Summary of the Auditor’s Approach to a SSGA and a MSE

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The fundamental principles and concepts applied to all audits and other engagements are to be applied equally to a SSGA and a MSE, including:

  1. The exercise of professional judgement and professional scepticism;
  2. Compliance with quality control and ethical requirements;
  3. Assessment of the appropriateness of subject matter and suitability of the criteria; and
  4. Materiality, risk assessment, sufficient appropriate evidence to obtain the level of assurance required and sufficient appropriate documentation.

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To illustrate the progressive approach to be adopted in conducting a SSGA and a MSE, Table 2 lists the main phases and steps in an assurance engagement under the AUASB Standards.

Table 2: The Main Phases and Steps in a SSGA and a MSE for an Assurance Engagement

Main Phases

Steps in an Assurance Engagement

Documentation and Quality Control [12]

Accepting

 
  • Firm capabilities and ethical requirements, including independence
  • Determining the acceptability of the engagement and the client relationship
  • Determining preconditions for the assurance engagement and agreeing the terms
  • Establishing engagement objectives [subject matter(s); level(s) of assurance; and reporting]


All phases of the Engagement are:

Documented in accordance with the requirements of the relevant AUASB Standards;

and


Subject to quality control policies and procedures that comply with the requirements of the relevant AUASB Standards

Planning

 
  • Understanding the entity to:
    • set materiality;
    • identify and assess risks of material misstatement/non-compliance; and
    • develop the overall strategy and plan the detailed work

Performing

 
  • Implementing the planned approach to obtain sufficient appropriate evidence
  • Evaluating evidence obtained

Reporting
  • Forming conclusions
  • Reporting [expressing the overall conclusion(s)]

For specific details of the approach and steps involved in an assurance engagement, refer to the relevant AUASB Standards - Australian Auditing Standards, Standards on Review Engagements and Standards on Assurance Engagements.

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Quality control and documentation requirements are found in the AUASB Standards comprising: the Australian Auditing Standards, Standards on Review Engagements, Standards on Assurance Engagements and Standards on Related Services.  They include, but are not limited to, ASQC 1Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information, Other Assurance Engagements and Related Services Engagements; ASA 220 Quality Control for an Audit of a Financial Report and Other Historical Financial Information; ASA 230 Audit Documentation; ASAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information and ASRS 4400.