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reasonable assurance involve analytical procedures (AP), general enquiry, substantive test of detail, substantive analytical procedures and test of control
limited assurance restricted to AP and general enquiry
1. Then what does ‘agreed upon procedures’ involve ?
2. limited assurance is restricted to AP and general enquiry. That means it can’t perform test of control and other substantive tests like reasonable assurance ?
1. Short answer – whatever has been agreed upon (!)
An agreed-upon procedures engagement “involves reporting factual findings based upon procedures agreed with the engaging party and any appropriate third parties, rather than a conclusion”. An example of an agreed-upon procedures engagement could be to report on controls at a service organisation. ISRS 4400 gives and example of a report the purpose of which is to assist the client in evaluating the validity of accounts payable. It summarises the procedures performed – e.g. checking the addition of the accounts payable balance and comparing the total with the ledger account, obtaining suppliers statements, obtaining reconciliations and examining outstanding invoices/credit notes/payments.2. Procedures are relevant to the level of assurance required for the particular engagement:
Audit -> audit procedures -> reasonable assurance – expressed positively
Review (say) -> limited procedures -> limited assurance – expressed negatively
(see page 9 of our notes)1. since it’s agreed upon procedures that means it can also involve all the procedures (test of control, substantive test) that are used in reasonable assurance ?
1. since it’s agreed upon procedures that means it can also involve all the procedures (test of control, substantive test) that are used in reasonable assurance ??
2. However in the notes it does not state specficially which procedures will be performed… i would like to know whether limited assurance review ONLY involves analytical procedures and general enquiry
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