Question

Elegant Constructions is a construction company which was established in the year 2020. Ms. Adeela is the founder of the company. The company is involved in the construction of excellent quality buildings which had aesthetic elevations and appearance. Elegant Constructions Company became popular in Rustaq region in the Sultanate of Oman. Like all other companies, this new company also should get their financial statements audited. The financial statements and all other operations of the company was checked and verified by Ms. Zeenat, the head of Marketing Department who is very knowledgeable and has more 15 years of experience. The shareholders of the company and the audit committee decided to appoint Smart Audit Services as the auditors for the company.
Answer the following questions:

Identify the type of assurance engagement between Elegant Constructions and Smart Audit Services and Justify by explaining.   

‘Auditing and assurance are parts of the same process of verifying the information on the company’s accounting records for accuracy and compliance with the accounting standards and principles’- Explain.

C. Differentiate the audit services of Ms. Zeenat, the head of Marketing Department and Smart Audit Services, the auditors of the company.   

Answer 1

a) assurance services are a type of independent professional service usually provided by a certified accountant. assurance service can include a review of any financial document.it is done for the user of the financial statement.

provider of assurance service will help the user,a better understanding of the financial statement. business use assurance service to increase the transparency, relevance, and value of the information they disclose to the market and their investors.

in the above example the assurance service used here is operational and financial reviews. which include a comprehensive review of department, program, or process to evaluate fundamental business practice.to ensure that adequate internal control exists in the company.and to ensure that procedures are efficient, effective, and in compliance with the accounting standards that exist in that particular country.

b)audit checks the accuracy of financial reports whereas assurance is the process of anal=ysing and used in the assessment of accounting entries and financial records.

an audit is actually a systematic review and assessment of information or documents.it is intended to provide reasonable assurance, but not absolute assurance, that the financial statement give a true and fair view in accordance with the financial reporting framework.

assurance is a professional service witty the aim of improving the quality and transparency of information.to reduce the chance of problems occurring from incorrect information.

c)a financial audit is an objective examination and evaluation of the financial statement of an organization to make sure that the financial records are fair and accurate. if Zeenat, head of the marketing department is involved in the audit procedure, she must make sure that she has proper knowledge and experience about the accounting standards. if the employee of the company is involved in the company audit, there is a chance of biased information and also manipulation of accounts.

if smart audit service is doing the audit, it increases the expertise. third party information also ensures non-biased information, and users of the financial statement can depend on that information.thsi is done by accounting experts, which include close scrutiny of accounting information.