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CA Ravi Taori
QNO— Three Parties in Assurance Engagement New Course – (SM23)
SAINTRO.08 Bhaskar CNO - SAINTRO.61
.50
An assurance engagement involves a three party relationship. Discuss meaning of three parties in such
an engagement.
Answer A three-party relationship involving a practitioner, a responsible party, and intended users.
A practitioner is a person who provides the assurance. The term practitioner is broader than auditor. Audit
is related to historical information whereas practitioner may provide assurance not necessarily related to
historical financial information.
A responsible party is the party responsible for preparation of subject matter.
Intended users are the persons for whom an assurance report is prepared. These persons may use the
report in making decisions.

QNO-- Types of Assurance Engagements New Course – (SM25/S24M/S24R)
SAINTRO.09 Bhaskar CNO - SAINTRO.61.50
“Assurance engagement” means an engagement in which a practitioner expresses a conclusion designed
to enhance the degree of confidence of the intended users other than the responsible party about the
outcome of the evaluation or measurement of a subject matter against criteria. In this context, give
three examples of assurance engagements highlighting difference in nature of assurance provided by
such engagements.
OR
Assurance engagements are not restricted to audit of financial statements alone. Discuss.
OR
Kriti, a CA student, has joined articles in a reputed audit firm. She considers audit engagement to be an
“assurance engagement”. Her understanding is that audit engagement is the only kind of assurance
engagement in which practitioner gives a written assurance report inappropriate form. However, her
friend Somaya, does not agree with her. She is of the view that assurance engagements are not
restricted to audit alone. Besides, Somaya also thinks that assurance engagements can also relate to
matters other than historical financial information. Whose view appears to be correct? State with
reasons.
Answer Three examples of assurance engagements are as under :-
i. Audit of financial statements
An audit of financial statements provides reasonable assurance about whether the
financial statements as a whole are free from material misstatement, whether due to
fraud or error, thereby enabling the auditor to express an opinion on whether the
financial statements are prepared, in all material respects, in accordance with an
applicable financial reporting framework.

ii. Review of financial statements
Review provides lower level of assurance than audit. Further, review involves fewer
procedures and gathers sufficient appropriate evidence on the basis of which limited
conclusions can be drawn up.

iii. Examination of prospective financial information
In assurance reports involving prospective financial information, the practitioner obtains
sufficient appropriate evidence to the effect that management’s assumptions on which
the prospective financial information is based are not unreasonable, the prospective
financial information is properly prepared on the basis of the assumptions and it is
properly presented and all material assumptions are adequately disclosed. Such type of
assurance engagement provides a moderate assurance.

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