Which of these possible engagements by a firm with their accountants is an assurance engagement?Group of answer choicespreparing the tax returna management consulting servicean assessment of the internal control systempreparing financial reports
Question
Which of these possible engagements by a firm with their accountants is an assurance engagement?Group of answer choicespreparing the tax returna management consulting servicean assessment of the internal control systempreparing financial reports
Solution
An assessment of the internal control system is an assurance engagement.
Here's why:
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Assurance engagements involve an independent professional providing an opinion to reduce the information risk (the risk that information is materially misstated) for users of that information.
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In an assurance engagement, the accountant assesses the procedures and operations of a company to ensure they are functioning as intended and reports on this to the company.
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When a firm's internal control system is assessed, the accountant is providing an opinion on the effectiveness of these controls, which is a form of assurance engagement.
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Preparing tax returns, providing management consulting services, and preparing financial reports are not assurance engagements as they do not involve the accountant providing an independent opinion on the information risk.
Similar Questions
Which of these is not an assurance engagement?Group of answer choicesa review of historical financial informationa performance auditall are assurance engagementsa consulting engagement to help an organisation meet its tax obligations
Performance engagements may give rise to:Group of answer choicesreasonable assuranceeither reasonable assurance or limited assurancecomplete assurancelimited assurance
Assurance engagementSelect one:a.Is an engagement intended to enhance the credibility of information about a subject matter by evaluating whether the subject matter conforms in all material respects with suitable criteria, thereby improving the likelihood that the information will meet the needs of an intended user.b.Is an engagement in which a practitioner is engaged to issue, or does issue, a written communication that expresses a conclusion about the reliability of a written assertion that is the responsibility of another party.c.Is an engagement in which the auditor provides a moderate level of assurance that the information subject to the engagement is free of material misstatement.d.Is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.
Examples of engagement-specific safeguards in the work environment include the following, except:Select one:a.Having a professional accountant who was not a member of the assurance team review the assurance work performed or otherwise advise as necessary.b.Consulting an independent third party, such as a committee of independent directors, a professional regulatory body or another professional accountant.c.Having a professional accountant who was not involved with the non-assurance service review the non-assurance work performed or otherwise advise as necessary.d.Securing the client's commitment to improve corporate governance practices or internal controls.
In assurance engagement the Appropriate subject matter is the criteria against which the subject matter is evaluated, i.e. Financial reporting Framework (standards), guidance, laws and regulationsTrueFalse
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