Session 1

[Vivienne]

1.State the objectives of an assurance engagement.

2.Briefly explain the difference between positive and negative assurance outlining the advantages to the directors of providing negative assurance on their Cashflow forecasts.

[Ash123]

Objectives of An Assurance Engagement
to increase the level of confidence of the users of financial statements.


POSITIVE ASSURANCE
One in which the auditors reports that the financial statements do give a true and fair view.

NEGATIVE ASSURANCE
One in which the auditors reports that nothing has come to his attention to suggest that the financial statements do not gve a true & fair view.

[Hamdy Hafez]

thanks a lot for the fighter lady ViVi
please give me some time till tomorrow (to read this chapter again) really I forgot it (just remeber the main idea):shocked:

[juliana-ap]

hi Viv,
i am in botswana and am part of the F8bit session,i sent u a post when i read about te gtg material u got in zambia.how much were they.i haev sent them an email to no avail.they have not responded as yet.would be greatful for any infomation.as for the question you posted i will be able to respond later on or tomorrow.thanx Viv and evrybody else in the session.

[Hamdy Hafez]

there are a variant types of assurance engagement:
* external audit: which is a type of assurance engagement which aims to give an independent opinion on a set of financial statements to provide assurance to shareholders

internal audit: which also another type assurance,which is an appraisal & monitoring activity to provide examining, evaluating & reporting to management & directors on the adequacy & effectiveness of the internal control & accounting system

2) positive assurance: when the auditor
* has obtained sufficient evidence
* to feel confident to give reasonable assurance that
* the information is free of material error

negative assurance:
when the auditor
* has obtained lower level of evidence
* so give only a lower level of assurance
* so he give his opinion as " nothing come to his attention which indicates that the F.S contain any material error

but regarding the advantages of Neg. assurances for directors
I don't know else one only
* it's cheaper because the lower level of work done by auditors

[Ash123]

On the basis of Level of assurance, environment and sector the assurance engagement can have the following types:

1. engagements intended to provide high or moderate levels of assurance
2. engagements to report internally and externally
3. engagements in the private or public sector

LEVEL OF ASSURANCE

If the auditor provides Auditing services to a client the
COmparative level of assurance is HIGH but not absolute assurance
and the report provided is a POSITIVE ASSURACE ON ASSERTIONS.

If the auditor provides related services to a client such as
1. Review Services
The Comparative level of assurance is Moderate assurance
and the report provided is of a NEGATIVE ASSURANCE ON ASSERTIONS.

2. Agreed Upon Procedures
No assurance is required
The report provides the information on factual findings of the procedures performed.

3. Compilation
No assurance is required
The reports prvides the identification of information compiled.

Audit engagement:
The objective of an audit of F/S is to enable the auditor to express an opinion whether the F/S are prepared, in all material respects, in accordance with an identified financial reporting framework.

Review engagement:
The review engagement enables an auditor 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 come to the auditor’s attention that causes the auditor to believe that the financial statements are not prepared, in all material aspects, in accordance with an identified financial reporting framework.

Agreed-upon procedures:
The auditor simply provides a report of the actual findings, so no assurance expressed.
Users of the report must instead judge for themselves the auditor’s procedures and findings, and draw their own conclusions from the auditor’s work.

Compilation engagement:
Users of the compiled information gain some benefit from the accountant’s (as opposed to auditor’s) involvement.

[Vivienne]

hi Viv,
i am in botswana and am part of the F8bit session,i sent u a post when i read about te gtg material u got in zambia.how much were they.i haev sent them an email to no avail.they have not responded as yet.would be greatful for any infomation.as for the question you posted i will be able to respond later on or tomorrow.thanx Viv and evrybody else in the session.


hi juliana

i managed to get the gtg book from our outlet here. it was going for 160 thousand kwacha if you know our currency very well. i have also sent mail to the gtg team for the other books that i require and they have promised to get back to me as quickly as possible.who di you send an email to because you have said they havent responded.

to all my members av been unable to respond early to the session 1 because i was out of office yesterday.please keep those answers flowing.

[omerpk]

1.State the objectives of an assurance engagement.

2.Briefly explain the difference between positive and negative assurance outlining the advantages to the directors of providing negative assurance on their Cashflow forecasts.


1. The purpose of assurance engagements is to increase the confidence and reduce the risk of the users of those assurance services.

The International Framework for Assurance Engagements (developed by the International Auditing and Assurance Standards Board) states that the objective of an assurance engagement is :

- for a practitioner (e.g. statutory auditor) to evaluate or measure subject matter (e.g. financial statements) that is the responsibility of another party (e.g. Board of Directors) against identified suitable criteria (e.g. compliance with IFRS) so that they can express a conclusion that provides the intended user with a level of assurance about the subject matter.

2. The outcome of a reasonable assurance engagement is expressed in the form of 'positive assurance'. For example the report would state that in the practioner's opinion the financial statements were prepared in accordance with an identifiable financial reporting framework.

The result of a limited assurance engagement is expressed in the form of 'negative assurance'. This report would probably take the following form:

'Nothing has come to our attention that causes us to believe that the financial statements were not prepared in accordance with the relevant financial reporting framework.'

What is apparent from the above distinction is that the level of assurance provided by a reasonable assurance engagement is higher than that of a limited assurance engagement. Consequently the work undertaken in a reasonable assurance enagement needs to be more intensive and the evidence collected of a higher quality than that of a limited assurance enagement.

The directors may be more comfortable with a limited assurance enagement (than a reasonable assurance one) regarding cash flow forecasts as it would be less expensive and time-consuming. This is because under such an engagement the practitioner would only be performing 'limited' testing in order to express a negative assurance opinion.

[juliana-ap]

hi guys sorry for the daly!

1.State the objectives of an assurance engagement.

2.Briefly explain the difference between positive and negative assurance outlining the advantages to the directors of providing negative assurance on their Cashflow forecas

- Objectives of an assurance engagement is basically to report on the findings of an activity which will have an impact on the assurance / confidence / reliance of the final user of such reports. Assurance engagements entail a detailed professional series of procedures undertaken to produce a report that can be professionaly relied on. The reports are however not regarded as the ultimate decision making tool as it does not rule out the possibility of error or mistatements of financial statements reviewed.

Positive assuarance is the reasonable confidence given to the user f the reports / financial statements as per the findings of the auditor that the finanacial statements in his opinion give a true and fair view of the companys financial position. while Negative assuarnece is the opposite of positive assuarance.

Advantages of the directors providing a neagtive assuarance of their cashflow forecast is that the auditor would be able to plan efficiently and effectively for the best audit startegy..

[vervicy]

1.State the objectives of an assurance engagement.

2.Briefly explain the difference between positive and negative assurance outlining the advantages to the directors of providing negative assurance on their Cashflow forecasts.

I will read up on this tonight and post my ans.

[vervicy]

An assurance engagement is that where the conclusion expressed are design to enhance the degree of confidence of the intended users,other than the responsible party about the outcome of valuation or measurement of the subject matter against critiria needed.eg an external audit.


Negative assurance is a form of review engagement, this allows auditor to state procedures that do not provides all the evidence requires in occordance with appropriate accounting standard which is reasonable but not obsolute. Positive assurance on the other hand show that account are ture and fair and are prepared with the appropriate accounting standard.

Director are responsible for providing financial statements, and as such they can be parepared with an assurance that are reasonable but not obsolute hence giving a negative assurance review.

[vervicy]

An assurance engagement is that where the conclusion expressed are design to enhance the degree of confidence of the intended users,other than the responsible party about the outcome of valuation or measurement of the subject matter against critiria needed.eg an external audit.


Negative assurance is a form of review engagement, this allows auditor to state procedures that do not provides all the evidence requires in occordance with appropriate accounting standard which is reasonable but not obsolute. Positive assurance on the other hand show that account are ture and fair and are prepared with the appropriate accounting standard.

Director are responsible for providing financial statements, and as such they can be parepared with an assurance that are reasonable but not obsolute hence giving a negative assurance review.

[Hamdy Hafez]

An assurance engagement is that where the conclusion expressed are design to enhance the degree of confidence of the intended users,other than the responsible party about the outcome of valuation or measurement of the subject matter against critiria needed.eg an external audit.


Negative assurance is a form of review engagement, this allows auditor to state procedures that do not provides all the evidence requires in occordance with appropriate accounting standard which is reasonable but not obsolute. Positive assurance on the other hand show that account are ture and fair and are prepared with the appropriate accounting standard.

Director are responsible for providing financial statements, and as such they can be parepared with an assurance that are reasonable but not obsolute hence giving a negative assurance review.


good work , keep it:err:

[Perfume30]

An assurnce engagement is one which a practitioner expressed a conclusion designed to enhance the degree of confidence of the interested users, other thatn the reasonable party, about the outcome of the evaluation or measurement of a subject matter against suitable crioters.

Types of assurance engagaements and their criteria are as follows:

Audit Engagement:

carried out by an auditor
is expressed positively in report as reasonable assurance
provides a high, but not absolute level of assurance that the information audited is free from material misstatement


Review Engagement:

carried out by auditor
provides moderate level of assurance that information is free from material misstatement
expressed in the form of negative assurance


Agreed upon procedures:

carried out by auditor
auditor provides a simple report based on actual finding
no assurance is provided
users if report must use their own judgement and draw their own conclusions


Compilation engagement:

carried out by accountant (rather than auditor)
users of compiled information gain some benefit from report
no assurance is given



Difference between positive and negative assurance@

Positive (reasonable) assurance is given when an auditor is able to provide a high but not absolute level of assurance that the information is free from material misstatement and of a "true and fair view".

Negative assurance, whilst also providing assurance, is not as high a level and only of moderate leve that the information is free from material misstatement.

Advantages to directors is that information obtained is assured, albeit only to a moderate level. This is a cheaper alternative to an audit engagement but at the same time provides ample assurance on the financial statements to suggest the cashflow forecasts are accurate. This information is beneficial to deliver to shareholders and stakeholders.

(My first attempt at any of these questions, so please be sympathetic!)

C