AUDIT AND ASSURANCE It is often not possible for the auditor to check things for himself such as quality,

accuracy, performance or existence because of lack of time, wrong location or skills The auditor has to therefore rely upon someone else to give assurance. But he should check that The reliability of the assurance and deciding how much should be checked The standards that should be applied What represents good, acceptable or unacceptable.

Audit is defined as independent examination of/and expression of opinion on financial statements and whether they are free from material misstatements. Elements of assurance engagement There are five elements of assurance engagement Three party relationship between third-party, auditor, related party Suitable criteria Subject matter Sufficient and appropriate audit evidence Written assurance report in an appropriate form stating reasonable assurance engagement or limited assurance engagement

Evidence The auditor performs reasonable assurance engagement with an attitude of professional skepticism about whether the financial statements are free from material misstatements whether due to fraud or error. Professional skepticism is a questioning mind. Sufficiency is the measure of quantity of evidence whereas appropriateness is measure of quality of evidence Assurance Report In a reasonable assurance engagement the auditor provides a positive conclusion. For example, In our opinion, the financial statements are free from material misstatements of XYZ company based on the following XYZ criteria In a limited assurance engagement the auditor provides a conclusion based on negative words. For example, Based on our work described in report nothing has come to our attention which indicates that financial statements are not free material misstatements based on XYZ criteria