Chapter 09: Audit-Related Services (SRS 4400 & SRS 4410)
1. Related Services Framework: Nature & Assurance Level
Related services do NOT provide any assurance (neither reasonable nor limited). Users assess procedures and factual findings themselves.
| Engagement Type | Standard | Level of Assurance | Type of Report Issued |
|---|---|---|---|
| Agreed-Upon Procedures (AUP) | SRS 4400 (Revised) | NO Assurance | Report of Factual Findings (objective listing of results) |
| Compilation Engagement | SRS 4410 (Revised) | NO Assurance | Compilation Report (practitioner assisted in compilation without verifying) |
2. SRS 4400 (Revised): Agreed-Upon Procedures (AUP)
Core Concept of AUP
The practitioner conducts procedures of an audit nature to which the practitioner, the entity, and any appropriate third parties have agreed, and reports on factual findings. The recipients must draw their own conclusions.
| Key Element | Statutory Requirement |
|---|---|
| Independence | SRS 4400 (Revised) does not strictly require independence unless required by code of ethics or engagement terms. However, if not independent, a statement to that effect must be included in the report. |
| Agreeing Terms | Engagement letter must clearly state: (a) Nature and specific procedures to be performed; (b) Statement that no assurance will be expressed; (c) Statement that distribution is restricted to agreed parties. |
| Core Content of Report | • Identification of specific financial/non-financial info. • Listing of specific procedures performed. • Description of factual findings (sufficient detail, no subjective words). • Disclaimer: Had an audit or review been performed, other matters might have come to light. |
| Restriction on Use | Report is restricted solely to the parties that have agreed to the procedures. |
3. SRS 4410 (Revised): Compilation Engagements
Practitioner's Role
The practitioner applies accounting and financial reporting expertise to assist management in the preparation and presentation of financial information without obtaining any assurance.
| Aspect | Mandate under SRS 4410 |
|---|---|
| Management Responsibility | Management retains complete responsibility for: (1) Financial information & framework; (2) Accuracy and completeness of underlying data; (3) Significant judgments. |
| Practitioner Responsibilities | Obtain understanding of entity business, accounting records, and AFRF. Read compiled information in light of that understanding. |
| If Records Incomplete / Unsatisfactory | Request management to supply additional info. If management refuses, withdraw from engagement. |
| Practitioner's Compilation Report | Must state: (1) Compiled based on info provided by management; (2) Neither audited nor reviewed; (3) Expresses no opinion or conclusion on FS. |
4. Master Matrix: Audit vs Review vs AUP vs Compilation
| Parameter | Audit (SAs) | Review (SREs) | AUP (SRS 4400) | Compilation (SRS 4410) |
|---|---|---|---|---|
| Assurance Level | Reasonable (High) | Limited (Moderate) | Zero Assurance | Zero Assurance |
| Expression Type | Positive Opinion ("True and fair view") | Negative Conclusion ("Nothing has come to our attention") | Factual Findings (No opinion/conclusion) | Identification of compiled info (No opinion) |
| Key Procedures | Risk assessment, TOC, substantive tests, external confirmations | Inquiry & analytical procedures primarily | Agreed specific procedures (e.g. recalculation, vouching sample) | Collection, classification, summarization of data |
| Independence | Mandatory | Mandatory | Disclose if not independent | Not required (ethics compliance) |