ACCA AAA INT Syllabus F. Other Assignments - Non-Audit Engagements - Notes 2 / 2
There are three main types of non-audit engagements
They are more likely to arise with small companies, and only a general awareness is needed
They are...
Review Engagements
Offer limited assurance
Used by smaller companies who do not require an audit but may want to apply for finance
The assurance given is negative assurance
Involves a lot less work than an audit
Agree the terms with the client and send an engagement letter
Look at the systems in place and how judgements made by management affect the items under review
Assess materiality & procedures to be used
Analytical Review (year on year figures) + forecasts as well as establish relationships between balances
Assess the entities accounting practices and how information is recorded during the review and examine minutes of important meetings to establish any facts which may affect the financial statements.
Agreed Upon Procedures
In certain situations the auditor may not be asked to express an opinion, but merely to present the results of a set of procedures
The client draws their own conclusions from the data presented by the auditor.
Eg. A report for a bank as to the validity of the receivables balance
The report will only be for the client
The engagement letter shows the purpose & procedures to be applied and the form of any report.
It should also make clear that neither an audit, nor a review is being carried out and that the report should not be distributed
Compilation Engagements
This is where the accountant is asked to compile financial information for presentation to the client
An example is the compilation of FS from a client’s books and records
No opinion is issued
Eg.
On the basis of information provided by management we have compiled, in accordance with the International Standard on Related Services (or refer to relevant national standards or practices) applicable to compilation agreements, the balance sheet of Jamima Ltd at 31 March 20XX and statements of income and cash-flows for the year ended then.
Management is responsible for these financial statements.
We have not audited or reviewed them and accordingly express no opinion thereon.
ACCOUNTANT Date
Address