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ACCA Strategic Professional · Advanced Audit and Assurance (International)

Audit-Related and Assurance Services for ACCA AAA

Audit-related and assurance services are engagements other than a full audit of historical financial statements. They include reviews, agreed-upon procedures, compilations, prospective financial information and sustainability assurance. To solve questions, identify the engagement type, state the level of assurance and the conclusion form, then apply it to the scenario.

What this chapter covers

This chapter covers work an auditor does beyond the statutory audit. You start with the assurance framework: the five elements, reasonable versus limited assurance, and the types of engagement. Then you meet the specific engagements one by one: reviews (of historical financial statements by a practitioner who is not the entity's auditor, and of interim financial information by the entity's auditor), agreed-upon procedures, compilations, reports on prospective financial information, and assurance on integrated reports, ESG and internal controls.

The key skill is telling the engagements apart. Each differs in the level of assurance given (if any), the nature of the procedures, who the users are and how the conclusion is worded. Examiners like to describe a client request and ask what service is suitable, what the report should say, or what risks the firm faces.

The chapter links to the rest of the paper. It builds on audit planning, evidence and reporting, and it feeds into ethics and quality management, because accepting an engagement needs independence and competence checks. It also links to current issues such as sustainability reporting. Section A case studies often include a client request for one of these services, so expect it as part of a larger scenario.

Written AAA questions often ask you to advise on an engagement a client wants, and this chapter gives you the rules to do it. The same ideas appear in Section A cases and in the 25-mark Section B questions, where you also earn professional skills marks for judgement and clear communication. The content is concept-heavy and compact, so a modest, well-organised effort pays off. If you can compare engagements quickly and apply the comparison to a scenario, you gain marks that students who only memorise definitions lose.

Audit-related and assurance services: topics in the order to study them

  1. 1Assurance Engagements: Framework and ElementsEverything else uses its vocabulary: the five elements, levels of assurance and the types of report.
  2. 2Review Engagements (ISRE 2400 and 2410)These are the main limited assurance engagements, so this is the best place to learn how limited differs from reasonable assurance. Keep the two standards apart. ISRE 2400 applies to reviews of historical financial statements by a practitioner who is not the entity's auditor. ISRE 2410 applies to reviews of interim financial information by the entity's auditor.
  3. 3Agreed-Upon Procedures Engagements (ISRS 4400)It gives no assurance at all, which sharpens the contrast with reviews; the report is factual findings only.
  4. 4Compilation Engagements (ISRS 4410)Another no-assurance service, but here you help prepare information instead of testing it, so professional ethics and competence matter. Independence is not required. The practitioner must comply with relevant ethical requirements, including professional competence and due care, and the report states that compliance.
  5. 5Prospective Financial Information (ISAE 3400)It builds on the framework with forward-looking information, where you examine assumptions and not outcomes.
  6. 6Other Assurance: Integrated Reporting, ESG and Internal ControlsStudy it last as an application of the framework to newer subject matter; it often appears in current-issues questions.

How to prepare Audit-related and assurance services

Treat this chapter as a comparison exercise. Build one clear picture of how the engagements differ, then practise applying it.

  1. Read the framework first and learn the five elements and the difference between reasonable and limited assurance in your own words.
  2. Build a comparison table on paper with columns for assurance level, procedures, report wording, users and key conditions for each engagement.
  3. For each engagement, learn what the practitioner must do before accepting it, such as checking ethics, competence and a suitable basis for the work.
  4. Practise the wording of conclusions: positive for reasonable assurance, negative for limited, and factual findings or no conclusion where no assurance is given.
  5. Write short answers to scenarios in which a client asks for a service. Name the engagement, justify it, and flag risks and limits of the work.
  6. For PFI and ESG assurance, list what makes the subject matter difficult to assure, such as uncertainty, assumptions and measurement criteria, and say how you would respond.
  7. Finish with a timed past question, and check that you applied the facts of the case and earned the professional skills marks.

Common mistakes in Audit-related and assurance services

  • Confusing limited assurance with no assurance.

    Fix: Remember that a review gives limited assurance, while AUP and compilations give none. State this in the first line of your answer.

  • Giving an audit-style opinion for a review or AUP report.

    Fix: Match the wording to the engagement: negative-form conclusion for a review, factual findings for AUP, and no assurance statement for a compilation.

  • Writing a generic list of definitions instead of applying the case.

    Fix: Tie every point to the client's facts, such as who the users are and why they want the service, and conclude with a recommendation.

  • Forgetting acceptance and ethics considerations.

    Fix: Always mention independence or objectivity where required, competence, a suitable basis for the work and a clear engagement letter.

  • Saying PFI assurance proves the forecast will be achieved.

    Fix: Say that you assess the assumptions and preparation, and that actual results are likely to differ from the forecast.

  • Treating ESG and integrated reporting assurance as a topic to read about only.

    Fix: Use the assurance framework: identify the criteria, the evidence available, the level of assurance and the limits of the engagement.

Last-day revision: Audit-related and assurance services

  • An assurance engagement has five elements: a three-party relationship, subject matter, suitable criteria, sufficient appropriate evidence and a written report.
  • Reasonable assurance gives a positive conclusion; limited assurance gives a negative-form conclusion and involves less work.
  • A review mainly uses enquiry and analytical procedures, not detailed testing.
  • A review gives limited assurance only; it is not an audit.
  • ISRE 2400 covers reviews of historical financial statements by a practitioner who is not the entity's auditor; ISRE 2410 covers reviews of interim financial information by the entity's auditor.
  • Agreed-upon procedures give no assurance; the report states factual findings and users draw their own conclusions.
  • In an AUP engagement, the procedures are agreed with the engaging party. The report describes the procedures and the factual findings. Use of the report may be restricted where appropriate, but the revised ISRS 4400 does not require this.
  • A compilation gives no assurance; the practitioner applies expertise in accounting and financial reporting to help prepare the information.
  • For compilations (ISRS 4410), the practitioner must comply with relevant ethical requirements, including professional competence and due care. Independence is not required, and the report states compliance with those requirements. For AUP (revised ISRS 4400), the practitioner must also comply with ethical requirements, and the report states whether the practitioner is independent or not required to be.
  • For prospective financial information, you examine the assumptions and how the information is prepared; you cannot confirm that the results will happen.
  • Forward-looking information carries inherent uncertainty, so the report should say that actual results may differ.
  • For integrated, ESG and internal control assurance, check that the criteria are suitable and the subject matter can be measured reliably.
  • In any scenario, name the engagement, state the assurance level, then apply the facts.

Audit-related and assurance services practice questions

Audit-related and assurance services in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Audit-related and assurance services: frequently asked questions

What is the difference between a review and an audit?

An audit gives reasonable assurance and involves detailed testing of evidence. A review gives limited assurance and relies mainly on enquiry and analytical procedures. The review conclusion is worded in negative form.

Do agreed-upon procedures give assurance?

No. The practitioner performs the procedures agreed with the engaging party and reports the factual findings. Users form their own conclusions from those findings.

How do I answer a scenario asking which service a client needs?

Identify what the client wants and who will use the result. Name the best-fit engagement, state the level of assurance it gives, and explain any limits. Add acceptance points such as ethics and competence.

Is sustainability or ESG assurance examinable in AAA?

It sits within the other assurance topics in this chapter. Prepare it by applying the assurance framework to the subject matter, covering criteria, evidence and the level of assurance.