CYRELL S.

SALIG

ACCOUNTING 151 – SECTION B56

TOPIC 2: AUDIT VS REVIEW VS COMPILATION VS AGREED-UPON PROCEDURES

AHA MOMENT SUMMARY/ SYNTHESIS CONFUSIONS QUESTIONS

 Audit is conducted primarily to enable

the auditor to express an opinion about Audit Review Compilation Agreed Upon Can the same
the fair presentation of the entity’s Procedures accountant
financial statement by gathering providing a
sufficient appropriate audit evidence compilation
thus providing a high level of assurance. Objective Express an To enable the To assist the client in To carry out audit engagement
 In a review engagement, the auditor will opinion on CPA to report the preparation of procedures agreed on also provide
state whether, on the basis of inquiry the financial whether anything the financial with the client and audit?
and analytical procedures, anything has statements has come to his statements any appropriate third
come to the auditor’s attention that attention that parties identified in
causes him to believe that the financial would indicate the report.
statements are not fairly represented, that the financial
providing moderate assurance as statement are not
compared to audit. presented fairly
 In a compilation engagement, the Explicit High but not Limited None None
practitioner uses accounting expertise to Assurance absolute. (negative)
compile the entity’s financial data to a Reasonable assurance
manageable and understandable form Assurance
without a requirement to test the Distribution General, General, unless General Limited to specified
assertions underlying that information. of Report unless based based on agreed parties involved
 In agreed-upon procedures, the auditor on agreed upon criteria
carries out procedures of an audit nature upon criteria
to which the auditor and the other Minimum Collection of Limited Assemble FS based Agreed Upon
parties have agreed and to report on Procedures sufficient procedures such on the client’s data procedures.
actual findings. evidence to as inquiry and
support analytical
opinion procedures
Comments Referred to Referred to as
as “audits” “unaudited
for financial statements”.
statements
 CYRELL S. SALIG

ACCOUNTING 151 – SECTION B56

TOPIC 1: INTRODUCTION TO ASSURANCE ENGAGEMENTS

AHA MOMENT SUMMARY/ SYNTHESIS CONFUSIONS QUESTIONS

 Assurance engagements performed by the RESPONSIBILITY: MEASURE/EVALUATE : ASSURE:

professional accountants (practitioner) are Is it the
intended to enhance the credibility of auditor’s job to
Evaluator ENGAGING
information about a subject matter of a Responsible put to his report
responsible party by evaluating whether PARTY if the entity is
Party (ENTITY)
the subject matter conforms in all material not likely to
respects with suitable criteria along with survive in order
sufficient appropriate evidence, thereby Criteria to provide fair
giving a higher degree of confidence to the representation
intended users about the credibility of the to the investors
subject matter information. of the entity?
 Subject Matter – Terms of the
1. Financial performance or conditions Engagement
Underlying Subject Subject Matter
2. Non-financial performance
matter Information
3. Physical Characteristics
4. Systems and Processes
5. Behavior
 Criteria –
1. Relevance – assist decision making ASSURANCE REPORT
2. Completeness
3. Reliability -
4. Neutrality – free from bias
5. Understandability – clear, Practitioner
comprehensive Intended Users