- May use the work of other persons, where

Default - sync and async specialized skills are needed

Final - mcq - Determining nature, timing, or extent
Others - essay Professional accountant - any are of accountancy
Class standing: Practitioner - rendering professional services
Quizzes - majority % (20%) Auditor - audit and review services
Sync activity → discuss a case, present mcq Intended users
Async class → video, pdf, reflection/answer - Whom the practitioner prepares the assurance
report
Assurance principle/ assurance engagement - next - Assurance report shall be addressed to all users
meeting definition type elements - May be limited to major stockholders w/
common interest
Assurance - Report must be restricted only to the parties
- Practitioner’s satisfaction as to the reliability identifies
- How sure or certain si practitioner na si Subject matter
representation ni responsible party is reliable - Nature of assertion the practitioner gathers
sufficient evidence
Assurance engagement/service Subject matter information
- Which a practitioner express a conclusion to - Pertains to the outcome of the evaluation of the
enhance the degree of confidence of the intended subject matter
users - Basis for expressing conclusion
- Three-party contracts where assurers report on - Ex. F/F in an audit engagement
the quality of information Characteristics of an appropriate subject matter:
- Services performed by independent professional a. Identifiable and consistent evaluation against the
to enhance the credibility of the subject matter identified criteria
Objective b. Can be subjected to procedures for gathering
- For a practitioner to evaluate or measure a sufficient evidence
subject matter against identifies suitable criteria Suitable criteria
and express conclusion to increase the level of - Req. for consistent evaluation of the subject
assurance of the intended user matter
- Optimum - w/o it, nay conclusion is open to individual
interpretation & misunderstanding
Elements of assurance engagements(3SECC) - Context-sensitive → even if same subject, can
Responsible party be different criteria
- Who is responsible to the subject matter - Should be available to the intended users
- May be engaging party, measurer/evaluator a. Formal
- may/may not engaging party to the practitioner - F/S
- May be one of intended users but should not be - Internal control framework
the only one - Laws, regulation or contracts
Practitioner b. Less formal
- Conducting assurance engagement - Code of conduct
- Must be independent to both responsible party - Level of performance
and intended users c. Established
- Governed by ethical requirements - Embodied in laws/regulations
- Complies w/ laws, regulatory requirements, - Associated to formal criteria
ethical standard d. Specifically developed
- Designed for the purpose of engagement
 - Associated to less formal criteria → affects the nature, timing, and extent of procedures
Characteristics of suitable criteria(RUN CR) in obtaining sufficient and appropriate evidence
Reliability
→ assessing subject matter if free of misstatement
- It allows reasonably consistent evaluation of the
→ what factors might influence the decision of users
subject matter
- verifiablity
Understandability d. Assurance engagement risk
- Contribute to conclusions that are clear & → risk that the practitioner expresses an inappropriate
comprehensive and not subject to different conclusion when the subject matter information is
interpretations materially mistated
Neutrality → it may be reduce by increasing the assurance level
- Free from bias
provided by the procedures
Completeness
- Criteria are complete → components:
- Does not omit relevant factors Risk of material misstatement
Relevance - Inherent risk
- It assist the decision-making by the intended - Control risk
users - Detection risk
- Measurement or evaluation risk
Evidence Risk on non-detection or detection risk
- All information gathered in evaluating the
subject matter e. Cost-benefit consideration
- w/o evidence, practitioner will not be able to
attain the objective of assurance engagement = f. Professional skepticism
expressing conclusion
- Professional skepticism - critical mind Nature, timing and extent of procedures
- Professional judgment - reasonable judgment - Combination of procedures can be used to obtain
supported by facts & evidence sufficient & appropriate evidence such as:
Considerations when planning and performing the 1. Inspection
engagement: 2. Observation
a. Quantity of evidence (sufficiency) 3. confirmation
Sufficiency 4. Re-calculation
→ quantity of evidence is affected by 5. Re-performance
6. Analytical procedures
→ risk - greater the risk, more evidence is required
7. Inquiry
→ quality - higher quality, less may be required

b. Quality of evidence (appropriateness) Assurance report/Conclusion

Appropriateness - May be expressed in a positive or negative form
→ quality of evidence ; relevance and reliability depending on the types of assurance engagement
Difficult to obtain assurance if the subject matter covers performed
a period than subject matter at a point in time

c. Materiality 8/19 sync

→ relevant in determining nature,timing, and extent Introduction to audit and assurance engagements
of evidence-gathering Audit
- One of the many assurance engagements
- Provide service more than audit
Assurance - The higher the risk the low level risk
- Broader than audit - Conclusion - form of negative statement

Services offered by practitioners:

Assurance engagement
Non-assurance engagement

Review engagement
- In audit which is attestation, mababa ang
evidence
Types of audit report: - Mas marami ang evidence sa audit
Qualified - Allow ang limited assurance (inquiry and
unqualified analytical procedures)
- Level of assurance is less than the assurance
engagement
Types of assurance engagements - based on form or - Recipients of the report must form their own
structure conclusion from the report of the auditor
● Attestation engagements - Report is restricted to those parties that have
- Made by company, other than practitioner agreed to the procedures
- Who measures or evaluates the underlying - Recipients must for their own conclusion
matter against criteria

● Direct engagements
- Practitioner
- Who measures or evaluates the underlying
matter against criteria

Types of assurance engagements - based on level of

assurance
● Reasonable assurance engagements
- Engagement risk is at acceptable low level
- Risk is not totally eliminated
- Cannot be zero 8/24 sync
Limitations: SGV services
Use of selective testing Assurance:
Inherent limitations of internal control Audit, review, and related services
Evidence available to the practitioner is persuasive External audit service
rather than conclusive Review services
Use of professional judgment - Higher engagement risk the
Characteristics of the subject matter - Lower assurance level
- Limited assurance, risk is higher than audit
● Limited assurance engagement Security offerings
- Engagement risk is at acceptable in the level in - Prospectus review
the circumstances - Prospectus - docx of company magbebenta ng
- High risk compare to reasonable stock sa public(initial public offering)
- Greater than reasonable assurance engagement Agreed-upon procedures
 Tuesday - quiz discuss answer 15 items
Extended audit services Exam thursday- chapter 1-2 45 items
- Fixed asset count
RA9298
Tax: - act of 2004
Strategy & transaction: - Regulatory act governing the practice of
Buy & integrate accountancy
- Buy a new company, integrateit - Revised accountancy law 1975
Urban development advisory Objectives:
- standardization and regulation of accounting
Consulting: education
- 2 party involve - Examination for registration of CPAs
Risk - Supervision, control, and regulation of the
Technology and transfer intelligent practice of accountancy in the PH

Example of positive and negative form of conclusion: Sectors of practice of accountancy:

Limited assurance Public accountancy
- Require negative form Commerce and industry
- Limited assurance than audit Gov’t
Annual & sustainability reports Education/academe
PLDT
By SGV PRC and BOA
Assurance engagement - limited assurance engagement - primary duty to enforce and implement RA 9298
*Annual reports Powers and function of BOA:
- Broader than financial report ● Prescribe and adopt the rules and regulations of
- Financial report is broader than financial 9298
statement ● Supervise the registration
EBITDA ● Administer oaths
Earnings before income tax, depreciation, and ● Issue of certificate of registration
amortization ● Adopt an official seal of BOA
● Prescribe code of ethics
Auditor’s responsibilities ● Monitor the conditions affecting the practice of
- Obtain reasonable assurance about whether the accountancy
consolidated F/F as a whole are free.. ● Conduct an oversight into the quality of audits of
fs
PSE Edge - search the reports ● Investigate violations
https://edge.pse.com.ph/ ● Issue a cease or desist order
TEL ● Punish for contempt
http://pldt.com/investor-relations/annual-and- ● Prepare the syllabu of the subjects for
sustainability-reports examinations
glossy ● Ensure

Reasonable assurance
- Required positive form Auditing
- High assurance - systematic process
- Objectively obtaining and evaluating evidence
about assertions
CHAPTER 3
 - Ascertains the degree of correspondence Listing of content (book)
between assertions and established criteria Put what paragraph
- Communication of the results to interested users Ex. scope of audit, what paragraph
9/14 sync 2 column
Quiz - done 1 column → content
2nd → paragraph number
Tuesday sept 21 exam
End of chapter mcq

9/23 sync Audit planning

International ethics standard board for accountants - How to conduct audit engagement
code of ethics - Develop general strategy and detailed approach
- sets of concept and principles - Not a discrete phase
need: - A continual and iterative process - from the
1. beginning to the completion of current audit
professional accountant tasks
- Risk-based approach → always update risk
self-interest
assessment
self-review
advocacy Adequate planning
familiarity - Devote attention to important areas
intimidation - Identify and resolve potential problems on
timely basis
9/28 sync - Organize and manage audit = effective and
Quiz 2 thursday efficient manner
Chapter 15 - Supervision of team members and review of
their work
Midterm - Coordination of work done by auditors of
Chapter 1-4, 15 components and experts

5 fundamental principles Overall audit strategy

Independence - General plan
Independence required when: Auditor shall:
● Engagement period - Identify characteristics of the engagement
● Period covered by the financial statements a. Reporting requirements
b. Expected audit coverage
Network firms - Ascertain reporting objectives
a. Timetable for reporting
9/30 sync b. Discussion w/ management
Quiz - Consider significant factors in directing
Chapter 4 engagement team’s effort
a. Determination of materiality levels
Tuesday discussion of quiz b. Significant changes and developments
- Consider the results of preliminary engagement
10/12 sync activities
Sample engagement letter - Ascertain the nature, timing, and extent of
Look for audit engagement letter, PH resources
Follow international standard a. Selection of engagement team
Valuation: b. Engagement budgeting
Benefits: Auditor - involves assessment of inherent risk
and control risk to evaluate likelihood of
material misstatements occurring in FS
Audit risk = inherent risk * control risk *
10/19 sync detection risk
Next week tuesday quiz - ch 5 and 6 ● Information and communication system
Thursday - answer or ch 7 lecture ● Control activities
● Monitoring of control
Chapter 6 10/26 sync
Study and evaluation of internal control Transaction cycle (test of controls) chapter 7
Internal control
Financial - reliability of financial reporting
Operational - effectiveness and efficiency Make up quiz 3:00-4:30pm friday nov 12
Compliance - comply w/ applicable laws & regulations Ch 5 and 6

Characteristics: Thursday nov 11 async ch 8

- A process Prefinals - tuesday nov 16
- Effective by entity’s personnel Coverage 5,6,7
- Provides reasonable assurance of achieving its
objectives Ch 7 and 8 take home quiz
- Geared toward attainment of the entity’s
objectives 11/9 sync
Chapter 7
Need to study and evaluate internal control Understanding the transaction cycles
a. To plan the audit and develop effective and General objectives:
efficient audit approach - Promote adequate segregation of ncompatible
b. Evidence generated internally is more reliable duties
when the related controls are effective - Provide safeguards to entity’s resources
c. Effective internal control system reduces the
possibility of error and fraud

Components:
● Control environment
→ sets the tone of the organization
→ management philosophy and operating style
→ integrity & ethical values
→ commitment to competence Sales order does not necessarily approved sales invoice
→ assignment of authority and responsibility Customer invoice - billing makes
→ Human resource policies and procedures
→ Organizational structure

● Entity’s risk assessment process

→ how company identifies, analyzes,. &
manage risk