Question Tag: Professional Services

• An audit of financial statements is the examination of historical financial statements to enable the auditor to express an opinion whether the financial statements are prepared fairly, in all material respects or give a true and fair view, in accordance with an applicable financial reporting framework. An audit is a higher form of an assurance engagement performed only on historical financial information or statements.
• An audit of financial statements is an assurance engagement.
• Assurance engagement means an engagement in which a practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria. The outcome of the evaluation or measurement of a subject matter is the information that results from applying the criteria to the subject matter. Here, a professional accountant evaluates a subject matter, which is the responsibility of a third party, and forms a conclusion about the subject matter’s conformity with an identified criterion to provide the intended user a level of confidence about the subject matter.
• Not all assurance engagements are audits. An example of non-audit assurance engagements is a Review assignment.
• Audit engagement gives reasonable assurance– low level of risk. Non-audit assurance gives limited assurance – the risk is limited to the circumstance surrounding the engagement.
• More time is spent on audit assurance than other non-audit assurance, and it is more costly too.

(5 points for 5 marks)