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EXPLANATIONS CONCERNING
THE ESSENTIAL DIFFERENCE
BETWEEN OUR
ASSURANCE ENGAGEMENTS
AND OUR OTHER
ENGAGEMENTS
An assurance engagement
is generally defined as
“an engagement in which
a conclusion, designed
to enhance the degree of
confidence of intended
users other than the
responsible party, is
expressed about the
outcome of the
evaluation of a subject
matter against
criteria”.
In assurance
engagements, we assume
responsibility towards
two separate parties.
The first one is the
party who is responsible
for the subject matter,
namely our client. The
second one is the party
who benefits by our
conclusion.
For example;
a. In our “full tax
certification”
engagement; we assume
responsibility towards
the tax payer [our
client] to whom the tax
returns belong, and
towards tax authority
whose level of
confidence about audited
tax returns is enhanced.
b. In our “Audit of
financial statements”
engagement; we assume
responsibility towards
the party who is
responsible for the
preparation of financial
statements and for the
transactions reflected
on them [our client],
and towards the party
whose level of
confidence about
financial statements is
enhanced.
The fact that we are
responsible not only
towards our client but
also towards other
parties in assurance
engagements requires us
to conduct these
engagements by adopting
a different approach.
The approaches are
different mainly in two
essential points.
a. In
assurance engagements,
we pay utmost attention
to stay independent
of the subject matter
and of the responsible
parties of the subject
matter, deterioration
even mentally of this
value is not accepted.
In other type
engagements, this value
is not viewed as such
crucial.
b. In assurance
engagements, we have
to adopt the standards
and procedures developed
by IFAC(1)
[and by tax authority
and other government
institutions in
engagements we conduct
as SCPA(2)].
In other type
engagements, procedures
are agreed upon
throughout discussions
with our client.
As a consequence of this
essential difference, we
place a commentary such
as “this report is
not an assurance report”
on the front pages of
all reports we issue in
relation with our
non-assurance
engagements.
Footnotes:
(1) IFAC:
International Federation
of
Accountants
(2) Sworn-in
Certified Public
Accountant
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