Hallmark Limited
a. Assurance services:
Assurance services are independent professional services usually provided by chartered accountants or any other person under their supervision with the goal of improving or providing information to decision-makers and other interested parties to enable them to make more informed, and presumably better, decisions on the subject matter.
(Marks: 5)

b. The levels of assurance services:
The degree of assurance that can be provided about the reliability of the financial statements of a company will depend on:
i. The amount of work performed in carrying out the assurance process; and
ii. The results of that work.
The resulting assurance falls into one of two categories:
Reasonable assurance: This is a high (but not absolute) level of assurance provided by the practitioner’s conclusion expressed in a positive form, for example, “In our opinion the accounts are true and fair.” The objective of a statutory audit is to provide reasonable assurance.
Limited assurance: This is a moderate level of assurance provided by the practitioner’s conclusion expressed in a negative form, for example, “Based on our review, nothing has come to our attention that causes us to believe that the accompanying financial statements do not give a true and fair view.” The objective of a review engagement is often to provide limited assurance.
(Marks: 7)

c. The components/elements of an assurance engagement:
These are:
i. A three-party relationship:

• Practitioner: The individual providing professional services that will review the subject matter and provide the assurance, for example, the audit firm in a statutory audit.
• Responsible party: The person(s) responsible for the subject matter, for example, the directors are responsible for preparing the financial statements to be audited.
• Intended users: The person(s) or class of persons for whom the practitioner prepares the assurance report, for example, the shareholders in a statutory audit.

\

ii. Subject matter: This is the information such as from the financial statements that have been prepared by the responsible parties for the practitioner to evaluate. Another example might be a cash flow forecast to be reviewed by the practitioner.

iii. Suitable criteria: This can be thought of as ‘the rules’ against which the subject matter is evaluated in order to reach an opinion. In a statutory audit, this would be the applicable reporting framework, for example, IFRS and company law.

iv. Evidence: Information used by the practitioners in arriving at the conclusion on which their opinion is based. This must be sufficient and appropriate.

v. Assurance report: The report containing the practitioner’s opinion, this is issued to the intended user following the collection of evidence.
(Marks: 8)