WHAT IS ASSURANCE ?

AUDIT ENGAGEMENT

"The purpose of an audit engagement is to enhance the degree of confidence of intended users in the financial statements. This is achieved by the expression of an opinion by the auditor on whether the financial statements are prepared in all material respects, in accordance with an applicable financial reporting framework (ISA)"

 In Audit We will give Reasonable Assurance,

• Unrestricted access to all information & explanations.
• High but not an absolute level of assurance.
• Its high----professional expert, skepticism, planning, rules & regulations.
• Not absolute---Sampling/Material basis (Time Contraint).
• Positive form of assurance.

REVIEW ENGAGEMENT

"The purpose of review engagement is to enable a practioner to state whether on the basis of procedures which do not provide all the evidence that would be required in an audit, anything that has not come to the practioner's attention that causes the practioner to believe that financial statements are not prepared in all material respects, in accordance with an applicable financial reporting framework (ISRE)"

In Review we will give Limited Assurance,

• Moderate level of assurance which is less than reasonable assurance.
• Restricted to inquiry & analytical procedures.
• Negative assurance. 

AUDIT BENEFITS:-

• High quality & reliability information circulates the markets (gives investors faith & improves reputation of the market).
• Independent verification ( management value having there business scrutinised ).
• Reduces the risk of management bias, fraud & error.
• Enhances the credibility of the information (especially for raising finance & for Tax authorities).
• Deficiencies may be highlighted in the management letter.

AUDIT LIMITATIONS:-

• Financial information includes subjective & judgemental matters.
• Inherent limitations of control used as audit evidence.
• Representations from management may have to be relied upon as the only source of audit evidence in some areas.
• Evidence is persuasive not conclusive.
• Do not review 100% of the transactions.

STEWRADSHIP:-
A stewardship is the responsibility to take good care of resources. A steward is a person entrusted with management of another person's property. for example , when one person is paid to look after after another person's house while the owner goes abroad on holiday.
The steward is accountable for the he caries out his role.

ACCOUNTABILITY:-
It means that people's in positions of power can be accountable for their actions i.e. they can be compelled to explain their decisions and can be criticised or punished if they abused their position.

AGENCY RELATIONSHIPS:-
Agency relationships occur when one party the principal, employs another party, the agent to perform a task on their behalf. For example directors can be seen as the agents of shareholders, employees as the agents of directors & external auditors as the agents of shareholders.

MATERIALITY:-
Information is material if its omission or misstatement could influence the economic decisions of the users taken on the basis of financial statements.