SERVICES OFFERED:

Objective: To provide high or moderate assurance (reasonable/limted)

I. ASSURANCE ENGAGEMENT
- dapat may independence
- enhances credibility
Direct Reporting (directly)
Affestations (Audit review, other)
5 ELEMENTS (TSECA)
1. Three-Party Relationship – intended user (shareholders, govt., creditors),
practitioner (auditor that is not employed in the entity puwedeng firm/individual),
responsible party (nagpapa-audit/mgt)
2. Subject Matter –ano yung iau-audit
3. Evidence Gathering- process of auditing
 Appropriate- quality
 Sufficient- quantity
4. Criteria – PFRS, PAS etc.
5. Assurance report- QUAD
 QUALIFIED- not all procedure were followed or in accordance (2 nd to the
highest)
 UNQUALIFIED - Highest
 ADVERSE – negative (may irregularities)
 DISCLAIMER – walang inissue na kahit anong report
Positive assurance – for audit engagement (whether in conformity with
standard)
Negative assurance- (walang item ang hindi na follow)

II. NON-ASSURANCE: (ACTMO)

1. Agreed upon procedures
2. Compilation
3. Tax service (ITR, BIR – tax planning)
4. MAS
5. Other
*Related for Services (AC)
*Neither non-assurance (TMO)
THREAT TO INDEPENDENCE:
1. Self-Review
 2. Self-Interest
3. Familiarity
4. Advocacy-promoting something
DIFFERENT RISKS:
1. INHERENT RISKS
2. CONTROL RISKS
3. DETECTION RISKS
CONTROL:
1. SUBSTANTIVE CONTROL
2. TEST OF CONTROL
ASSURANCE ENGAGEMENT:
1. REASONABLE ASSURANCE-highest
2. LIMITED ASSURANCE-low
III. ABSOLUTE ASSURANCE- 100% not attainable kaya wala na ngayon
Why?:
1. Selective Testing (sampling di ginagamit ng census)
2. Use of Judgement (as person, prone to error)
3. Inherent Limitations of Internal Control (human limitations)
4. Collusion (sabwatan) among the employees
ARC (Separation of Duties)
A- Authorization
R - Registration
C - Custody

TYPE OF AUDIT:
1. FS AUDIT- auditing the entity as a whole
2. OPERATIONAL AUDIT- about operations
3. COMPLIANCE AUDIT- compliance in government and other requirements

AUDIT PROCESS:
1. Pre-Engagement – when in doubt, withdraw (accept/continue), communicate
with the previous auditor in accordance with the mgt. (don’t associate to entity
with no integrity) (process-PPIER)
 2. Planning -
3. Evaluation
4. Evidence
5. Reporting

*Familiarity is threat to independence

3 CLASSES OF PFRS:
1. PFRS FOR SMES
2. PFRS FOR SE
3. PFRS FOR FULL ENTITY
PHILIPPINE STANDARDS IN AUDITING (PSA)

FINANCIAL STATEMENTS AUDIT

-fairness of FS and standard use