Level of Assurance in Audit Engagement
A professional and independent audit firm completes the work should always be based on the level of assurance of the engagement.
It is important for the client to let qualified professionals perform their work and express an opinion based on how much assurance they are working with.
Assurance engagements are important for a variety of reasons. First, they provide an opportunity for qualified professionals to perform their work and express their opinion. This is valuable because it allows professionals to identify any potential problems with the work being done and to suggest improvements.
Second, assurance engagements help to build confidence in the work being done. When stakeholders see that qualified professionals have reviewed the work and had no significant concerns, they are more likely to have confidence in the financial statement.
Finally, assurance engagements help to protect against fraud and other risks. By having qualified professionals review the work, any potential risks can be identified and addressed before they result in harm. As a result, assurance engagements play a vital role in ensuring the quality of work and protecting against potential risks.
Level of assurance in audit engagement
Audit firms have two common levels of assurance engagements that they provide to the clients.
First, reasonable assurance is known as the higher level of assurance service that an audit firm provides to the client. The auditor reviews the whole set of financial statements and issues an opinion over them. The opinion provides a true and fair view of the report. It ensures that the financial statements are free from material misstatements. It is also known as the full assurance service or positive assurance.
For example, the auditors provide audit service over the annual financial statements. At the end of the work, the auditor must issue the audit opinion over the financial statement. It is the
Second, it is the limited assurance engagement. The auditors only review part of the financial statement base on the client’s requirement. The auditors only provide a low level of assurance if compare to the full assurance. It is also known as the negative assurance that auditors require to report the issue only if something is wrong with the clients’ report.
For example, The client requests the auditor to review the quarterly report to comply with local regulations. It is not the full financial statement, so the auditor is not required to issue an opinion. They have to report only the issue which comes to their attention during the work.