1. Assurance, Related Services and Internal Auditing
Chapter Twenty
Assurance, Related Services and Internal Auditing

2. Elliott Committee: Assurance Services
Assurance services are independent professional services that improve the quality of information, or its context, for decision-makers.

3. Decision-Making and the Role of Information

4. Assurance Services and IAASB Engagement Standards

5. IAASB: Assurance Engagements
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.

6. IAASB: Assurance Engagements
Subject matter and subject matter information.
Criteria.
Practitioner.
Intended user.
Responsible party.
Assertion-based engagements.
Direct reporting engagements.

7. IAASB: Assurance Engagements
Ethical requirements.
Appropriate subject matter.
Suitable criteria.
Sufficient appropriate evidence.
Practitioner’s conclusion in a written report.
Reasonable or limited assurance.
Conclusion in positive or negative form.
Rational purpose.
Assurance engagement risk is the risk that the practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated.

8. IAASB Assurance Standards and Assurance Level
Reasonable assurance means that the engagement assurance risk is reduced to an acceptably low level in the circumstances of the engagement.
In a limited assurance engagement the risk is greater than for a reasonable assurance engagement, but still acceptable in the circumstances of the engagement.
The nature, timing and extent of procedures for gathering sufficient appropriate evidence in a limited assurance engagement are deliberately limited relative to a reasonable assurance engagement.

9. IAASB Assurance Standards and Assurance Level

10. Review of Historical Financial Information
Review as an alternative to an audit.
Review performed by the auditor of the entity, for example review of interim financial information.
Historical financial information.
Inquiries and analytical procedures.
Limited assurance.
Negative form of expression of the conclusion.
Negative form of expression of the conclusion The review provides a basis to express a conclusion whether anything has come to the practitioner’s attention that causes the practitioner to believe that the financial information is not in accordance with the applicable financial reporting framework.

11. Review Report – Unmodified Conclusion

12. Review Report – Qualified Conclusion

13. Assurance Engagements Other Than Audits and Reviews of Historical Financial Information
ISAE 3000
Establish procedural requirements for assurance engagements not covered by ISAs or ISREs.
Ethical requirements.
Quality control.
Engagement acceptance and continuance.
Agreeing on the terms of the engagement.
Planning and performing the engagement.
Using the work of an expert.
Obtaining evidence.
Considering subsequent events.
Documentation.
Preparing the assurance report.
Other reporting responsibilities.
Basic elements

14. Assurance Report Compliance with the Kimberley Process

15. Assurance Report Compliance with the Kimberley Process

16. Assurance Report Compliance with the Kimberley Process

17. Assurance Report on Internal Control

18. IAASB Assurance Projects
Internal Control
Sustainability
Pro Forma Financial Information
Greenhouse Gas

19. Overview of Global Reporting Initiative (GRI) G3 Guidelines

20. Assurance on Sustainability Reporting
What type of information does sustainability reporting typically include?
What are relevant criteria for reporting on sustainability?
Why do companies report on sustainability?
Why is third-party assurance of sustainability reporting demanded?
What is relevant guidance for assurance on sustainability reporting?
What is the role of practitioners as assurers of sustainability reporting?

21. Assurance on Prospective Financial Information
Financial forecasts are prospective financial information based on expectations of future events and actions.
General use
Limited use
Financial projections are prospective financial information based on hypothetical assumptions about future events and actions.

22. Assurance on Prospective Financial Information
(1) Evaluating the preparation.
(3) Evaluating the presentation.
(2) Evaluating the support of the underlying assumptions.
(4) Issuing an assurance report.

23. Related Services Related Services Provide No Assurance ISRS 4400
Agreed-Upon
Procedures
Compilation
ISRS 4410
ISRS 4400
Provide No
Assurance

24. Agreed-Upon Procedures Report

25. Agreed-Upon Procedures Report (cont.)

26. Compilation Report

27. Internal Auditing
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations.
It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

28. Institute of Internal Auditors (IIA) Standards
The IIA oversees and sets standards for internal auditing internationally.
Mandatory guidance
Definition of internal auditing
Code of ethics
Standards
Strongly recommended guidance
Position papers
Practice advisories
Practice guides

29. IIA Code of Ethics Principles Integrity Objectivity Confidentiality
Competency

30. Internal Auditors’ Roles
Evaluating Risks and Controls
Reviewing Compliance
Financial Auditing
Operational Auditing

31. Internal Audit Function

32. Interactions between Internal and External Auditors
Some of the work performed by internal auditors may be directly relevant to the work of the external auditor.
Before a decision to use some of the work of internal auditors, the external auditor must evaluate the internal auditors’ objectivity and competence.

33. End of Chapter 20