What is an Assurance engagement in auditing?

Assurance engagement is an engagement performed by a practitioner to enable himself to express an opinion about the measurement of subject matter against a criteria. Practitioner’s expression of opinion raise the confidence of the users over the measurement of subject matter subject to the criteria applicable under consideration.

IAASB Framework | Para 7
“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.

To summarize the above formal definition, read through the following example to understand how assurance engagement is performed and how it enhances the confidence of users

Management (responsible party) of company A Ltd fulfilled its responsibility of evaluating entity’s financial position, financial performance and changes in cash flows (these all three aspects are in short the subject matter) by publishing financial statements in accordance with International Financial Reporting Standards (criteria) and the assets, liabilities etc are recognized, measured, presented and disclosed in the financial statements (subject matter information) as per the requirements of IFRSs.

Practitioner (auditor) is appointed by the shareholders (users) to express his opinion (assurance) in the form of a report over the recognition, measurement, presentation and disclosures i.e. financial statements (subject matter information) made by the management (responsible party) are actually in accordance with IFRSs (criteria) and the actual financial position, performance and changes in cash flow (subject matter).

From the definition of assurance engagement and also from the above example we understood that not every engagement undertaken by the practitioner amounts to assurance engagement. For an engagement to be assurance engagement it must have the following FIVE essentials or elements (also known as essentials or elements of assurance engagements):

  1. Existence of three party relationship which involves:
    1. practitioner
    2. a responsible party
    3. intended users
  2. Subject matter 
  3. Criteria;
  4. Sufficient appropriate evidence collected as a result of examination
  5. Expression of opinion in the form of a written report issued by the practitioner providing assurance of:
    1. higher degree as under reasonable assurance engagements
    2. moderate degree as under limited assurance engagements.


  1. Sanni Ahmad Adebayo

    The objective of statutory audit is to obtain reasonable assurance in whether the financial statements are free from material misstatement, thereby enabling the auditor to express an opinion in whether the financial statements are prepared in all material respects in accordance with applicable reporting framework while a limited audit has a more restricted scope than a full audit. In this type of audit, the audit team confines its operations to certain audit procedures, or only examines certain functional areas of an organization.


    loving the simple explanation

  3. what a relieve!! I have better understanding from your text. thanks alot

  4. This really helped with understanding for my audit and assurance essay – many thanks!!

  5. what is difference btn statutory audit & limited audit?

  6. From my own point of view

    The explanation was very simple. I also understand that we can summarise it by
    Criteria the are the standards or rules which are going to be followed in order to tackle the subject matter
    Report self explanatory
    Evidence ie have you gathered enough evidence in order to give a true report
    Subject the subject matter of course are the financial statements
    Third party relation for example management

  7. Comment:please help me define auditing as an assurance service.I need it Asap.

  8. Wow,simple and clear explanation

  9. Griselda Sackey

    thank you……. simple explanation and easy to understand

  10. Albert Mnkandla

    thanks with simple explanations to undestand…..

  11. What is the difference between statutory and non-statutory assurance engagements?


Please enter your comment!
Please enter your name here