## Types of Assurance Engagements

Audit is a type of assurance engagement, but assurance engagements are not restricted to audit alone.

### What is an Assurance Engagement?

An engagement in which a practitioner aims to enhance the degree of confidence of intended users about the outcome of a subject matter, by issuing a written assurance report.

### Types and Levels of Assurance

Engagement Type	Standard	Level of Assurance	Conclusion
Audit	Standards on Auditing (SAs)	Reasonable assurance (High)	Positive form: "In our opinion..."
Review	Standards on Review Engagements (SREs)	Limited assurance (Lower than audit)	Negative form: "Nothing came to our attention..."
Other assurance engagements	Standards on Assurance Engagements (SAEs)	Varies	Depends on engagement

### Scope of Standards

SAs apply to: Audit of historical financial information
SREs apply to: Review of historical financial information
SAEs apply to: Assurance on matters other than historical financial information — e.g.:
Assurance on prospective financial information (forecasts/projections)
Assurance on internal controls in an entity

### Assurance on Prospective Financial Information

The practitioner obtains sufficient appropriate evidence that:

1. Management's assumptions on which prospective information is based are not unreasonable

2. Prospective financial information is properly prepared on the basis of those assumptions

3. It is properly presented and all material assumptions are adequately disclosed

### Key Takeaway

All assurance engagements result in a written assurance report. The difference between audit and review is the degree of assurance — audit gives higher assurance than review.

Worked example

### Example 1

Example (Q12 — RTP Sep 2024): Kriti believes audit engagement is the only kind of assurance engagement in which the practitioner gives a written assurance report. Somaya disagrees.

Analysis: Somaya is correct. Assurance engagements are not restricted to audit alone. Review engagements (under SREs), engagements on prospective financial information, and engagements on internal controls also result in written assurance reports. The difference is the degree of assurance — audit provides reasonable (high) assurance; review provides lower (limited) assurance.

⚠️ Common exam mistakes

Thinking only audits produce written reports — all assurance engagements produce written reports.
Confusing SAs (audit of historical info) with SREs (review of historical info) — remember: same subject (historical), different assurance level.
Stating review provides 'no assurance' — review provides limited/lower assurance, not zero.
Forgetting that SAEs cover prospective financial information and internal controls — these are common exam extras.

Reference:

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →

Types of Assurance Engagements — Audit, Review, and Others

Worked example

⚠️ Common exam mistakes