Services provided by audit firm

 Services provided by audit companies could be divided into two groups - assurance engagements and non-assurance engagements. The first group of “assurance engagements” includes audit engagements, review engagements of historical financial statements and interim information, and other assurance engagements. The second group of services “non-assurance engagements” comprises of related services engagements and other services.

Audit engagement - The purpose of an audit is to enhance the degree of confidence of intended users in the financial statements. This is achieved by obtaining reasonable assurance about whether the financial statements as a whole are free from material misstatement and express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework.

Review engagements of historical financial statements and interim information are limited assurance engagements. The practitioner performs primarily inquiry and analytical procedures to obtain sufficient appropriate evidence as the basis for a conclusion on the financial statements as a whole. The practitioner shall express an unmodified conclusion in the practitioner’s report that nothing has come to the practitioner’s attention that causes the practitioner to believe that the financial statements are not prepared, in all material respects, in accordance with the applicable financial reporting framework. 

Assurance engagement other than audits or review engagements is an engagement in which a practitioner aims to obtain sufficient appropriate evidence in order to express a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the subject matter information (that is, the outcome of the measurement or evaluation of an underlying subject matter against criteria).

Assurance engagements could be classified on two dimensions:

1.      Either a reasonable assurance engagement or a limited assurance engagement.

2.      Either an attestation engagement or a direct engagement.

Attestation engagement is an assurance engagement in which a party other than the practitioner measures or evaluates the underlying subject matter against the criteria. Example of attestation engagements is compliance with law or regulation engagement where a practitioner obtaining assurance on a statement prepared by another party (the measurer or evaluator) of compliance with the relevant law or regulation.

 Direct engagement is an assurance engagement in which the practitioner measures or evaluates the underlying subject matter against the applicable criteria and the practitioner presents the resulting subject matter information as part of, or accompanying, the assurance report. An example of direct engagement is engagement  when the practitioner is engaged to carry out an assurance engagement of the effectiveness of a company's system of internal controls. The practitioner would evaluate and test the internal controls, and then issue an assurance report explaining the outcome of the assurance engagement.

Related services engagements are engagements in which the practitioner does not express an opinion or a conclusion but shall execute an engagement in accordance with applicable standard on related services and provide the report on the work done. Examples of related services are agreed-upon procedures engagement and compilation engagement.

Other services are the other engagements that are not audit engagements, review engagements, other assurance engagements and related services engagements. For example, the preparation of tax returns where no assurance conclusion is expressed and сonsulting (or advisory) engagements, such as management and tax consulting.