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REPORT WRITING &
INDEPENDENT REVIEW
PRESENTED BY FAITH NGWENYA
TECHNICAL & STANDARDS SERVICES EXECUTIVE
REPORT WRITING - CPD 2017
1
Professional Accountant
REPORT WRITING - CPD 2017
2
QUALITY CONTROL ISQC 1
REPORT WRITING - CPD 2017
3
Leadership
responsibilities
Ethical
requirements Acceptance and
continuance
Human
Resources .
Engagement
performance
Monitoring
ISQC 1
ISQC 1 RISK AND COMPLIANCE
REPORT WRITING - CPD 2017
4
Leadership
responsibility
Monitoring
Independence &
ethical
requirements
Client acceptance
& continuance
Human Resources
Engagement
performance
No on -going review of
policies and procedures
No cold file reviews (audit)
-Lack of supervision and
control
-Methodology (audit) not
effective
- References not obtained for new staff
-Fit and proper declarations not obtained
- Insufficient training on ISA/IFRS and record keeping
-Staff appraisals not done or informal
Non-compliance
with ISQC1
Policies and procedures not
documented
- Independence declaration
from staff not obtained
- Register of identified
threats & safeguards not
maintained
- No integrity checks plus
client identification
- Procedures not
documented -
- Engagement letters
not issued
REPORT WRITING - CPD 2017
5 Leadership responsibility
Leadership responsibility
Organisation structure
Setting tone from the
top
Establish policies &
procedures
Document policies &
procedures
Communicate with staff
Enforcement of policies
SETTING TONE AT THE TOP
REPORT WRITING - CPD 2017
6
Tone at the top
Associate with right
clientsClear
standards & robust
processes
Recruitment of skilled & competent
staffCommitment
to technical excellence &
quality
Performance of effective &
efficient reviews
Commitment to continuous improvement
ETHICAL REQUIREMENTS
REPORT WRITING - CPD 2017
7
Code of Conduct
IndependenceEthical
dilemma procedures
INDEPENDENCE
REPORT WRITING - CPD 2017
8
Compilation
Independent review
Audit
Independence of Decision making
Independent of business entity
Independence
of record
keeping and
compilation
INDEPENDENCE
REPORT WRITING - CPD 2017
9
AppointmentRegulations &
standardsServices agreed
uponExecution of performance
Acceptance & continuance
Engagement letter & planning
Engagement performance
Compliance of performance
Independence
INDEPENDENCE AND ETHICS
REPORT WRITING - CPD 2017
10
01 02
04 03
Obtain information on potential threat to
independence & ethicsEvaluate any threats to
independence & ethics
Document & report on
conclusions
Take appropriate action to mitigate
the risks to ethics & independence.
Obtain
information Evaluate
Document Action
ACCEPTANCE AND CONTINUANCE
REPORT WRITING - CPD 2017
11
Acceptance and
continuance
Integrity of the client
Can comply with ethical
requirements Practice is competent
and & has sufficient
time, resources &
competence
HUMAN RESOURCES
REPORT WRITING - CPD 2017
12
Recruitment and Appointment
Professional
development
Values
Performance evaluation,
compensation &
promotions
MotivationCompetence
Quality of work
Ability/Aptitude
ASSIGNMENT AND ENGAGEMENT TEAM
REPORT WRITING - CPD 2017
13
Identity and role of engagement partner communicated
Engagement partner has appropriate capabailities,
competence, authority & time
Responsibilities of engagement partner clearly defined &
communicated
ENGAGEMENT PERFORMANCE
REPORT WRITING - CPD 2017
14
Performance
obligations
Regulatory
requirements
Professional
Standards
ENGAGEMENT PERFORMANCE
Performance Activity Performance Criteria
Engagement letter Service/agreed upon deliverables
Resource allocation Competence-engagement fit
Planning engagement Responsibility & accountability duties
Monitoring Quality assurance – supervision & review strategies &
reports
Work flow planning Integrated work plan documented and sign off
Reporting File & report review processes
Performance obligations Document discussions & communicationsREPORT WRITING - CPD 2017
15
CONSULTATION OR SECONDMENTS
REPORT WRITING - CPD 2017
16
• Appropriate consultation has taken place on
difficult issues
• Sufficient resources available to enable appropriate
consultation
• Nature and scope of consultations documented
• Conclusions reached from consultations are
documented & implemented
CONSULTATION OR SECONDMENTS
Strategy Objective
Supervision Risk identification & provide guidance
Monitoring Continuous quality assurance review to
prevent risks
Review Ensure compliance & correction of risks
Documentation Proof of evidence
REPORT WRITING - CPD 2017
17
MONITORING
REPORT WRITING - CPD 2017
18
Establish a monitoring process designed to provide it with
reasonable assurance that policies & procedures relating to
the system of quality control/assurance are relevant, adequate
& operating efficiently.
Internal assessment
Functionality & compliance
External assessment
Relevance & benchmarking
Professional assessment
Inspection & compliance
Compilation Engagement
[ISRS 4410]
Prepared by:
Rashied Small, Hashim Salie, Shafiek Dollie & Yaeesh Yasseen
REPORT WRITING - CPD 2017
19
Public Interest Score
Public Interest Score: The public interest score is a mechanism introduced by the Companies Act that determines:
(i) the type of engagement that must be performed,
(ii)accounting framework that must be adopted, and
(iii)corporate governance issues that should
be complied with
REPORT WRITING - CPD 2017
20
PUBLIC INTEREST SCORE COMPONENTS
REPORT WRITING - CPD 2017
21
PUBLIC INTEREST SCORE - CRITERIA
A number of points that equal the average number of
employees during the financial year.
One point for every R 1 million (or portion thereof) in
third-party liabilities at the financial year end.
One point for every R 1 million (or portion thereof) in
turnover during the financial year
One point for every individual who, at the end of the
financial year, is known to directly or indirectly have a
beneficial interest.
REPORT WRITING - CPD 2017
22
1. Is the company a public
company or a state-owned
company?
2. Is company a private company
and controls fiduciary assets
>R5m?
Yes Audit
No
Application of PIS to
Private Companies and
CCs
Owner
Managed
Greater/=
than 350 PIS
Yes
No
Audit
No
Audit/N
o IR
Non-
Owner
Managed
Less than 350 PIS
and
greater/equal to
than 100 PIS
Independe
nt Review
Int Ext
Less than 100 PIS
Is entity
CCYes
Acc
Officer Non CA/CA
CA
Greater/=
than 350 PIS
Less than 350 PIS and
greater/equal to than 100 PIS
EXT
INT
OM <
100
No
Aud/IR
Duties of
Acc Off
PUBLIC INTEREST SCORE - APPLICATION
Public Interest Score Financial Reporting Standard Audit
PIS ≥ 350 IFRS / IFRS for SMEs YES
PIS ≥100 and < 350 and AFS were
internally compiled
IFRS / IFRS for SMEs YES
PIS ≥ 100 and < 350 and AFS
independently compiled
IFRS / IFRS for SMEs NO
PIS < 100 and AFS independently
compiled
IFRS / IFRS for SMEs NO
PIS < 100 and AFS internally
compiled The Financial Reporting Standard as
determined by the company for as long as
no Financial Reporting
Standard is prescribed
NO
REPORT WRITING - CPD 2017
24
PUBLIC INTEREST SCORE - PRACTITIONERS
REPORT WRITING - CPD 2017
25
COMPILATION – ISRS 4410
Assurance:
A compilation does not involve and audit or review, no assurance about the financial statements is
providedCompilation provide “implied
assurance” about the fair presentation and relevance of the financial statements (requirement of accounting standards) and the procedures prescribed in terms
of ISRS 4410REPORT WRITING - CPD 2017
26
LEGISLATION
REPORT WRITING - CPD 2017
27
• Responsibilities of the compiler and the procedures to follow
• Competence required to perform the compilation
• Qualitative characteristics and presentation of financial information
• S 29 and s30 requires the compilation
Companies Act
Accounting Standards
ISRS 4410ISQC 1
Compilation Engagement
Compilation is defined as an
engagement in which the
professional applies his accounting
and financial competence to assist
management to prepare financial
statements in accordance with the
appropriate accounting framework
based on information provided by
management.
REPORT WRITING - CPD 2017
28
When should a compilation be performed
Co
mp
ila
tio
n
Assist management in making judgement in compiling financial statements
Management requires reports for decision making
For planning purpose – support financial and tax planning
Supporting documentation – valuation or sale of a business or interest in a business
Purposes of other engagements – base for review or audit engagement
REPORT WRITING - CPD 2017
29
Compiler’s Responsibilities
REPORT WRITING - CPD 2017
30
Compiler
Independence
Financial statement risks
Verification of information
When are the uses of a compilation?
Use
s o
f c
om
pila
tio
n
Assist management in making judgement in compiling financial statements
management requires reports for decision making purposes
For planning purpose – support financial and tax planning
Supporting documentation – valuation or sale of a business or interest in a business
Purposes of other engagements – based of review and audit engagement
REPORT WRITING - CPD 2017
31
What are the benefits of compilations?
Be
ne
fits
of c
om
pila
tio
n
Cost effective – save time and money because of the work required
Use of an expert – technical financial reporting competence and ethics
Flexible and targeted engagements – compilation can be used as an agreed upon engagement
Independence – improve the quality and integrity of the financial statements
REPORT WRITING - CPD 2017
32
What are the procedures for a compilation?
Accept
• Apply risk assessment of the client – risk profile fit (ISCQ 1)
• Engagement letter – competent to accept the engagement
Plan
• Understand the nature of the business and its operations
• Understand and evaluate the accounting system
Execute
• Reconcile the financial information with the accounting records
• Discuss significant matters and judgements with management
Report
• Discuss the financial statements with management
• Prepare the compilation report
REPORT WRITING - CPD 2017
33
What preparation is required for a compilation?
Accepting the
engagement
Code of Ethical Conduct
[objectivity ,integrity,
professional conduct & competence, due care, confidentiality]
ISRS 4410 –Compilation Engagement
[objective, purposes and procedures]
Professional judgement
[fair representation of financial statements]
Quality control
[competence to perform task, quality control procedures]
REPORT WRITING - CPD 2017
34
Checklist before accepting a compilation
Ac
ce
pta
nc
e
Ch
ec
klist
Risk assessment of client – fits practice risk profile
Management’s integrity – reliance placed on information provided for compilation
Previous accountant – reasons for change or reason for appointment
Purpose of assignment – needs of the external and/or internal users
Internal controls – reliability of accounting systems to produce accurate information
Competence of professional – ability to perform the engagement
REPORT WRITING - CPD 2017
35
Mini Case Study
Client 1:
Technology business that is known for its integrity and innovation. The owners are involved in community activities and established a strong relationship. The client has been referred by the previous accountant (a trusted friend who is retiring) and stated that there is no professional reason not to accept the client.
Client 2:
Entertainment business that opened a casino in the heart of the community. The community including law enforcement agencies has petitioned the establishment and requested the relocation of the business because of their concerns about the possible negative social impact it may have on the community. To date the financial statements of the business was prepared internally.
REPORT WRITING - CPD 2017
36
What factors to consider for a compilation?
Fa
cto
rs t
o c
on
sid
er
Public Interest Score – legislative requirements
Purpose of compilation – will external users place reliance on the financial statements
Benefits of professional’s competence – benefits management can gain from the assistance
Limitation of financial statements – historical costs principle and the judgement
REPORT WRITING - CPD 2017
37
What are the key contents for a compilation?
En
ga
ge
me
nt
co
nte
nt Customised – specific to satisfy the requirements and
circumstance of engagement
Objectives and scope – explicit statement that it is a non-assurance engagement (no audit)
Responsibilities – details of management’s and professional responsibilities
Purpose of financial statements – users, purposes and distribution
Reporting – nature and type of reporting as well as means/channels of communication
REPORT WRITING - CPD 2017
38
What must be done for recurring engagement?
NO CHANGES
Circumstance and conditions of the engagement does not change – no need to issue a new engagement letter
Changes
- Misunderstanding of compilation
- Changes in terms of engagement
- Changes in management
- Changes in ownership of business
- Changes in nature of business
- Changes in accounting framework
REPORT WRITING - CPD 2017
39
What other factors should be considered?
Use and distribution of reports
Publication of financial statements (website)
Supporting schedules prepared by management
Reliance placed on information received from third parties
Billing arrangements
Other Services
REPORT WRITING - CPD 2017
40
What are the critical processes in planning?
Planning of compilation
Communication
- Management
- Compilation team
- Team & client staff
Business
- Nature of business
- Governance
Materiality
- Context of IFRS
- Misstatements
- Reliability
Procedures
- ISRS 4410
- System & controls
- Reconcile records
REPORT WRITING - CPD 2017
41
What procedures are followed for a compilation?
Pro
ce
du
res
Understanding the business – assess the level of risks and materiality
Understanding the accounting system – type of transactions and accounting records
Estimates and judgement – assess the accuracy and reliability of judgements
Incomplete information – obtain explanations from management (evidence)
Unusual transactions – investigate significant transactions and variances in balances
REPORT WRITING - CPD 2017
42
Compilation - Procedures
REPORT WRITING - CPD 2017
43
What procedures are followed for compilation?
Discussions
• Nature of business
• Accounting system
• Principles & practice
• Judgements
• Reconcile to records
• Incomplete data
Consideration
• Judgements –reasonability
• Unusual transactions – recognition
• Completeness – cut-off procedures
• Fair representation -truthfulness
Customisation
• Compliance –accounting framework
• Adjustments to statements
• Recommendations to management
• Concerns - resolved
REPORT WRITING - CPD 2017
44
What contents is part of compilation report?
Preparation of financial statements – based on information provided by
management
Responsibilities of management – relation to governance, compilation
engagement and financial statements
Accounting Framework used for the preparation of the financial statements
Compliance with format of financial statements – components of the statements
Responsibilities of compiler – complied with ISRS 4410 (procedures) and ethical
behaviour
Not an assurance function:
no need to verify the transactions and information provided by management
No opinion is expressed
Special purpose – description of the engagement and use of the statements
REPORT WRITING - CPD 2017
45
Review Engagement
[ISRE 2400]
Prepared by:
Rashied Small, Hashim Salie, Shafiek Dollie & Yaeesh Yasseen
REPORT WRITING - CPD 2017
46
Review Engagement
A review provides limited assurance that the financial statements conform to generally accepted accounting principles.
This type of assurance is known as negative assurance. This means that as the professional accountant is only providing assurance that nothing has come to their attention that would indicate the financial information is not presented in accordance with accounting standards.
REPORT WRITING - CPD 2017
47
What is the objective of a review?
The professional accountant inquires and performs procedures to
determine whether the financial statements prepared by
management is free from material misstatements due to fraud
and errors.
In a review the professional accountant provides limited or
moderate assurance about the fair presentation and reliability of
the financial statements – nothing has come to the attention of
the reviewer that the financial statements do not fairly presents, in
all material respect in accordance with the accounting
framework.
REPORT WRITING - CPD 2017
48
When is the independent review used?
Use
of re
vie
w
Provide users of financial statements with some assurance – level of reliability
To support proposals and applications for financing or change in ownership through sale of interest
Provide assurance of compliance to reporting regulations
Supporting management with internal review of the business
Support the risk management strategy and governance of the business
REPORT WRITING - CPD 2017
49
What are the benefits of a review?
Be
ne
fits
of re
vie
w
Cost effective – gain limited assurance on the reliability of the financial statements
Limited assurance – financial statements are free of material misstatement
Flexible and targeted engagements – review focuses on the areas of potential risks of misstatement
Use of expert – reviewer’s experience can be used as a risk management strategy
REPORT WRITING - CPD 2017
50
What are the pre-condition for a review?
The accounting framework used to prepare the financial
statements must be acceptable and appropriate for the business.
The scope to conduct a review should not be restricted as a result
of management not be willing grant the professional accountant access to the accounting records
and documents supporting the financial statements.
Proceed with
review
REPORT WRITING - CPD 2017
51
What are steps involved in a review?
Determine whether a review is necessary and appropriate
Identify potential risks that may result in material misstatement of the financial statements
Perform the review by applying appropriate procedures –analytical procedures as per ISRE 2400
Conduct additional procedure for areas of possible risks of misstatement
Prepare the review report – arrive at a conclusion (limited assurance)
REPORT WRITING - CPD 2017
52
Parties Responsibilities
REPORT WRITING - CPD 2017
53
What are the procedures for a review?
Accept
• Apply risk assessment of the client – risk profile fit (ISCQ 1)
• Engagement letter – competent to accept the engagement
Plan
• Understand the nature of the business and its operations
• Identify areas of material misstatement in financial statements
Execute
• Perform analytical procedures – obtain sufficient evidence
• Perform additional procedures on areas of risk
Report
• Evaluate evidence obtained – communication with management
• Prepare the review report
REPORT WRITING - CPD 2017
54
What preparation is required for a review?
Accepting the
engagement
Code of Ethical Conduct
[objectivity ,integrity,
professional conduct & competence, due care, confidentiality]
ISRE 2400 – Review Engagement
[objective, purposes and procedures]
Professional judgement
[fair representation of financial statements]
Quality control
[competence to perform task, quality control procedures]
REPORT WRITING - CPD 2017
55
What is professional skepticism?
Professional skepticism is an attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of evidence.
Attitude to be able to:
Identify and respond to conditions that indicate possible misstatement
Critically assess evidence obtained
Question managements explanations and representations
Draw conclusions based and the facts and evidence obtained
REPORT WRITING - CPD 2017
56
What is professional judgement?
Professional judgment involves the application of competence
and experience in making informed decisions about the courses
of action that are appropriate for the circumstances.
Circumstances where professional judgement may be used:
Determining materiality for the engagement
Determining areas of possible material misstatement of statements
Allocating of staff members that fits their competence levels
Designing analytical and additional procedures for the engagement
Evaluating evidence to support the conclusion - sufficiency
REPORT WRITING - CPD 2017
57
Checklist before accepting a review
Ac
ce
pta
nc
e
Ch
ec
klist
Risk assessment of client – fits practice risk profile
Owner’s and management’s integrity – misuse of the review report (claiming it is an audit)
Quality of information – risk that the information required may not be reliable or available
Purpose of assignment – management may use the review to avoid negative audit reports
Outstanding matters – significant matters impacting performing the review effectively
Complexity of business – financial statements are complex and requires specialized knowledge and experience
REPORT WRITING - CPD 2017
58
ENGAGEMENT LETTER
REPORT WRITING - CPD 2017
59
Engagement letter
Purpose &
objectiveFinancial
statement risk
Mgnt’sresponsibility
Restriction on scope
Procedures
Reporting
What factors to consider for a review?
Fa
cto
rs t
o c
on
sid
er
Public Interest Score – legislative requirements
Integrity of management – indication of unethical behaviour, infringement of regulations or unwillingness to
provide information
Limitation on scope – restriction on access to information or staff, unrealistic deadlines or quality of information
Internal controls – process and procedures to mitigate risks of material misstatement of financial statements
REPORT WRITING - CPD 2017
60
What are the key contents for a review?
En
ga
ge
me
nt
co
nte
nt Customised – specific to satisfy the requirements and
circumstance of engagement
Objectives and scope – explicit statement that it is not an audit but limited assurance is provided
Responsibilities – details of management’s and professional responsibilities
Purpose of financial statements – users, purposes and distribution
Reporting – nature and type of reporting as well as means/channels of communication
REPORT WRITING - CPD 2017
61
What must be done for recurring engagement?
NO CHANGES
Circumstance and conditions of the engagement does not change – no need to issue a new engagement letter
Changes
- Misunderstanding of compilation
- Changes in terms of engagement
- Changes in management
- Changes in ownership of business
- Changes in nature of business
- Changes in accounting framework
REPORT WRITING - CPD 2017
62
What are the critical processes in planning?
Planning of review
Communication
- Management
- Compilation team
- Team & client staff
Business
- Nature of business
- Governance
Materiality
- Context of IFRS
- Misstatements
- Reliability
Procedures
- ISRE 2400
- Analytical procedures
- Additional procedures
REPORT WRITING - CPD 2017
63
MATERIALITY
REPORT WRITING - CPD 2017
64
Material risks
Prior results
Industry practice
Mgnt’sjudgement
Transactions
What are causes of material misstatements?
Material misstatement is when it would significantly change or
influence the decisions of informed users of the financial statements.
Possible causes of misstatement of financial statements:
Fraud and errors (recognition and measurement)
Departure from the accounting framework
Inappropriate estimates
Lack of full disclosure of significant matters
REPORT WRITING - CPD 2017
65
Review - Procedures
REPORT WRITING - CPD 2017
66
Review procedures
Understand business
Accounting systems
Financial statement assertions
Analytical procedures
Accounting framework
Information risk
What procedures are followed for a review?
Pro
ce
du
res
Understanding the business – assess the level of risks and materiality
Identifying misstatements – identify possible risks of misstatement of financial statements
Evaluate internal controls – assess controls to mitigate material misstatements
Analytical procedures – obtain evidence for possible misstatement identified
Additional procedures – investigate and obtain evidence relating to material misstatements
REPORT WRITING - CPD 2017
67
What contents is part of review report?
Responsibilities of management – relation to governance, review engagement
and preparation of financial statements
Accounting Framework used for the preparation of the financial statements
Compliance with format of financial statements – components of the statements
Responsibilities of reviewer – complied with ISRE 2400 (procedures) and ethical
behaviour
Limited assurance function:
Evaluate the misstatement of financial statements
Draw a conclusion on whether financial statements are free of material
misstatement
Purpose of engagement – description of the engagement and use of the
statements
REPORT WRITING - CPD 2017
68
FORMING AN APPROPRIATE
CONCLUSION
REPORT WRITING - CPD 2017
69
Negative Assurance:
Reviewer is satisfied based on the
evidence obtained that the
financial statements are free of
misstatements
Qualification of Assurance:
The nature of matters may render the
financial statements misleading, a
qualified or adverse opinion may be
expressed.
COMPARISONS
Compilation Independent review Audit
Level of assurance obtained
by Accountants or Auditors
that the financial statements
are not materially misstated
Accountant does not obtain
or provide any assurance that
there are no material
modification that should be
made to the financial
statements
Accountant obtains limited
assurance that there are no
material modification that
should be made to the
financial statements
The auditor obtains a high,
but not absolute, level of
assurance about whether the
financial statements are free
of material misstatement
Objective To assist management in
presenting financial
information in the form of
financial statements without
undertaking to provide any
assurance that there are no
material modifications that
should be made to the
financial statements
To obtain limited assurance
that there are no material
modification that should be
made to the financial
statements
To obtain a high level of
assurance about whether the
financial statements as a
whole are free of material
misstatement thereby
enabling the auditor to
express an opinion on
whether the financial
statements are presented
fairly, in all material respects
REPORT WRITING - CPD 2017
70
COMPARATIVE ANALYSIS
COMPARISONSCompilation Independent review Audit
Assurance provided to
the user of the financial
statements
None – the report states that no assurance
is provided
None – the report provides a
statement that the accountant is
not aware of any material
modifications that should be
made to the financial statements
None – the auditor provides an
opinion as to whether the financial
statements present fairly, in all
material respects, the company’s
financial position, results of
operations and cash flows
Situations requiring different
levels of service
Generally appropriate or privately held
companies and are often prepared for
simple situations (e.g., a lender needs IFRS
financial statements instead of the
statements the internal accounting system
produces or the lender needs the comfort
provided by knowing that an accountant
read the financial statements)
Often prepared for privately held
companies because of
requirements of outside third parties
(such as banks, creditors and
potential purchasers) that are
looking for comfort that the
financial statements are not
materially misstated
Often prepared for companies
because outside third parties
(such as banks, creditors,
potential purchasers and outside
investors) require an auditor’s
opinion on the financial
statements
REPORT WRITING - CPD 2017
71
Agreed upon Engagement
[ISRS 4400]
REPORT WRITING - CPD 2017
72
Agreed upon Engagement
An agreed-upon procedures
engagement is an engagement in
which an auditor/professional
accountant is engaged to carry
out those procedures of an audit
nature to which the auditor and
the entity and any appropriate
third parties have agreed and to
report on factual findings.
REPORT WRITING - CPD 2017
73
What is objective of agreed upon engagement?
The objective of an agreed-upon procedures engagement is for the professional accountant to:
carry out procedures of an investigative nature to which the parties have agreed
report on factual findings
No assurance is expressed – provide a factual findings reports without expressing an opinion or making recommendations
Users of the report assess the findings reported and draw their own conclusions from the work performed
Use of the report is restricted to those parties that have agreed to the procedures to be performed - others, unaware of the reasons for the procedures, may misinterpret the results
REPORT WRITING - CPD 2017
74
What is the contents of the agreement?
REPORT WRITING - CPD 2017
75
Nature of the engagement - no audit or review (no assurance or
opinion expressed)
Purpose for the engagement
Identification of the financial information or activities to which the
agreed-upon procedures will be applied
Nature, timing and extent of the specific procedures to be
applied
Anticipated form of the report of factual findings
Limitations on distribution of the report of factual findings
What are steps involved in an engagement?
Determine the nature and complexity of the engagement
Design the procedures to be performed to conduct the engagement
Investigate and obtain sufficient evidence relating to the engagement – documents all evidence
Evaluate the evidence obtained to support the conclusion
Prepare the engagement report – prepare a factual findings report
REPORT WRITING - CPD 2017
76
What preparation is required for a engagement?
Accepting the
engagement
Code of Ethical Conduct
[objectivity ,integrity,
professional conduct & competence, due care, confidentiality]
ISRS 4400 –Agreed upon Engagement
[objective, purposes and procedures]
Procedures
[investigation of financial and non-
financial information]
Quality control
[competence to perform task, quality control procedures]
REPORT WRITING - CPD 2017
77
What contents is part of engagement report?
Purpose of engagement – description of the engagement and use of the report
Not audit or review – no assurance or opinion expressed
Responsibilities of management – facilitate the engagement process
Responsibilities of professional accountant – complied with ISRS 4400
(procedures) and ethical behaviour
Procedures that will be applied
Limitation of engagement:
Financial information that engagement relates to
Distribution and use of the report
Format of the report
Fee structure and timeframe
REPORT WRITING - CPD 2017
78
Engagement Letter
Prepared by:
Rashied Small, Hashim Salie, Shafiek Dollie & Yaeesh Yasseen
REPORT WRITING - CPD 2017
79
What is an Engagement Letter (E.L.)?
Engagement letters are a key document in the relationship between you and your client, providing a written confirmation of the work that will be carried out
“Agreement of service” binding the Profession Accountant with the client.
“Service Level Agreement” which stipulates the nature, type and conditions of services to be performed
Engagement letter is a legal contract which is binding on the parties to the agreement
REPORT WRITING - CPD 2017
80
What is the purpose of E.L.?
Ensures both parties are on the
same page
Serves as a risk management tool
Forms the foundation of client
communication and trust
Mandatory in your practice –
quality control.
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What are the primary contents?
Purpose and objectives of the assignment
Responsibilities of management
A statement stating the professional is an independent
contractor.
Standards that will be followed for the terms of the assignment
Reporting format and communication channels
Deliverables of the assignment
Type and timing of the assignment - timeframe
Basis of determining cost for the assignment
Procedures for amendments to the assignment
State any limitationsREPORT WRITING - CPD 2017
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