PSA 120 Framework of Philippine Standards on Auditing

Sec 1 INTRODUCTION
1 ASPC authorized to issue PSA. Purpose of this document is to describe the
framework within which PSAs are issued in relation to the services which may be
performed
2 term auditor used to describe both auditing and related services
Sec 2 FINANCIAL REPORTING FRAMEWORK
3 FS need to be prepared in accordance with or combination of accounting
standards generally accepted in the Philippines, International Accounting
Standard, other authoritative and comprehensive financial reporting
framework
SEC 3 FRAMEWORK FOR AUDITING AND RELATED SERVICES
4 distinguishes audits from related services. Related services include review
(moderate assurance, negative assurance) agreed upon procedures (no assurance)
and compilation (no assurance)
5 does not apply to other services
SEC 3 LEVELS OF ASSURANCE
15 Definition of assurance. (Assurance is the auditors satisfaction as to the
reliability of an assertion)
16 Audit engagement high, not absolute, level of assurance. Expressed positively
as reasonable assurance
17 Review engagement moderate level of assurance. Expressed negative form
18 Agreed upon procedures no assurance
19 Compilation engagement no assurance
SEC 4 AUDIT
20 Objective of an audit of FS is to enable the auditor to express an opinion whether
the FS are prepared in all material respects, in accordance with fs framework.
21 Obtaining sufficient appropriate audit evidence to form audit opinion
22 Opinion enhances credibility of FS
SEC 5 RELATED SERVICES
14-16 Review. Objective of review of FS is to state whether anything has come to
the auditors attention that causes auditor to believe that FS are not prepared in all
material respects in accordance with an identified FS framework (procedures of this
DO NOT provide all evidence required in an audit) Procedures comprises inquiry and

analytical procedures, does not ordinarily involve assessment of accounting and

internal control systems, test of records
17 Agreed upon Procedures- 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 factual findings
18 Compilations accountant engaged to use accounting expertise as opposed to
auditing expertise to collect, classify and summary financial information
SEC 6 AUDITOR ASSOCIATION WITH FINANCIAL INFORMATION
19 When auditor attaches a report to the financial information or consents to the
use of auditors name in a professional connection the auditor is associated with that
financial information