Engagements and standards
The Assurance Ladder
Each engagement buys a different level of assurance, and the report and procedures follow from it.
How the exam words it
- -The stem names an engagement (audit, review, compilation, preparation, agreed-upon procedures) and asks what assurance, procedures, or report goes with it.
- -It asks which engagement provides the highest or lowest assurance, or to rank them.
- -It quotes report wording, such as 'we are not aware of any material modifications', and asks which engagement it belongs to.
- -It asks who may use an agreed-upon procedures report.
The playbook
- 1Place the engagement on the ladder: audit gives reasonable assurance and an opinion, review gives limited assurance in negative form, compilation and preparation give no assurance, agreed-upon procedures give findings.
- 2Match the procedures to that rung: audit tests, review inquiry and analytics, compilation and preparation none.
- 3Match the report to that rung, and remember SSAE 19 removed the use restriction on agreed-upon procedures reports.
The trap
Saying a review gives reasonable assurance, or that agreed-upon procedures end in an opinion. A review is limited assurance in negative form, and an AUP report states findings only.
How the exam varies it
The same pattern, re-skinned along these axes:
Which engagement is namedWhether it asks for the assurance level, the procedures, or the report wordingNonissuer SSARS engagements versus attestation (SSAE) engagements
Drill this pattern
8 questions of The Assurance Ladder from across the AUD topics. Clear it by getting 5 right with a streak of 3.