ABC Ltd., a listed company, has engaged CST & Co., Chartered Accountants, as statutory auditors to audit its financial statements for the…

Meaning of Assurance Engagement "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. It means that the practitioner gives an opinion about specific information due to which users of information are able to make confident decisions knowing well that chance of information being incorrect is diminished. Identification in the given case: (I) Practitioner: CST & Co., Chartered Accountants (II) Responsible Party: Management of ABC Ltd. (III) Intended Users: Shareholders, Investors, lenders and other stakeholders Elements of an Assurance Engagement Following elements comprise an assurance engagement: (i) A three party relationship involving a practitioner, a responsible party and intended users: An assurance engagement involves abovesaid three parties. 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. (ii) An appropriate subject matter: It refers to the information to be examined by the practitioner. For example, financial information contained in financial statements while conducting audit of financial statements. (iii) Suitable criteria: These refer to benchmarks used to evaluate the subject matter like standards, guidance, laws, rules and regulations. (iv) Sufficient appropriate evidence: The practitioner performs an assurance engagement to obtain sufficient appropriate evidence. It is on the basis of evidence that conclusions are arrived and an opinion is formed by auditor. (v) A written assurance report in appropriate form: A written report is provided containing conclusion that conveys the assurance about the subject matter. A written assurance report is the outcome of an assurance engagement.