24/01/2012 3:52:48 AM
Paul Meredith -
The Federal Department of Finance and Deregulation has issued Finance Circular No 2011/08 Clarification of the terms Audit and Assurance. This circular is intended to assist Australian Government entities to understand the distinction between assurance and audit engagements, and other types of engagements such as agreed-upon-procedures engagements. A better understanding of the technical meaning of these terms by audit clients in the government sphere should result in better expectations for both clients and practitioners, as well as improved application of and adherence to the auditing and assurance standards.
This circular should, however, enjoy a wider audience beyond the target of government entities, as confusion about the meaning and application of these terms is present in all industries and market segments. For example, the contents of the circular could prove to be of assistance to a practitioner in discussions with a not-for-profit client, or with a newly-empanelled audit committee who need to understand the parameters around which the practitioner's work is framed.
Of particular utility is Appendix B, which presents a straightforward hierarchy of the various types of engagements, with example wording of the different types of reports issued - a very useful summary.
It could also be used as a training aid for accounting staff in providing a quick overview of the assurance landscape within with the firm operates.
A reminder too that professional standard APES 210 Conformity with Auditing and Assurance Standards requires members to comply with auditing and assurance standards in the conduct of assurance engagements.
Paul Meredith (Member since: 4/07/2010 12:05:45 AM)
I am the Head of Professional Standards at the Institute, a chartered accountant and a former suburban practitioner.
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I do agree that this circular should reach a wider audience, also not listed in your blog would be other professionals (beyond non-assurance practitioners, i.e. not necessarily accountants) that do conduct agreed-upon-procedures. It would be useful if they are given a nudge to read through ASRS 4400 to appreciate better how the results of their work can be utilised/perceived and to set those expectations clear upfront and not to form a conclusion/opinion within their reports.
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