AUE2601 Exam Study Notes Summary

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AUE2601 Study Notes Summary


Legal aspects in accountancy (Durban University of
Technology)




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GENERAL PRINCIPLES OF ASSURANCE ENGAGEMENTS
ASSURANCE ENGAGEMENTS

Introduction

1. This Framework defines and describes the elements and objectives of an
assurance engagement and identifies engagements to which International
Standards on Auditing (ISAs), International Standards on Review
Engagements (ISREs) and International Standards on Assurance
Engagements (ISAEs) apply. It provides a frame of reference for:
(a) Professional accountants in public practice (“practitioners”) when
performing assurance engagements. Professional accountants in the public
sector refer to the Public Sector Perspective at the end of the Framework.
Professional accountants who are neither in public practice nor in the public
sector are encouraged to consider the Framework when performing
assurance engagements;
(b)Others involved with assurance engagements, including the intended
users of an assurance report and the responsible party; and
(c) The International Auditing and Assurance Standards Board
(IAASB) in its development of ISAs, ISREs and ISAEs.


2. This Framework does not itself establish standards or provide procedural
requirements for the performance of assurance engagements. ISAs, ISREs
and ISAEs contain basic principles, essential procedures and related
guidance, consistent with the concepts in this Framework, for the
performance of assurance engagements. The relationship between the
Framework and the
ISAs, ISREs and ISAEs is illustrated in the “Structure of Pronouncements Issued by
the IAASB” section of the Handbook of International Auditing, Assurance, and
Ethics Pronouncements.


3. The following is an overview of this Framework:
•Introduction: This Framework deals with assurance engagements
performed by practitioners. It provides a frame of reference for
practitioners and others involved with assurance engagements, such as
those engaging a practitioner (the “engaging party”).
•Definition and objective of an assurance engagement: This section defines
assurance engagements and identifies the objectives of the two types of
assurance engagement a practitioner is permitted to perform.


This Framework calls these two types reasonable assurance engagements and
limited assurance engagements.
•Scope of the Framework: This section distinguishes assurance
engagements from other engagements, such as consulting
engagements.
•Engagement acceptance: This section sets out characteristics that
must be exhibited before a practitioner can accept an assurance
engagement.
•Elements of an assurance engagement: This section identifies and discusses five
elements assurance engagements performed by practitioner’s exhibit: a
three party relationship, a subject matter, criteria, evidence and an
assurance report. It explains important distinctions between reasonable
assurance engagements and limited assurance engagements (also outlined in
the Appendix). This section also discusses, for example, the significant
variation in the subject matters of assurance engagements, the required
characteristics of suitable criteria, the role of risk and materiality in assurance
engagements, and how conclusions are expressed in each of the two types of
assurance engagement.

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•Inappropriate use of the practitioner’s name: This section discusses implications of a





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