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” effectiveness of negative assurance form of reporting”
what is it? and where can i get a study material on it? I’m studying kaplan version.
need help!!!!!Definition of ‘Negative Assurance’
A representation that particular facts are believed to be accurate since no contrary evidence has been found. Negative assurance is normally used by auditors in situations where it may not be possible to positively confirm the accuracy of financial reports. Since fully auditing a public company in accordance with generally accepted accounting standards is an extremely large task, a positive assurance is normally issued only when legally requiredTutor i need your advice on this.
I have come up with this theory….
“the effectiveness of negative assurance form of reporting is to the extent that nothing has come to the auditor’s attention , from the procedures performed that do not provide all the evidence that would be required in an audit, that causes auditor to believe that financial statements do not show a true and fair view and are not in accordance with applicable financial reporting framework.
However, if matters come to auditor’s attention during a review assignment that provide evidence of issues then the effectiveness of negative assurance form of reporting is limited”.please help me!!!!!!
Negative assurance is generally the type used when agreed upon procedures (AUP) are being employed. For instance there is suspected fraud in the awarding of a contract. The auditor is engaged in determining whether or not there is information which indicates this fraud. The auditor goes in, examines the information and if no fraud is detected during the examination, then the report will go something like this. Upon examination of the facts, nothing has come to our attention that indicates that a fraud was committed in the awarding of the contract.
These tend to be issued for very limited scope engagements and information not deemed to be related to the AUP is not generally made available to the auditors (hence it is not acceptable for a full scope audit). Thus the effectiveness is dependent on the scope of the AUP and as such, the effectiveness is measured based on the parameters/ guidelines given to the auditors.
Negative assurance is not as reliable as a positive assurance.
or it could be
“negative assurance form of reporting is effective to the extent that the auditor states/ can state on the basis of sufficient and appropriate evidence obtained from limited procedures that no issue has been identified that causes the auditor to believe that financial statements do not show a true and fair view or have not been prepared in accordance with identified/ applicable financial reporting framework”.
Thanks Alkemist, but negative assurance is also applicable in a review engagement.
The assurance given is the same – “nothing has come to our attention to suggest ….”
It’s clearly not as strong as positive assurance, but positive assurance is limited to the assignments involving an audit and both review engagements and agreed upon procedures assignments are specifically negating the fact of an audit
What is an assurance engagement is explained on page 8 or the notes. The difference between reasonable assurance (expressed “positively”) and limited assurance (expressed “negatively” is explained on page 9.
There is further discussion of positive/negative in relation to PFI on page 127 of the notes.
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