(a) Meaning of assurance
Assurance is 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 involves providing an independent opinion or conclusion, typically on financial or non-financial information, to improve its reliability and credibility for stakeholders.

(b) Difference between an audit and a review of historical financial statements

1. Level of Assurance: An audit provides a high level of assurance (reasonable assurance) that the financial statements are free of material misstatement, while a review provides limited assurance, confirming no material modifications are needed based on inquiries and analytical procedures.
2. Scope of Work: An audit involves extensive procedures, including testing of internal controls, substantive testing, and obtaining sufficient audit evidence. A review is less extensive, primarily involving inquiries of management and analytical procedures, with no testing of controls or detailed substantive testing.
3. Objective and Outcome: An audit aims to express an opinion on whether the financial statements present a true and fair view in accordance with the applicable financial reporting framework. A review aims to determine whether anything has come to the practitioner’s attention that suggests the financial statements are not prepared in accordance with the framework, resulting in a conclusion rather than an opinion.