Types of Assignment
1 Introduction
This chapter classifies and briefly describes the various types of assignment that accountants might be involved with. The main classifications are:
Assurance engagements
Related services ('non-assurance engagements')
2 Assurance engagements
2.1 Audits and reviews of historical information
Reasonable assurance engagement, such as a statutory audit. The auditor expresses an opinion whether the financial statements are presented fairly (ie positive assurance). ISAs apply.
Limited assurance engagement, such as a review engagement (eg of interim financial information), in which the practitioner concludes that nothing has come to his attention to indicate that the financial statements do not show a true a fair view (ie negative assurance). Faster and cheaper, but less confidence in the figures is provided. ISREs apply.
2.2 Other assurance engagements (ISAEs apply)
Prospective financial information (ISAE 3400) - see Chapter 27.
Due diligence reviews - (see Chapter 29).
Controls at a service organisation (ISAE 3402). The service auditor's report will be a type 1 or type 2 report (see Chapter 18).
Compilation of pro forma financial information included in a prospectus (ISAE 3420). This involves gathering, classifying, summarising and presenting financial information to illustrate the impact of a significant event/transaction on an entity's unadjusted financial information. The practitioner's sole responsibility is to report:
whether the pro forma financial information has been compiled "in all material respects"
by the responsible party (usually management)
on the basis of the applicable criteria (eg the adjustments are directly attributable to the event/transaction and factually supportable).
3 Related services (ISRSs apply)
3.1 Agreed-upon procedures (ISRE 4400)
Where the auditor and client agree on the investigations to be carried out and on the work do be done. For example, assessing how much has been lost through an incidence of fraud or a warehouse fire. The auditor carries out procedures of an audit nature and reports factual findings - no assurance is expressed. Forensic audits (see Chapter 28) include agreed-upon procedures. Due diligence assignments may also be of this nature (see Chapter 29).
3.2 Compilation engagements
Where the accountant assists management with the preparation and presentation of financial information. The practitioner does not gather any evidence (eg to verify the accuracy or completeness of the information) and therefore no opinion is expressed.