RIVERA, CHRISTINE NICOLE P.

AC516 7:30-10:30 TTH

PSA 120
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December 8, 2015
(Approval date: Oct. 29, 2001)

Issued by Auditing Standards Practices Council (ASPC) based on International

Standards on Auditing
Purpose: to describe the framework within which PSAs are issued in relation
to the services which may be performed by an auditor

FINANCIAL REPORTING FRAMEWORK

Financial statements need to be prepared in accordance with one or combination of:
GAAP
IAS
Another authoritative and comprehensive financial reporting framework
which has been designed for use in financial reporting and is identified in the
financial statements

FRAMEWORK FOR AUDITING AND RELATED SERVICES

Related Services
I.
II.
III.
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Review Engagement
States whether anything has come to the auditors attention that the financial
statements are not fairly presented
Level of assurance: Moderate
Form of expression in report: Limited Assurance (negative)
Agreed-upon Procedures
Report restricted to parties who agreed to the procedures to be performed
Level of assurance: None
Form of report: Factual findings
Compilations
Use of accounting expertise rather than auditing
No need to test assertions
Level of assurance: None
Form of report: Compiled information

Audit
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Enhances credibility of financial statements

Provides only high, not absolute, assurance because of:
Need for judgment
Use of testing (sample)
Inherent limitations of internal control systems
Evidence are persuasive rather than conclusive

AUDITOR ASSOCIATION WITH FINANCIAL INFORMATION

When auditor attaches a report to that information or consents to use name in a
professional connection

*Difference between PSA 120 and ISA 120:

Deletion of the section on public sector perspective