURPOSE FRAMEWORK

TAX Tax basis of accounting for a set of financial

AUTHOURITIES statements that accompany an entity’s tax return.
Examples of
special-
purpose
bursements basis of
ow information.
frameworks
depends on
the specific
ovisions established by a
users of
requirements of that
financial
information
presented:
ovisions of a contract, such
oan agreement, or a project
 SPECIFIC USER EXAMPLE OF SPECIAL-PURPOSE FRAMEWORK

TAX Tax basis of accounting for a set of financial

AUTHOURITIES statements that accompany an entity’s tax return.
Examples of
special-
purpose Cash receipts and disbursements basis of
CREDITORS accounting for cash flow information.
frameworks
depends on
the specific
ovisions established by a
users of
requirements of that
financial
information
presented:
ovisions of a contract, such
oan agreement, or a project
 SPECIFIC USER EXAMPLE OF SPECIAL-PURPOSE FRAMEWORK

TAX Tax basis of accounting for a set of financial

AUTHOURITIES statements that accompany an entity’s tax return.
Examples of
special-
purpose Cash receipts and disbursements basis of
CREDITORS accounting for cash flow information.
frameworks
depends on
the specific Financial reporting provisions established by a
users of REGULATORS regulator to meet the requirements of that
financial regulator.
information
presented:
ovisions of a contract, such
oan agreement, or a project
 SPECIFIC USER EXAMPLE OF SPECIAL-PURPOSE FRAMEWORK

TAX Tax basis of accounting for a set of financial

AUTHOURITIES statements that accompany an entity’s tax return.
Examples of
special-
purpose Cash receipts and disbursements basis of
CREDITORS accounting for cash flow information.
frameworks
depends on
the specific Financial reporting provisions established by a
users of REGULATORS regulator to meet the requirements of that
financial regulator.
information
presented: Financial reporting provisions of a contract, such
CONTRACTING
PARTIES as bond indenture, a loan agreement, or a project
grant.
CLASSIFICATION OF FINANCIAL
REPORTING FRAMEWORK
Acknowledges explicitly or implicitly that,
to achieve their fair presentation of the
FS, it may be necessary for management
Supplementary to provide disclosures beyond those
disclosures specifically required by the framework.
FAIR
PRESENTATION
FRAMEWORK Departure from Acknowledges explicitly that it may be
necessary for management to depart
the framework from a requirement of the framework to
achieve fair presentation of the FS.

COMPLIANC Requires strict compliance with the requirements of the

E framework; no required acknowledgements for supplementary
FRAMEWOR disclosures or departure from the reporting framework.

K
 SPECIAL
SPECIAL
CONSIDERATIONS
CONSIDERATIONS
1 ENGAGEMENT
ACCEPTANCE
3
INTERPRETATION
OF CONTRACTUAL

2
• In evaluating its acceptability, the ENGAGEMENT PROVISIONS
needs of the users serves as a PLANNING AND
primary consideration. PERFORMANCE • For FS prepared in accordance
To assess it appropriately, the with the provisions of a contact,
• Accordingly, the auditor should
auditor obtains an understanding the auditor shall obtain an
continue to comply with “audit
of: understanding of any significant
planning and performance
1. The purpose for which the FS interpretations of the contract
requirements presented in other
that the management made in
are prepared, chapters” as may be relevant to
preparing the FS.
2. The intended users, and the audit.
3. The steps taken by management
to determine that the applicable
financial reporting framework is
acceptable in the circumstances.
REPORTING
CONSIDERATIONS
The requirements
1
discuss in Chapter 14
Audit Reporting as to
the formation and

2
expression of opinion on
general-purpose FS also
apply to the audits of
special-purpose FS.
However, it is subject to
additional requirements
as follows:

3
 1
DESCRIPTION OF PURPOSE
REPORTING Auditor’s report shall also describe the purpose for
which the FS are prepared and, if necessary, the
CONSIDERATIONS intended users, or refer to a note in the special-purpose
The requirements FS that contains that information.
discuss in Chapter 14
Audit Reporting as to
the formation and

2
expression of opinion on
general-purpose FS also
apply to the audits of
special-purpose FS.
However, it is subject to
additional requirements
as follows:

3
 1
DESCRIPTION OF PURPOSE
REPORTING Auditor’s report shall also describe the purpose for
which the FS are prepared and, if necessary, the
CONSIDERATIONS intended users, or refer to a note in the special-purpose
The requirements FS that contains that information.
discuss in Chapter 14
Audit Reporting as to
the formation and

2
MANAGEMENT RESPONSIBILITY OVER THE FRAMEWORK
expression of opinion on
The explanation of management’s responsibility for the
general-purpose FS also FS shall also refer to its responsibility for determining
apply to the audits of that the applicable financial reporting framework is
special-purpose FS. acceptable in the circumstances.
However, it is subject to
additional requirements
as follows:

3
 1
DESCRIPTION OF PURPOSE
REPORTING Auditor’s report shall also describe the purpose for
which the FS are prepared and, if necessary, the
CONSIDERATIONS intended users, or refer to a note in the special-purpose
The requirements FS that contains that information.
discuss in Chapter 14
Audit Reporting as to
the formation and

2
MANAGEMENT RESPONSIBILITY OVER THE FRAMEWORK
expression of opinion on
The explanation of management’s responsibility for the
general-purpose FS also FS shall also refer to its responsibility for determining
apply to the audits of that the applicable financial reporting framework is
special-purpose FS. acceptable in the circumstances.
However, it is subject to
additional requirements
as follows:

3
REQUIRED EMPHASIS OF MATTER PARAGRAPH (EMP)
This paragraph alerts users of the auditor’s report that
the FS are prepared in accordance with a special-purpose
framework and that, as a result, the FS may not be
suitable for another purpose.
2. SINGLE FS/ SPECIFIC ELEMENTS OF FS

• An auditor may be engaged to express an

opinion only on:

1. A single financial statement

2. A specific element, account or item of
financial statements
1ENGAGEMENT ACCEPTANCE
• When an audit over a single FS is
2 AUDIT PLANNING AND 3 AUDIT REPORTING
PERFORMANCE • Depending on the
performed, the objectives, general circumstances of the
principles and theoretical framework of • The auditor shall adapt all engagement, the audit
an audit remain applicable. PSAs relevant to the audit as reporting requirements
necessary in the discussed in Chapter 14
Before accepting the engagement, the auditor
must consider the following:
circumstances of the Audit Reporting remain
1. Whether an audit, in accordance with engagement. applicable.
Philippine Standards of Auditing (PSAs), is
practicable
2. Whether the financial reporting framework
applied is acceptable,
3. Whether the agreed terms of the audit
engagement include the expected form of
any reports to be issued by the auditor.
 SPECIAL CONSIDERATIONS

1ENGAGEMENT ACCEPTANCE
• When an audit over a single FS is
2 AUDIT PLANNING AND 3 AUDIT REPORTING
PERFORMANCE • Depending on the
performed, the objectives, general circumstances of the
principles and theoretical framework of • The auditor shall adapt all engagement, the audit
an audit remain applicable. PSAs relevant to the audit as reporting requirements
necessary in the discussed in Chapter 14
Before accepting the engagement, the auditor
must consider the following:
circumstances of the Audit Reporting remain
1. Whether an audit, in accordance with engagement. applicable.
Philippine Standards of Auditing (PSAs), is
practicable
2. Whether the financial reporting framework
applied is acceptable,
3. Whether the agreed terms of the audit
engagement include the expected form of
any reports to be issued by the auditor.
 AUDITING THE COMPLETE SET OF FS AND SINGLE FS/ELEMENT OF THE SAME
ENTITY

• If an auditor is engaged to perform both the (1) • If an auditor issues an adverse opinion or
audit of the complete set of FS, and (2) audit of disclaimer of opinion on the complete FS, the
a single statement or of a specific element of FS auditor is prohibited to issue an unmodified
of the same entity, the auditor shall express a opinion on the audit of single FS or specific
separate opinion for each engagement. element of it.
• An auditor shall apply professional judgement Exception to the rule:
to consider the implications of matters. 1. Not prohibited by law or regulation to do so,
Matters to be considered include the following: 2. The auditor’s report is not published
 Modified opinion together with the auditor’s report
 Emphasis of matter paragraph containing an adverse or disclaimer of
 Other matter paragraph opinion, and
 Key audit matters 3. The element does not constitute a major
 Uncorrected material misstatement of other portion of the entity’s complete set of FS.
information
 AUDITING THE COMPLETE SET OF FS AND SINGLE FS/ELEMENT OF THE SAME
ENTITY

• If an auditor is engaged to perform both the (1) • If an auditor issues an adverse opinion or
audit of the complete set of FS, and (2) audit of disclaimer of opinion on the complete FS, the
a single statement or of a specific element of FS auditor is prohibited to issue an unmodified
of the same entity, the auditor shall express a opinion on the audit of single FS or specific
separate opinion for each engagement. element of it.
• An auditor shall apply professional judgement Exception to the rule:
to consider the implications of matters. 1. Not prohibited by law or regulation to do so,
Matters to be considered include the following: 2. The auditor’s report is not published
 Modified opinion together with the auditor’s report
 Emphasis of matter paragraph containing an adverse or disclaimer of
 Other matter paragraph opinion, and
 Key audit matters 3. The element does not constitute a major
 Uncorrected material misstatement of other portion of the entity’s complete set of FS.
information
 AUDITING THE COMPLETE SET OF FS AND SINGLE FS/ELEMENT OF THE SAME
ENTITY

• If an auditor is engaged to perform both the (1) • If an auditor issues an adverse opinion or
audit of the complete set of FS, and (2) audit of disclaimer of opinion on the complete FS, the
a single statement or of a specific element of FS auditor is prohibited to issue an unmodified
of the same entity, the auditor shall express a opinion on the audit of single FS or specific
separate opinion for each engagement. element of it.
• An auditor shall apply professional judgement Exception to the rule:
to consider the implications of matters. 1. Not prohibited by law or regulation to do so,
Matters to be considered include the following: 2. The auditor’s report is not published
 Modified opinion together with the auditor’s report
 Emphasis of matter paragraph containing an adverse or disclaimer of
 Other matter paragraph opinion, and
 Key audit matters 3. The element does not constitute a major
 Uncorrected material misstatement of other portion of the entity’s complete set of FS.
information
3. SUMMARY FINANCIAL STATEMENTS (SFS)
• Are historical financial information that is derived from the
audited FS but that contains less detail than the FS, while still
providing a structured representation consistent with that
provided by the FS of the entity’s economic resources or
obligations at a point in time or the changes therein for a period
of time.

 AUDITED FINANCIAL STATEMENTS (AFS) are FS audited by the

auditor in accordance with PSAs, and from which the summary
FS are derived.

 APPLIED CRITERIA is the criteria applied by management in

preparing the summary FS.

 It is important that the auditor of the AFS also audits the

SFS.
 SPECIAL
C0NSIDERATION
01

ENGAGEMENT
ACCEPTANCE

AUDIT PLANNING
02

AND
PERFORMANCE
03

AUDIT
REPORTING
 01 02 03

ENGAGEMENT
ACCEPTANCE
• In determining its acceptability, the
following factors may affect the auditor’s
determination:

a. The nature of the entity,

C0NSIDERATION

b. The purpose of the SFS,

c. The information needs of the

AUDIT PLANNING
intended users of the SFS, and

PERFORMANCE
d. Whether the applied criteria will

REPORTING
result in the SFS that are not
SPECIAL

misleading in the circumstances.

AUDIT
AND
 01 02 03

AUDIT PLANNING AND

PERFORMANCE
1. Evaluate whether the SFS adequately disclose their
summarized nature and identify the AFS.
2. When the SFS are not accompanied by the AFS,
evaluate whether they describe clearly:
a. For whom or for where the AFS are available,
b. The law or regulation that specifies that the AFS
need to be made available
3. Evaluate whether the SFS adequately disclose the
C0NSIDERATION

applied criteria
4. Compare the SFS with the related information in the
AFS to determine whether the SFS agree with or can
be recalculated from the related information in the
ENGAGEMENT

AFS.

REPORTING
ACCEPTANCE
SPECIAL

5. Evaluate whether the SFS are prepared in

accordance with the applied criteria.

AUDIT
6. Evaluate whether the SFS contain the information
necessary, and are not an appropriate level of
aggregation.
7. Evaluate whether the AFS are available to the
intended users of the SFS without undue difficulty.
 01 02 03

AUDIT REPORTING

• Elements of the auditor’s report on SFS

share similarities with the report on a
complete set of FS. On the other hand,
C0NSIDERATION

additional statements are included to

properly inform the users regarding the SFS.

AUDIT PLANNING AND

ENGAGEMENT

PERFORMANCE
ACCEPTANCE
SPECIAL
 SPECIAL
C0NSIDERATION

ENGAGEMENT
01

ACCEPTANCE

AUDIT PLANNING AND

02

PERFORMANCE

AUDIT REPORTING
03
E 01

SSEE 02

ON ON SFS &
TION OF 03
AFS
PARTS OF THE
AUDIT REPORT 04
NG
ON SFS
HE AUDITOR’S
ON 05

PONSIBILITY FOR
06
FS

PNSIBILITY 07

TOR’S REPORT 08
 TITLE 01

02 • This distinguishes the report from reports

SSEE
issued by other parties.
ON ON SFS &
TION OF 03
AFS
PARTS OF THE
AUDIT REPORT 04
NG
ON SFS
HE AUDITOR’S
ON 05

PONSIBILITY FOR
06
FS

PNSIBILITY 07

TOR’S REPORT 08
 TITLE 01

ADDRESSEE 02

ON ON SFS &
TION OF 03 • If the addressee of the SFS is not the same
AFS as the AFS, the auditor shall evaluate the
PARTS OF THE appropriateness of using a different
AUDIT REPORT 04
NG addressee.
ON SFS
HE AUDITOR’S
ON 05

PONSIBILITY FOR
06
FS

PNSIBILITY 07

TOR’S REPORT 08
 TITLE 01

ADDRESSEE 02

AUDITOR’S OPINION ON SFS &

IDENTIFICATION OF 03
SFS & AFS
PARTS OF THE
AUDIT REPORT 04
NG • Based on the results of engagements
ON SFS procedures discussed on the immediately
HE AUDITOR’S preceding section, the auditor shall
ON 05 communicate its opinion on the SFS.

PONSIBILITY FOR
06
FS

PNSIBILITY 07

TOR’S REPORT 08
 TITLE 01

ADDRESSEE 02

AUDITOR’S OPINION ON SFS &

IDENTIFICATION OF 03
SFS & AFS
PARTS OF THE
AUDIT REPORT WARNING 04
ON SFS
HE AUDITOR’S
• The report shall include a statement which
ON 05
indicates that the SFS do not contain all
disclosure as presented in the audited FS.
PONSIBILITY FOR
06
FS

PNSIBILITY 07

TOR’S REPORT 08
 TITLE 01

ADDRESSEE 02

AUDITOR’S OPINION ON SFS &

IDENTIFICATION OF 03
SFS & AFS
PARTS OF THE
AUDIT REPORT WARNING 04
ON SFS
REFERENCE TO THE AUDITOR’S
REPORT ON 05
THE AFS
PONSIBILITY FOR • The reference would vary depending on the
06
FS matters included in the report to the AFS and
the opinion thereon.
PNSIBILITY 07

TOR’S REPORT 08
 TITLE 01

ADDRESSEE 02

AUDITOR’S OPINION ON SFS &

IDENTIFICATION OF 03
SFS & AFS
PARTS OF THE
AUDIT REPORT WARNING 04
ON SFS
REFERENCE TO THE AUDITOR’S
REPORT ON 05
THE AFS
MANAGEMENT’S RESPONSIBILITY FOR
06
THE SFS

• The report shall include a description of

PNSIBILITY 07
management’s responsibility for the SFS.

TOR’S REPORT 08
 TITLE 01

ADDRESSEE 02

AUDITOR’S OPINION ON SFS &

IDENTIFICATION OF 03
SFS & AFS
PARTS OF THE
AUDIT REPORT WARNING 04
ON SFS
REFERENCE TO THE AUDITOR’S
REPORT ON 05
THE AFS
MANAGEMENT’S RESPONSIBILITY FOR
06
THE SFS

AUDITOR’S RESPNSIBILITY 07 • This section states that the auditor is

responsible for expressing an opinion
based on the auditor’s procedures.
TOR’S REPORT 08
 TITLE 01

ADDRESSEE 02

AUDITOR’S OPINION ON SFS &

IDENTIFICATION OF 03
SFS & AFS
PARTS OF THE
AUDIT REPORT WARNING 04
ON SFS
REFERENCE TO THE AUDITOR’S The report shall be dated on or after the
REPORT ON 05 following:
THE AFS • The date on which the auditor has
MANAGEMENT’S RESPONSIBILITY FOR obtained sufficient appropriate
06 evidence on which to base the opinion,
THE SFS
and
• The date of the auditor’s report on the
AUDITOR’S RESPNSIBILITY 07 AFS.

DATE OF THE AUDITOR’S REPORT 08

EXAMINATION OF PROSPECTIVE FINANCIAL INFORMATION

• Prospective financial information means financial information

based on assumptions about events that may occur in the future
and possible action by an entity.

• Includes FS or one or more elements of FS and may be prepared:

a. As an internal management tool
b. For distribution to third parties
 TYPES OF PROSPECTIVE FINANCIAL INFORMATION

FORECAST PROJECTION

based on historical conditions based on range of possible

and actions conditions and actions

Best-estimate assumptions Hypothetical assumptions

What management expects to Depending on a range of

happen possible scenarios

May be provided for general use May be provided for limited use
 PROCEDURES TO EXAMINE PROSPECTIVE FINANCIAL INFORMATION

Obtain sufficient Consider reliance

knowledge of the Identify significant on the historical
business assumptions used information

Obtain written Determine the nature, Consider the period

representations from timing, and extent of covered by prospective
management information financial information
SERVICES RENDERED BY PRACTITIONERS IN
RELATION TO AN ENTITY’S FS:

SINGLE FS/
SPECIFIC SUMMARY FS
ELEMENTS OF FS
 SERVICES RENDERED BY PRACTITIONERS IN
RELATION TO AN ENTITY’S FS:

SINGLE FS/
SPECIFIC SUMMARY FS
ELEMENTS OF FS

AUDIT REVIEW AGREED-UPON

COMPILATION

1 2 3
PROCEDURES

4
1. AUDIT
• Most pursued service of a practitioner because, on
top of its value to the public, it is a statutory
requirement for most entities.
2. REVIEW OF FINANCIAL STATEMENTS
• May be performed in a variety of circumstances, it may be
required for entities that are exempt from requirements
specified in law or regulation for mandatory audit or may be
requested in voluntary basis.
OBJECTIVES AND LEVELS OF ASSURANCE
• The engagement is primarily executed by performing (1)
inquiry and (2) analytical procedures
• The level of assurance obtained by the auditor in a review
engagement is only a limited assurance.
2. REVIEW OF FINANCIAL STATEMENTS
• May be performed in a variety of circumstances, it may be
required for entities that are exempt from requirements
specified in law or regulation for mandatory audit or may be
requested in voluntary basis.
OBJECTIVES AND LEVELS OF ASSURANCE
• The engagement is primarily executed by performing (1)
inquiry and (2) analytical procedures
• The level of assurance obtained by the auditor in a review
engagement is only a limited assurance.

LIMITED ASSURANCE
 The level of assurance obtained where engagement risk is
reduced to a level that is acceptable in the circumstances
of the engagement, but what risk is greater than for a
reasonable assurance engagement, as the basis for
expressing a conclusion.
 TYPES AND FORMS OF REVIEW CONCLUSION

FORECAST PROJECTION

“nothing has come to our attention that causes us to believe

UNMODIFIED CONCLUSION
that the FS do not present fairly, in all material respects”

“Based on our review, except for the effects of the matter(s)

QUALIFIED CONCLUSION described in the Basis FOR Qualified Conclusion paragraph,
nothing has come to our attention that causes us to believe
that the FS do not present fairly, in all material respects.”

“Based on our review, due to the significance of the matter(s)

ADVERSE CONCLUSION described in the Basis for Adverse Conclusion paragraph, the FS
do not present fairly, in all material respects.”

“Due to the significance of the matter(s) described in the Basis

for Disclaimer Conclusion paragraph, the practitioner is unable
QUALIFIED CONCLUSION
to obtain sufficient appropriate evidence to form a conclusion
on the FS; and accordingly, the practitioner does not express a
conclusion on the FS.
3. AGREED-UPON PROCEDURES (AUP)
OBJECTIVE
The objective of an AUP engagement is for the auditor to:
1. Carry out procedures for an audit nature to which the auditor and
the entity and any appropriate third parties have agreed and
2. Report on findings

 NO ASSURANCE IS EXPRESSED
 PRACTITIONERS ARE NOT REQUIRED TO BE INDEPENDENT
 PRACTITIONER SHALL EXERCISE PROFESSIONAL JUDGEMENT
4. COMPILATION OF INANCIAL STATEMENTS
COMPILATION ENGAGEMENT is an engagement in which a
practitioner applies accounting and financial accounting expertise
to assist management in the preparation and presentation of
financial information of an entity in accordance with an applicable
financial reporting framework, and reports as required by the
OBJECTIVE
standards.
The practitioner’s objectives in a compilation engagement are to:
1. Apply accounting and financial reporting expertise to assist management
in the preparation and presentation of financial information in accordance
with an applicable financial reporting framework based on information
provided by management
2. Report on the compiled FS

 NO ASSURANCE IS EXPRESSED