Question

Chan & Chow offer their clients a range of professional services, including: a. providing advice on accounting policies and accounting standards b. auditing annual financial reports c. providing assistance to management and the board in strengthening internal controls and corporate governance practices d. providing assistance with the establishment and training of internal audit teams e. checking compliance with company policies and legislative regulations Required: For each of the five (5) services (a. – e.) listed above, determine whether it is an assurance engagement or not and explain your answer.

Answer 1

a) providing advice on accounting policies and accounting standards
No. Providing advice on accounting policies and accounting and auditing standards is not an assurance engagement. There is no three-party relationship, nor is it clear that there are always suitable criteria. Such assistance would be a consulting activity.

b) auditing annual financial reports
Yes. Audits of financial reports are an assurance engagement providing a reasonable level of assurance.

c) providing assistance to management and the board in strengthening internal controls and corporate governance practices.
No. Assisting management and the board to strengthen internal and corporate governance is not an assurance engagement, it is a consulting activity. There is no three-party relationship, nor is it clear that there are suitable criteria

d) Providing assistance with the establishment and training of internal audit teams
No. Assisting in establishing and training internal audit teams is not an assurance engagement. There is no three-party relationship, nor is it clear that there are suitable criteria. Such assistance would be constructed as a consulting activity.

e) Checking compliance with company policies and legislative regulations
Yes. Checking of compliance with company policies and legislative regulations can be constructed as a compliance assurance engagement.