Introduction to Attestation Engagements
Attestation engagements are independent professional services that provide assurance on subject matter or an assertion, such as financial statements, internal controls, or compliance with laws and regulations. These services are designed to enhance the credibility of the subject matter or assertion by providing an independent opinion or conclusion.
The most common types of attestation engagements include audits, reviews, and agreed-upon procedures. Each type of engagement has its own unique characteristics and objectives, and is designed to meet the specific needs of the client or user of the subject matter or assertion.
Audit Services
An audit is the most comprehensive type of attestation engagement, providing a high level of assurance on the subject matter or assertion. The objective of an audit is to express an opinion on whether the financial statements are presented fairly and in accordance with the applicable financial reporting framework.
Audits involve a thorough examination of the subject matter or assertion, including testing of transactions, balances, and disclosures, as well as an evaluation of the internal controls and risk assessment processes.
Review Services
A review is a less comprehensive type of attestation engagement than an audit, providing a moderate level of assurance on the subject matter or assertion. The objective of a review is to provide a basis for expressing limited assurance that there are no material modifications that should be made to the subject matter or assertion.
Reviews involve inquiries, analytical procedures, and other review procedures to provide a basis for the limited assurance conclusion, but do not involve the same level of testing and evaluation as an audit.
Agreed-Upon Procedures
Agreed-upon procedures are a type of attestation engagement where the procedures to be performed are agreed upon by the client, the user of the subject matter or assertion, and the practitioner. The objective of agreed-upon procedures is to provide a basis for the user to draw conclusions about the subject matter or assertion.
Agreed-upon procedures involve the performance of specific procedures, such as tests of transactions or balances, and the reporting of the results of those procedures, but do not involve the expression of an opinion or conclusion.
Other Types of Attestation Engagements
In addition to audits, reviews, and agreed-upon procedures, there are other types of attestation engagements, such as compliance attestation and internal control audits. Compliance attestation involves providing assurance on an entity's compliance with laws, regulations, or other requirements.
Internal control audits involve evaluating the design and operating effectiveness of an entity's internal controls, and providing assurance on the entity's ability to maintain effective internal controls.
Frequently Asked Questions
What is the purpose of an attestation engagement?
The purpose of an attestation engagement is to provide assurance on subject matter or an assertion, such as financial statements or internal controls.
What is the difference between an audit and a review?
An audit provides a high level of assurance, while a review provides a moderate level of assurance, with fewer procedures and less testing.
What are agreed-upon procedures?
Agreed-upon procedures are a type of attestation engagement where the procedures are agreed upon by the client, user, and practitioner, and involve specific tests and reporting of results.
What is compliance attestation?
Compliance attestation involves providing assurance on an entity's compliance with laws, regulations, or other requirements.
What is an internal control audit?
An internal control audit involves evaluating the design and operating effectiveness of an entity's internal controls, and providing assurance on the entity's ability to maintain effective internal controls.
Who can perform an attestation engagement?
Attestation engagements can be performed by independent public accounting firms, such as certified public accountants (CPAs) or chartered accountants (CAs).