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Fundamental Principles of Assurance Services

Assurance engagements are professional services by CPAs aimed at enhancing the reliability of information for decision-makers, involving a practitioner, a responsible party, and intended users. The main objective is to ensure information is free from material misstatement, with types including audits, reviews, and other assurance engagements. Global organizations like IFAC and IAASB, along with Philippine standards, govern the accountancy profession and its practices.

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0% found this document useful (0 votes)
14 views2 pages

Fundamental Principles of Assurance Services

Assurance engagements are professional services by CPAs aimed at enhancing the reliability of information for decision-makers, involving a practitioner, a responsible party, and intended users. The main objective is to ensure information is free from material misstatement, with types including audits, reviews, and other assurance engagements. Global organizations like IFAC and IAASB, along with Philippine standards, govern the accountancy profession and its practices.

Uploaded by

alyssa banta
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Fundamental Principles of Assurance

Services
Introduction to Assurance Engagements

Assurance engagements are professional services provided by CPAs to improve the


quality and reliability of information for decision-makers. The primary goal is to
enhance the confidence of users in the information being presented. Assurance
engagements involve a practitioner (such as a CPA), a responsible party (the entity
providing the information), and intended users (those who rely on the information).

Nature, Objective, and Elements of Assurance Engagements

Nature: Assurance engagements are designed to provide an independent


assessment of the subject matter, which can be financial or non-financial
information. The practitioner evaluates the information against established criteria
to form a conclusion.

Objective: The main objective is to provide assurance that the information is free
from material misstatement, whether due to fraud or error. This helps users make
informed decisions based on reliable information.

Elements:
1. Three-Party Relationship: Involves the practitioner, the responsible party, and the
intended users.
2. Subject Matter: The information or process being evaluated.
3. Criteria: The standards or benchmarks used to assess the subject matter.
4. Evidence: The information collected to support the practitioner's conclusion.
5. Assurance Report: The formal report issued by the practitioner, providing their
conclusion on the subject matter.

Types of Assurance Engagements

Assurance engagements can be categorized into three main types:


1. Audits: These provide a high level of assurance (reasonable assurance) that
financial statements are free from material misstatement. Audits involve extensive
testing and verification of financial information.
2. Reviews: These provide a moderate level of assurance (limited assurance).
Reviews involve less extensive procedures than audits and primarily consist of
inquiry and analytical procedures.
3. Other Assurance Engagements: These can include various services such as agreed-
upon procedures, compliance audits, and performance audits. The level of assurance
provided can vary depending on the nature of the engagement.
Global Organizations and Standard-Setting Boards of the Accountancy Profession

Several global organizations and standard-setting boards play a crucial role in


establishing and maintaining standards for the accountancy profession:

International Federation of Accountants (IFAC): A global organization representing


the accountancy profession. IFAC's mission is to serve the public interest by
strengthening the profession and contributing to the development of strong
international economies.

International Auditing and Assurance Standards Board (IAASB): An independent


standard-setting body that develops International Standards on Auditing (ISAs) and
other assurance standards to enhance the quality and consistency of practice
globally.

International Accounting Standards Board (IASB): Responsible for developing


International Financial Reporting Standards (IFRS) used by companies worldwide.

Standards Governing the Professional Services of CPAs in the Philippines

In the Philippines, the practice of accountancy is governed by several standards and


regulations:

Philippine Standards on Auditing (PSAs): These standards provide guidelines for


conducting audits of financial statements.

Philippine Standards on Assurance Engagements (PSAEs): These standards apply to


assurance engagements other than audits or reviews of historical financial
information.

Philippine Standards on Review Engagements (PSREs): These standards apply to the


review of historical financial information.

Philippine Standards on Related Services (PSRSs): These standards cover services


such as agreed-upon procedures and compilations.

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