According to International Framework on Assurance Engagements, there are five elements of any assurance engagement which are as follows:
- A three party relationship involving practitioner (auditor), a responsible part (client) and intended users (users of financial statements)
- Subject matter; against which assurance is required by the intended users
- Criteria; which will be used by the practitioner to assess the subject matter
- Gathering of sufficient appropriate evidence; based on which practitioner will express his opinion regarding subject matter
- Expression of an opinion; which will be done by the practitioner through written report
These are FIVE ingredients of any and every assurance engagement and in the absence of any of the above five elements it can be an engagement but NOT an assurance engagement.
Students must remember that assurance engagement does not only mean audit engagement. Audit engagement is one type of assurance engagement. Other types include, review engagements and other assurance engagements which are not audit and review engagements.