Chapter 1 - Assurance and auditing: an overview. This chapter presents the following content: overview of current environment, auditing profession’s response to crisis of confidence, the assurance framework, objective of assurance engagement, forms of assurance services,. | AUDITING AND ASSURANCE SERVICES IN AUSTRALIA. AUTHORS: GAY & SIMNETT Prepared by Roger Simnett Copyright McGraw-Hill 2003 PART ONE: The Auditing and Assurance Services Profession CHAPTER 1 ASSURANCE AND AUDITING: AN OVERVIEW OVERVIEW OF CURRENT ENVIRONMENT Crisis of confidence in current financial system. Need to consider role played by Accounting standards Corporate governance Ethics Independence of auditors Business complexity and globalisation. AUDITING PROFESSION’S RESPONSE TO CRISIS OF CONFIDENCE Numerous reviews and committees Auditing standards revisited Auditing independence revisited Auditor’s role in corporate governance considered THE ASSURANCE FRAMEWORK Many parties provide reports to users as an aid to decision-making. Reports may potentially be biased due to the vested interests of the report providers. Users may demand that credibility of report be enhanced by having someone who is both independent and expert examine the report. OBJECTIVE OF ASSURANCE ENGAGEMENT ‘ for a professional accountant to evaluate or measure a subject matter that is the responsibility of another party against identified suitable criteria, and to express a conclusion that provides the intended user with a level of assurance about a subject matter.’ ISAE 100/AUS 108 Fig. Diagrammatic summary of an assurance service engagement (p. 9) FORMS OF ASSURANCE SERVICES Audit engagements — high level of assurance, positive expression of opinion. Review engagements — moderate level of assurance, negative expression of opinion. Agreed-upon procedures engagements — no assurance, report of factual findings. ATTEST V DIRECT REPORTING Audit and review engagements can involve either an attest or direct reporting engagement. Attest engagement — auditor issues an opinion on written assertions made by party responsible for the subject matter. Direct reporting engagement — auditor issues an opinion directly on the subject matter, (no written . | AUDITING AND ASSURANCE SERVICES IN AUSTRALIA. AUTHORS: GAY & SIMNETT Prepared by Roger Simnett Copyright McGraw-Hill 2003 PART ONE: The Auditing and Assurance Services Profession CHAPTER 1 ASSURANCE AND AUDITING: AN OVERVIEW OVERVIEW OF CURRENT ENVIRONMENT Crisis of confidence in current financial system. Need to consider role played by Accounting standards Corporate governance Ethics Independence of auditors Business complexity and globalisation. AUDITING PROFESSION’S RESPONSE TO CRISIS OF CONFIDENCE Numerous reviews and committees Auditing standards revisited Auditing independence revisited Auditor’s role in corporate governance considered THE ASSURANCE FRAMEWORK Many parties provide reports to users as an aid to decision-making. Reports may potentially be biased due to the vested interests of the report providers. Users may demand that credibility of report be enhanced by having someone who is both independent and expert examine the report. OBJECTIVE OF
