ACCA AAA · Chapter 1
What is assurance?
Your chapter at a glance. Open any section, or keep the whole map in view.
Core technical principles
Assurance criteria, evidence, conclusion
Assurance engagement
- Independent practitioner evaluates information
- Evidence supports a conclusion for intended users
- An audit is a regulated form of assurance
Financial statement audit
- Independent examination by appointed auditor
- Opinion on financial statements as a whole
- Professional judgement is essential
- No guarantee of absolute correctness
An assurance engagement requires
- Three parties: practitioner, responsible party, users
- Appropriate subject matter
- Suitable criteria for evaluation
- Sufficient appropriate evidence
- Written assurance report with conclusion
Scope and criteria
- Define work and reporting terms at acceptance
- Forecast period or other subject must be clear
Sufficient appropriate evidence
- Sufficiency = quantity
- Appropriateness = relevance and reliability
- If necessary evidence is unavailable, assess report effect
Financial statements
- Test amounts and accounting treatment
- Test presentation and required disclosures
Professional scepticism
- Question assumptions and evidence reliability
- Investigate contradictions and seek corroboration
- Neither presume dishonesty nor accept claims untested
Reasonable assurance
- High but not absolute assurance
- Positive-form conclusion, such as “in our opinion”
Limited assurance
- Lower level of assurance
- Negative form: “nothing has come to our attention”
Modification
- Materially misstated subject matter information
- Or inability to obtain sufficient appropriate evidence
- No opinion that uncertain future results will occur
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