1.

Assurance service is an independent professional service, typically provided

by Chartered or Certified Public Accountants, with the goal of improving the
information or the context of the information so that decision makers can make
more informed, and presumably better, decisions. Assurance services provide
independent and professional opinions that reduce information risk (risk from
incorrect information).

2. Types of Assurance Services

1. Financial Statement Audit

An audit is the most comprehensive examination of your financial records, systems,
and statements. It is often required by lenders, investors, and governmental
agencies and assures the accuracy of your completed financial statements.
2. Internal Audits
This function provides an ongoing series of tests that examine controls within an
organization and measures if policies and procedures are being followed. It includes
recommendations to our clients on best practices based on our experience in the
various industries that we service.
3. Governmental Compliance Audits
Most governmental, educational and nonprofit organizations are required to have
single audits, which include both financial, and compliance aspects. Our staff has
extensive experience in this type of audit, which includes continuing professional
development in this area.
4. Report on Evaluation of Internal Control
Your business may be required to include a report on Internal Control with your
financial statements. We conduct a thorough evaluation of your accounting system
and provide you with suggestions for improvement. We can tailor our specific
procedures to assist in identifying areas of your operations vulnerable to
embezzlement or fraud.
5. Special Reports
Special reports (agreed-upon procedures reports) provide you with assurance on the
accuracy of specific components of a financial statement without having to perform
a complete audit.
6. Sarbanes-Oxley Act

This 2002 legislation is changing the face of audit services provided by independent
accountants to public companies. We are fully aware of the issues being faced by
public companies and financial institutions in order to be in compliance with the
provisions of the Sarbanes-Oxley Act. Our continued recommendations will assist
our clients in addressing the requirements of the act.
MBAF is providing companies with services required under Section 404 of the Act by
assisting in the documentation of internal control systems enabling executives of
public companies to render reports that their businesses have appropriate and
effective systems of internal controls.

3.

IAASB Interim Terms of Reference (August 2004)

Philippine Framework for Assurance Engagements
Preface to International Standards and Philippine Standards
PSA 120 - Framework of Philippine Standards on Auditing
PSA 200 (Revised and Redrafted) - Overall Objectives of the Independent
Auditor and the Conduct of an Audit in Accordance with International
Standards on Auditing
PSA 210 (Redrafted) Agreeing the Terms of Audit Engagements
PSA 220 (Redrafted) Quality Control for Audits of Historical Financial
Statements
PSA 230 (Redrafted) Audit Documentation
PSA 240 (Redrafted) The Auditors Responsibility to Consider Fraud in an
Audit of Financial Statements
PSA 250 (Redrafted) Consideration of Laws and Regulations in an Audit
of Financial Statements
PSA 260 (Revised and Redrafted) Communication with Those Charged
with Governance
PSA 265 (New) - Communicating Deficiencies in Internal Control to Those
Charged with Governance and Management
PSA 300 (Redrafted) Planning an Audit of Financial Statements

PSA 315 (Redrafted) Identifying and Assessing the Risks of Material

Misstatement through Understanding the Entity and Its Environment
PSA 320 (Revised and Redrafted) Materiality in Planning and Performing
an Audit
PSA 330 (Redrafted) The Auditor's Responses to Assessed Risks
PSA 402 (Revised and Redrafted) Audit Considerations Relating to
Entities Using Service Organizations
PSA 500 (Redrafted) Audit Evidence
PSA 501 (Redrafted) Audit Evidence Additional Considerations on
Specific Items
PSA 505 (Revised and Redrafted) External Confirmations
PSA 510 (Redrafted) Initial Audit Engagements-Opening Balances
PSA 520 (Redrafted) Analytical Procedures
PSA 530 (Redrafted) Audit Sampling
PSA 540 (Revised and Redrafted) Auditing Accounting Estimates,
Including Fair Value Accounting Estimates, and Related Disclosures
PSA 550 (Revised and Redrafted) Related Parties
PSA 560 (Redrafted) Subsequent Events
PSA 570 (Redrafted) Going Concern
PSA 580 (Revised and Redrafted) Written Representations
PSA 600 (Revised and Redrafted) Special Considerations-Audits of Group
Financial Statements (Including the Work of Component Auditors)
PSA 610 (Redrafted) Using the Work of Internal Auditors
PSA 620 (Revised and Redrafted) Using the Work of an Expert
PSA 700 (Redrafted) The Independent Auditors Report on a Complete
Set of General Purpose Financial Statements
PSA 705 (Revised and Redrafted) - Modifications to the Opinion in the
Independent Auditor's Report
PSA 706 (Revised and Redrafted) - Emphasis of Matter Paragraphs and
Other Matter Paragraphs in the Independent Auditor's Report

PSA 710 (Redrafted) Comparative Information-Corresponding Figures and

Comparative Financial Statements
PSA 720 (Redrafted) The Auditor's Responsibilities Relating to Other
Information in Documents Containing Audited Financial Statements
PSA 800 (Revised and Redrafted) Special Considerations-Audits of
Financial Statements Prepared in Accordance with Special Purpose
Frameworks
PSA 805 (Revised and Redrafted) - Special Considerations-Audits of Single
Financial Statements and Specific Elements, Accounts or Items of a
Financial Statement
PSA 810 (Revised and Redrafted) - Engagements to Report on Summary
Financial Statements

4. Types of Audit Reports

An audit report is an appraisal of a small businesss complete financial status.
Completed by an independent accounting professional, this document covers a
companys assets and liabilities, and presents the auditors educated assessment of
the firms financial position and future. Audit reports are required by law if a
company is publicly traded or in an industry regulated by the Securities and
Exchange Commission (SEC). Companies seeking funding, as well as those looking
to improve internal controls, also find this information valuable. There are four types
of audit reports.
Unqualified Opinion
Often called a clean opinion, an unqualified opinion is an audit report that is issued
when an auditor determines that each of the financial records provided by the small
business is free of any misrepresentations. In addition, an unqualified opinion
indicates that the financial records have been maintained in accordance with the
standards known as Generally Accepted Accounting Principles (GAAP). This is the
best type of report a business can receive. Typically, an unqualified report consists
of a title that includes the word independent. This is done to illustrate that it was
prepared by an unbiased third party. The title is followed by the main body. Made up
of three paragraphs, the main body highlights the responsibilities of the auditor, the
purpose of the audit and the auditors findings. The auditor signs and dates the
document, including his address.
Qualified Opinion

In situations when a companys financial records have not been maintained in

accordance with GAAP but no misrepresentations are identified, an auditor will issue
a qualified opinion. The writing of a qualified opinion is extremely similar to that of
an unqualified opinion. A qualified opinion, however, will include an additional
paragraph that highlights the reason why the audit report is not unqualified.
Adverse Opinion
This financial report indicates that the firms financial records do not conform to
GAAP. In addition, the financial records provided by the business have been grossly
misrepresented. Although this may occur by error, it is often an indication of fraud.
When this type of report is issued, a company must correct its financial statement
and have it re-audited, as investors, lenders and other requesting parties will
generally not accept it.
Disclaimer of Opinion
On some occasions, an auditor is unable to complete an accurate audit report. This
may occur for a variety of reasons, such as an absence of appropriate financial
records. When this happens, the auditor issues a disclaimer of opinion, stating that
an opinion of the firms financial status could not be determined.

Examples: