Assurance Options Available from a Chartered Accountant

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Assurance Options Available from a Chartered
Accountant
Craig Fisher, Chair, Professional Standards
Board Helen Prangnell, Director Professional
Standards
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Who We Are

• Professional Standards Board

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Problem
Audited financial statements are often requested
from recipients of grants/funds and potential
funding recipients as a matter of course
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Why is this a Problem?

• Cost annually audited financial statements are
  not a mandatory requirement for all organisations
• Supply/demand issue
• Audited financial statements may not be providing
  the desired assurance

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An Audit (of financial statements) is NOT (unless
scoped into the terms of the engagement)

• primarily designed to detect fraud
• specific assurance as to how the grant has been
  spent
• any sort of assurance of financial viability
• a sign-off on process
• an opinion on internal systems

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Dilemma
ability to specify and monitor the use of funds vs ability to comply with reporting and other accountability requirements
There is no single set of procedures that would
be optimally effective for the good management of
all funding arrangements
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Types of services

• Audit - provides an opinion designed to give
  reasonable assurance on something (information or
  process/compliance)

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An Audit is designed to provide reasonable
assurance that

• information is free from material misstatement
• e.g. full set of financial statements, summary of
  receipts payments
• OR
• people have performed their accountability
  function in all material respects
• e.g. terms of the grant, rules/regulations of the
  entity

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Types of services (contd)

• Audit - provides an opinion designed to give
  reasonable assurance on something (information or
  process/compliance)
• Review provides an opinion designed to limited
  assurance
• Compilation accounting expertise used to
  compile and present information no opinion
  expressed
• Agreed-upon Procedures specific procedures
  performed and factual findings reported

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Types of services (contd)

• Different level of assurance therefore lends
  different levels of credibility
• Different report communicates the extent of
  work performed and the degree of responsibility
  accepted by the accountant

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Subject matter (audit and review)
It is important to specify what you require
assurance on
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Who should perform the work?

• Someone with appropriate skills and expertise in
  the type of work (a member of the Institute must
  comply fully with the Institute's Code of Ethics
  and relevant engagement standards)
• For an audit/review/agreed-upon procedures -
  someone independent of the subject matter and
  those responsible for the subject matter

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Our suggestions

• Decide what your objective is in
  monitoring/accountability
• Consider the available assurance and other
  options
• Have a threshold for audit requirement
• Specify who should carry out the work

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Questions? Contact psd_at_nzica.com