Assurance Engagements Defined

Assurance engagement mean an engagement in which a practitioner (professional accountant

or auditor), expresses a conclusion (in report form) that is designed to enhance the degree of
confidence users have about the evaluation of a subject matter against identified criteria.

five elements that all assurance engagements exhibit

(1) a three party relationship involving a practitioner; a responsible party; and the
intended users, (2) a subject matter, (3) suitable criteria, (4) evidence (5) an assurance
report.
Three Party Relationship
The practitioner (e.g., auditor, accountant, expert) gathers evidence to provide a conclusion
to the intended users about whether a subject matter (e.g., financial statements) conforms, in
all material respects, with identified criteria.
The responsible party (usually management or the board of directors) is one who is
responsible for the subject matter and is not the intended user.
The intended users are generally the addressee of the assurance report.

The assurance engagement evaluates whether the subject matter conforms

to suitable criteria that will meet the needs of an intended user. A subject matter of an
assurance is the topic about which the assurance is conducted.
Subject matter could be information such as financial statements, statistical information,
non-financial performance indicators, capacity of a facility, etc.
The subject matter could also be systems and processes (e.g., internal controls, IT systems)
or behavior (e.g., corporate governance, compliance with regulation, human resource
practices).
Suitable Criteria
Suitable criteria are the benchmarks (standards, objectives or set of rules) used to evaluate
evidence or measure the subject matter of an assurance engagement.
International Financial Reporting Standards
U.S. Generally Accepted Accounting Principles
national standards
Global Reporting Initiative
PCAOB internal control report criteria
Applicable law, regulation or contract
An agreed level of performance

Characteristics of Suitable Criteria

(a) Relevance
(b) Completeness
(c) Reliability
(d) Neutrality
(e) Understandability

Assurance Report
The practitioner provides a written report containing a conclusion that conveys the
assurance obtained as to whether the subject matter conforms, in all material respects, with
the identified criteria. For instance, an audit of financial statements provides an opinion on
conformity with IFRS.