1. What is Auditing?

- Auditing is basically about the assessment and investigation of the subject matter

or the financial statement audits. It is mostly done by a practitioner or a third

party to lessen the biased conclusion among the reliability and credibility of the

information. It is also done to confirm if they are in compliance with the rules and

regulations of the Generally Accepted Accounting Principles (GAAP).

2. Differentiate the following:

1. Assurance Engagements

- It is rendered by an independent professional accountant who impart reliability

and credibility to the financial statements by a conclusion. It also increases the

confidence of the intended users of the subject matter on the practitioner’s

conclusion or outcome of the examination.

2. Assurance Services

- These are liberated examination done by practitioners within the entity’s process

and internal and external controls. Its aim is to provide a level of assurance to the

financial statements by lessening the risks, increase the reliability and credibility

of the content and putting them in a form that assists decision making.

3. Attestation Services

- These are services where a Certified Public Accountant (CPA) gives a report and

assurance as to the reliability, credibility and truthfulness of the subject matter or

 the financial statements or the assertion of the former. One of the famous and

most intensive level of attestation is said to be the examination of historical

subject or the financial audit (Shelton Hal).

4. Audit Engagements

- Audit engagement can be said to be a consultation or an arrangement of the

entity or business owner to the practitioner or auditor to perform audit to its

subject matter of financial statements and records. The said individuals will meet

up and discuss the services needed by the consultee. The details such as the

agreed services, price and duration of performing the audit are stated in an

engagement letter done by the consultant then sent to the client.

5. Financial Statements Audit

- It is the investigation of the subject matter or financial statements of the company

to add credibility and reliability to the reports of the business. It is done by an

independent or external auditor and attest the fairness of the reports and

associated disclosures. His audited report must also be attached besides the

financial statements when they given to the intentional users of information.

3. Why do we perform Financial Statements Audit? What is its importance and

for whom do we perform such?

- We do financial statements audit in order to add credibility, reliability and

truthfulness to the subject matter of an entity and its performance. It is also to

 ensure that it is complying with the rules and regulations of different accounting

standard and financial frameworks. It can also help to maintain definite and

timely data collection. We must perform this to all business owners or entities

whom expecting prospect investors through the use of their credible subject

matter.

4. Who can perform a financial statements audit?

- Only Certified Public Accountants with accreditation from the Securities and

Exchange Commission (SEC) and Board of Accountancy (BOA) are allowed to

conduct auditing of financial statements.

Reference/s:
AccountingEDU Staff (2021). Retrieved August 3, 2021 from

https://www.accountingedu.org/accounting-vs-auditing/

Corporate Finance Institute Education Inc. (2015-2021). Retrieved August 03, 2021

from https://corporatefinanceinstitute.com/resources/knowledge/accounting/what-is-an-

audit/ https://corporatefinanceinstitute.com/resources/knowledge/accounting/assurance-

services/

Cabrera, M. & Cabrera G. (2020). Principles of Auditing and Assurancce Services(2020-

2021 ed.). GIC Enterprises & Co., Inc.

Laco, R., et.al. (2022). Quicknotes in Auditing Theory: For Accountancy Students and

CPA Reviewees (2020 ed.).

Hal, Shelton (2017). Attestation Services: The Tools That May Help You Avoid an Audit.

Retrieved from https://www.americanexpress.com/en-us/business/trends-and-

insights/articles/attestation-services-the-tools-that-may-help-you-avoid-an-audit/

AccountingTools (2021). Audit engagement definition. Retrieved from

https://www.accountingtools.com/articles/2017/9/4/audit-engagement

Securities and Exchange Commission (2005). Retrieved August 3, 2021 from

https://www.sec.gov.ph/wp-content/uploads/2019/12/2005Rule_68.pdf

AccountingTools (2021). Financial statement audit definition. Retrieved from

https://www.accountingtools.com/articles/what-is-a-financial-statement-audit.html