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12 Cards in this Set
- Front
- Back
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Assurance (definition) |
To enhance the credibility of information |
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5 Fundamental Elements |
WHO: 3 party relationship WHAT: Subject matter HOW: Sufficient and Appropriate Evidence Suitable Criteria CONCLUSION: Written report |
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Subject matter |
Financial (financial statements) Non-financial (performance of entity) Physical Characteristics (capacity of facilities) Systems and Processes (internal control of IT) Behavior (corporate governance/compliance) |
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Levels of Assurance |
1. Absolute assurance - not achievable because of inherent limitation 2. Reasonable assurance - high but less than absolute (High) 3. Limited assurance - acceptable but less than reasonable (Moderate) |
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Reasonable Assurance |
Procedures/Evidences Inquiry Inspection Observation Recalculation/Reperformance Analytical procedures Form Positive |
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Limited Assurance |
Procedures/Evidence Inquiry Analytical procedures Form Negative |
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Audit engagement risk |
Risk that practitioner will express inappropriate conclusion |
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3 party relationship |
Intended users - person, persons, class of persons for whom the practitioner prepares the assurance report Practitioner - professional accountant Responsible party - person who in a direct reporting engagement - responsible for the subject matter/assertion |
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Suitable criteria |
Benchmarks used to evaluate or measure subject matter - must be: Neutral Understandable Reliable Relevant |
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Inherent Limitations |
- use of selective testing - limitations of internal control - evidence available is persuasive, rather than conclusive - use of judgment |
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Objective of Review Engagement |
Reporting whether material modifications should be made to such F/S to make them conform with GAAP |
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In a review engagement, considerations are: |
- same materiality considerations as would be applied in audit - judgment as to what material is made by reference to information - greater risk of not detecting misstatements than audit - still applies professional judgment |
