Nature of an audit of financial statements Auditing Help

Audit of financial statements is an assurance engagement.

Assurance engagement means an assignment in which the auditor expresses an opinion in order to enhance credibility of a subject matter against a criteria.

Following are the elements of an assurance engagement.

  1. A three party relationship involving a practitioner, a responsible party and intended users Responsible party is the person who is responsible for the subject matter.
  2. A subject matter, for example, financial statements.
  3. Criteria Criteria is the benchmark used to evaluate or measure the subject matter, for example IFRS.
  4. Evidence
    Evidence is the information obtained by the practitionerto evaluate whether the subject matter is free of material misstatements.
  5. Written report
    The report contains conclusion that conveys the assurance about the subject matter information.

Following services provided by the auditor do not fall in the definition of assurance engagement:

  1. Agreed upon procedures.
  2. Compilation.
  3. Management and tax consultancy.

Posted on November 2, 2015 in Overall Objective of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing

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