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HKSA 300 - Planning an Audit

HKICPA Code of Ethics | 318ncoe1225.pdf | Issued Nov 2018 | Revised Dec 2025 | Effective 15 Jun 2019

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HKSAE 3000 (Revised) - Assurance Engagements Other than Audits or Reviews of Historical Financial Information

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1. Introduction and Scope

1.1 Overview

HKSAE 3000 (Revised) deals with assurance engagements other than audits or reviews of historical financial information. Audits and reviews of historical financial information are covered by Hong Kong Standards on Auditing (HKSAs) and Hong Kong Standards on Review Engagements (HKSREs) respectively.

Key Point: This standard applies to a wide range of assurance engagements including sustainability reporting, compliance with laws/regulations, value for money engagements, and internal control effectiveness assessments.

1.2 Types of Assurance Engagements

Assurance engagements include two main categories:

Attestation Engagements:

  • A party other than the practitioner measures or evaluates the underlying subject matter against criteria
  • The practitioner's conclusion addresses whether the subject matter information is free from material misstatement
  • The conclusion may be phrased in terms of:
  • The underlying subject matter and applicable criteria
  • The subject matter information and applicable criteria
  • A statement made by the appropriate party(ies)

    • Direct Engagements:

  • The practitioner measures or evaluates the underlying subject matter against applicable criteria
  • The practitioner presents the resulting subject matter information as part of, or accompanying, the assurance report
  • The practitioner's conclusion addresses the reported outcome of the measurement or evaluation

    • 1.3 Engagements NOT Covered by HKSAEs

    The following are NOT assurance engagements under HKSAEs:

  • Engagements covered by Hong Kong Standards on Related Services (HKSRS), such as agreed-upon procedures and compilation engagements
  • Preparation of tax returns where no assurance conclusion is expressed
  • Consulting (or advisory) engagements, such as management and tax consulting
  • Engagements to testify in legal proceedings regarding accounting, auditing, taxation or other matters
  • Engagements that include professional opinions that are merely incidental to the overall engagement (subject to specific conditions)

    • 1.4 Effective Date

    This HKSAE is effective for assurance reports dated on or after 15 December 2015.

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    2. Objectives

    The practitioner's objectives in conducting an assurance engagement are:

  • Obtain reasonable or limited assurance about whether the subject matter information is free from material misstatement
  • Express a conclusion regarding the outcome of the measurement or evaluation of the underlying subject matter through a written report
  • Communicate further as required by this HKSAE and any other relevant HKSAEs

    • Critical Rule: When reasonable assurance or limited assurance cannot be obtained and a qualified conclusion is insufficient, the practitioner must disclaim a conclusion or withdraw from the engagement where withdrawal is possible under applicable law or regulation.

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    3. Key Definitions

    TermDefinition
    Assurance EngagementAn engagement where a practitioner aims to obtain sufficient appropriate evidence to express a conclusion designed to enhance the degree of confidence of intended users other than the responsible party about the subject matter information
    Reasonable Assurance EngagementAn engagement where the practitioner reduces engagement risk to an acceptably low level as the basis for the practitioner's conclusion, expressed in a positive form (opinion)
    Limited Assurance EngagementAn engagement where the practitioner reduces engagement risk to a level acceptable but greater than for reasonable assurance; conclusion is expressed in a negative form ("nothing has come to our attention")
    Attestation EngagementA party other than the practitioner measures/evaluates the underlying subject matter against criteria
    Direct EngagementThe practitioner measures/evaluates the underlying subject matter against criteria and presents the subject matter information
    Assurance Skills and TechniquesPlanning, evidence gathering, evidence evaluation, communication and reporting skills distinct from expertise in the underlying subject matter
    CriteriaBenchmarks used to measure or evaluate the underlying subject matter
    Engagement RiskThe risk that the practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated
    Engaging PartyThe party(ies) that engages the practitioner to perform the assurance engagement
    EvidenceInformation used by the practitioner in arriving at the practitioner's conclusion
    Intended UsersThe individual(s), organization(s), or group(s) that the practitioner expects will use the assurance report
    Measurer or EvaluatorThe party(ies) who measures or evaluates the underlying subject matter against the criteria
    MisstatementA difference between the subject matter information and the appropriate measurement or evaluation of the underlying subject matter in accordance with the criteria
    PractitionerThe individual(s) conducting the engagement
    Professional JudgmentApplication of relevant training, knowledge and experience within the context provided by assurance and ethical standards
    Professional SkepticismAn attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement, and a critical assessment of evidence
    Responsible PartyThe party(ies) responsible for the underlying subject matter
    Subject Matter InformationThe outcome of the measurement or evaluation of the underlying subject matter against the criteria
    Underlying Subject MatterThe phenomenon that is measured or evaluated by applying criteria

    3.1 Components of Engagement Risk

    Engagement risk can be represented by:

  • Inherent Risk - The susceptibility of the subject matter information to material misstatement before consideration of any related controls
  • Control Risk - The risk that a material misstatement will not be prevented, detected or corrected on a timely basis by internal control
  • Detection Risk - The risk that the procedures performed by the practitioner will not detect a material misstatement

    • Important: Reducing engagement risk to zero is very rarely attainable or cost beneficial. Reasonable assurance is less than absolute assurance due to factors such as selective testing, inherent limitations of internal control, persuasive rather than conclusive evidence, and use of professional judgment.

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    4. Requirements

    4.1 Conduct of an Assurance Engagement in Accordance with HKSAEs

    Complying with Relevant Standards:

  • The practitioner shall comply with HKSAE 3000 and any subject matter-specific HKSAEs relevant to the engagement
  • The practitioner shall not represent compliance unless all requirements have been complied with
  • The practitioner shall have an understanding of the entire text of an HKSAE, including application and other explanatory material

    • Departure from Requirements:

    In exceptional circumstances, the practitioner may judge it necessary to depart from a relevant requirement. This is expected to arise only when:

  • The requirement is for a specific procedure
  • In the specific circumstances, that procedure would be ineffective in achieving the aim of the requirement
  • Alternative procedures must be performed to achieve the aim

    • Failure to Achieve an Objective:

    If an objective cannot be achieved, the practitioner shall evaluate whether this requires:

  • Modifying the practitioner's conclusion, or
  • Withdrawing from the engagement (where withdrawal is possible)

    • 4.2 Ethical Requirements

    The practitioner shall comply with the provisions of the Code of Ethics for Professional Accountants related to assurance engagements, or other professional requirements at least as demanding.

    Fundamental Principles of Ethics:

  • Integrity
  • Objectivity
  • Professional competence and due care
  • Confidentiality
  • Professional behavior

    • Threat Categories:

  • Self-interest
  • Self-review
  • Advocacy
  • Familiarity
  • Intimidation

    • Independence Requirements:

    Independence comprises both independence of mind and independence in appearance. Matters addressed include:

  • Fees
  • Gifts and hospitality
  • Financial interests
  • Loans and guarantees
  • Business relationships
  • Family and personal relationships
  • Long association of personnel with an assurance client
  • Provision of non-assurance services

    • 4.3 Acceptance and Continuance

    Conditions for Acceptance/Continuance:

    The practitioner shall accept or continue an assurance engagement only when:

  • No reason to believe relevant ethical requirements (including independence) will not be satisfied
  • Satisfied that those performing the engagement collectively have appropriate competence and capabilities, including sufficient time
  • The basis upon which the engagement is to be performed has been agreed through:
  • Establishing that preconditions for an assurance engagement are present
  • Confirming common understanding of the terms of the engagement

    • Preconditions for an Assurance Engagement:

    The practitioner shall determine whether:

  • Roles and responsibilities of the appropriate parties are suitable
  • The engagement exhibits ALL of the following characteristics:
  • The underlying subject matter is appropriate
  • The criteria are suitable (exhibiting relevance, completeness, reliability, neutrality, understandability)
  • The criteria will be available to intended users
  • The practitioner expects to obtain the evidence needed
  • The conclusion will be contained in a written report
  • A rational purpose exists (including meaningful level of assurance for limited assurance engagements)

    • Characteristics of Suitable Criteria:

    CharacteristicDescription
    RelevanceResults in subject matter information that assists decision-making by intended users
    CompletenessDoes not omit relevant factors that could reasonably be expected to affect decisions
    ReliabilityAllows reasonably consistent measurement or evaluation when used in similar circumstances by different practitioners
    NeutralityResults in subject matter information free from bias
    UnderstandabilityResults in subject matter information that can be understood by intended users

    Limitation on Scope Prior to Acceptance:

    If the engaging party imposes a scope limitation that would result in disclaiming a conclusion, the practitioner shall not accept the engagement unless required by law or regulation.

    Agreeing on Terms:

  • The practitioner shall agree the terms of the engagement with the engaging party
  • Terms shall be specified in sufficient detail in an engagement letter or other suitable form of written agreement
  • On recurring engagements, assess whether circumstances require revision of terms

    • Change in Terms:

    The practitioner shall not agree to a change in terms where there is no reasonable justification. If a change is made, evidence obtained prior to the change shall not be disregarded.

    4.4 Quality Management

    Engagement Partner Characteristics:

    The engagement partner shall:

  • Be a member of a firm that applies HKSQM 1 or equivalent requirements
  • Determine sufficient and appropriate resources are assigned
  • Have competence in assurance skills and techniques
  • Have sufficient competence in the underlying subject matter and its measurement or evaluation

    • Engagement Resources:

    The engagement partner shall be satisfied that those performing the engagement collectively have:

  • Appropriate competence and capabilities
  • Sufficient time to perform the engagement in accordance with relevant standards
  • Ability to issue an appropriate assurance report

    • Responsibilities of the Engagement Partner:

    The engagement partner has overall responsibility for:

  • Following firm's policies for acceptance and continuance
  • Planning and performing the engagement in accordance with professional standards
  • Reviews being performed in accordance with firm's policies
  • Appropriate engagement documentation
  • Appropriate consultation on difficult or contentious matters

    • Engagement Quality Review:

    For engagements requiring an engagement quality review:

  • The engagement partner shall discuss significant matters and significant judgments with the engagement quality reviewer
  • The assurance report shall not be dated until completion of that review

    • 4.5 Professional Skepticism, Professional Judgment, and Assurance Skills and Techniques

    Professional Skepticism:

  • Plan and perform the engagement with professional skepticism
  • Recognize that circumstances may exist that cause the subject matter information to be materially misstated
  • Includes a questioning mind, alertness to conditions indicating possible misstatement, and critical assessment of evidence

    • Professional Judgment:

  • Exercise professional judgment in planning and performing the engagement
  • Includes determining the nature, timing and extent of procedures

    • Assurance Skills and Techniques Include:

  • Application of professional skepticism and professional judgment
  • Planning and performing an assurance engagement
  • Understanding information systems and the role and limitations of internal control
  • Linking materiality and engagement risks to procedures
  • Applying procedures (inquiry, inspection, recalculation, reperformance, observation, confirmation, analytical procedures)
  • Systematic documentation and report-writing skills

    • 4.6 Planning and Performing the Engagement

    Planning Requirements:

    The practitioner shall plan the engagement so that it will be performed in an effective manner, including:

  • Setting the scope, timing and direction of the engagement
  • Determining the nature, timing and extent of planned procedures

    • Post-Acception Issues:

    If discovered after acceptance that:

  • One or more preconditions are not present → Discuss with appropriate party(ies) and determine resolution
  • Criteria are unsuitable or underlying subject matter is not appropriate → Consider withdrawal; if continuing, express qualified/adverse conclusion or disclaimer

    • Materiality:

    The practitioner shall consider materiality when:

  • Planning and performing the assurance engagement
  • Evaluating whether the subject matter information is free from material misstatement

    • Understanding the Underlying Subject Matter:

    The practitioner shall make inquiries regarding:

  • Knowledge of any actual, suspected or alleged intentional misstatement or non-compliance with laws and regulations
  • Whether the responsible party has an internal audit function and its activities and findings
  • Whether the responsible party has used any experts in preparation of the subject matter information

    • Limited vs. Reasonable Assurance - Understanding Requirements:

    AspectLimited Assurance (46L)Reasonable Assurance (46R)
    Purpose of understandingIdentify areas where material misstatement is likely to ariseIdentify and assess risks of material misstatement
    Basis for proceduresDesign and perform procedures to address identified areas and obtain limited assuranceDesign and perform procedures to respond to assessed risks and obtain reasonable assurance
    Internal controlConsider the process used to prepare subject matter informationObtain understanding of internal control over preparation, including evaluating design and determining implementation

    4.7 Obtaining Evidence

    Risk Consideration and Responses:

    AspectLimited AssuranceReasonable Assurance
    Risk identificationIdentify areas where material misstatement is likely to ariseIdentify and assess risks of material misstatement
    Procedure designDesign procedures to address identified areas and obtain limited assuranceDesign procedures to respond to assessed risks and obtain reasonable assurance
    Control testingNot specifically requiredRequired when assessment includes expectation that controls are operating effectively, or when other procedures alone cannot provide sufficient evidence

    Additional Procedures in Limited Assurance:

    If the practitioner becomes aware of a matter that causes belief that the subject matter information may be materially misstated, additional procedures shall be performed until the practitioner can:

  • Conclude the matter is not likely to cause material misstatement, or
  • Determine the matter causes material misstatement

    • Revision of Risk Assessment in Reasonable Assurance:

    If evidence is obtained that is inconsistent with the original risk assessment, the practitioner shall:

  • Revise the assessment
  • Modify planned procedures accordingly

    • Evidence Considerations:

  • Consider relevance and reliability of information to be used as evidence
  • If evidence from one source is inconsistent with another, determine what changes or additions to procedures are necessary
  • Accumulate uncorrected misstatements other than those clearly trivial

    • Work Performed by a Practitioner's Expert:

    When using a practitioner's expert, the practitioner shall:

  • Evaluate the expert's competence, capabilities and objectivity
  • Obtain sufficient understanding of the expert's field of expertise
  • Agree on the nature, scope and objectives of the expert's work
  • Evaluate the adequacy of the expert's work

    • Work Performed by Others:

  • Another practitioner: Evaluate whether the work is adequate for the practitioner's purposes
  • Responsible party's/measurer's expert: Evaluate competence, capabilities and objectivity; obtain understanding of work; evaluate appropriateness as evidence
  • Internal audit function: Evaluate organizational status, objectivity, competence, systematic and disciplined approach, and adequacy of work

    • Written Representations:

    The practitioner shall request written representations from the appropriate party(ies):

  • That all relevant information has been provided
  • Confirming the measurement or evaluation of the underlying subject matter against applicable criteria

    • Requirements for Written Representations:

  • Date as near as practicable to, but not after, the date of the assurance report
  • Evaluate reasonableness and consistency with other evidence
  • Consider whether those making representations can be expected to be well-informed

    • If Written Representations Not Provided or Not Reliable:

  • Discuss the matter with the appropriate party(ies)
  • Reevaluate the integrity of those providing representations
  • Take appropriate actions, including determining possible effect on the conclusion

    • 4.8 Subsequent Events

    The practitioner shall:

  • Consider the effect on the subject matter information and assurance report of events up to the date of the assurance report
  • Respond appropriately to facts that become known after the date of the assurance report that, had they been known, may have caused amendment to the report
  • Note: No responsibility to perform any procedures regarding the subject matter information after the date of the assurance report

    • 4.9 Other Information

    When documents containing the subject matter information and assurance report include other information, the practitioner shall:

  • Read that other information to identify material inconsistencies
  • If a material inconsistency or material misstatement of fact is identified, discuss with the appropriate party(ies) and take further action as appropriate

    • 4.10 Description of Applicable Criteria

    The practitioner shall evaluate whether the subject matter information adequately refers to or describes the applicable criteria.

    4.11 Forming the Assurance Conclusion

    Evaluation of Evidence:

  • Evaluate the sufficiency and appropriateness of evidence obtained
  • If necessary, attempt to obtain further evidence
  • Consider all relevant evidence, regardless of whether it appears to corroborate or contradict
  • If unable to obtain necessary further evidence, consider implications for the conclusion

    • Forming the Conclusion:

    The practitioner shall form a conclusion about whether the subject matter information is free from material misstatement, considering:

  • Sufficiency and appropriateness of evidence obtained
  • Whether uncorrected misstatements are material, individually or in the aggregate

    • Scope Limitation:

    If unable to obtain sufficient appropriate evidence, a scope limitation exists and the practitioner shall:

  • Express a qualified conclusion
  • Disclaim a conclusion
  • Withdraw from the engagement (where withdrawal is possible)

    • 4.12 Preparing the Assurance Report

    General Requirements:

  • The assurance report shall be in writing
  • It shall contain a clear expression of the practitioner's conclusion
  • The conclusion shall be clearly separated from information not intended to affect the conclusion (Emphasis of Matter, Other Matter, findings, recommendations, additional information)

    • Minimum Basic Elements of the Assurance Report:

    ElementDescription
    (a) TitleClearly indicates it is an independent assurance report
    (b) AddresseeAs appropriate
    (c) IdentificationLevel of assurance, subject matter information, underlying subject matter
    (d) Applicable criteriaIdentification of criteria used
    (e) Inherent limitationsDescription of significant inherent limitations, where appropriate
    (f) Specific purpose criteriaStatement alerting readers if criteria are designed for a specific purpose
    (g) ResponsibilitiesIdentify responsible party, measurer/evaluator, and describe responsibilities
    (h) StandardStatement that engagement was performed in accordance with HKSAE 3000
    (i) Quality managementStatement that firm applies HKSQM 1 or equivalent
    (j) Ethical requirementsStatement that practitioner complies with independence and other ethical requirements
    (k) Summary of work performedInformative summary; for limited assurance, state that procedures are less in extent than for reasonable assurance
    (l) ConclusionAppropriate form (positive for reasonable assurance, negative for limited assurance)
    (m) SignaturePractitioner's signature
    (n) DateNo earlier than date evidence obtained and engagement quality review completed (if required)
    (o) LocationLocation in the jurisdiction where the practitioner practices

    Form of Conclusion:

    Engagement TypeForm of Conclusion
    Reasonable AssurancePositive form: "In our opinion, the subject matter information is prepared, in all material respects, in accordance with the applicable criteria"
    Limited AssuranceNegative form: "Based on the procedures performed and evidence obtained, nothing has come to our attention that causes us to believe that the subject matter information is not prepared, in all material respects, in accordance with the applicable criteria"

    Reference to Practitioner's Expert:

    If referring to a practitioner's expert in the assurance report, the wording shall not imply that the practitioner's responsibility is reduced because of the expert's involvement.

    4.13 Unmodified and Modified Conclusions

    Unmodified Conclusion:

  • Reasonable assurance: The subject matter information is prepared, in all material respects, in accordance with the applicable criteria
  • Limited assurance: Based on the procedures performed and evidence obtained, no matter(s) has come to the practitioner's attention that causes the practitioner to believe the subject matter information is not prepared, in all material respects, in accordance with the applicable criteria

    • Emphasis of Matter and Other Matter Paragraphs:

  • Emphasis of Matter: Draws intended users' attention to a matter presented or disclosed in the subject matter information that is fundamental to their understanding
  • Other Matter: Communicates a matter other than those presented or disclosed that is relevant to users' understanding of the engagement, practitioner's responsibilities, or the assurance report

    • Modified Conclusions:

    CircumstanceType of Modification
    Scope limitation (material but not pervasive)Qualified conclusion
    Scope limitation (material and pervasive)Disclaimer of conclusion
    Material misstatement (material but not pervasive)Qualified conclusion
    Material misstatement (material and pervasive)Adverse conclusion

    Qualified Conclusion:

    Expressed as being "except for" the effects, or possible effects, of the matter to which the qualification relates.

    4.14 Other Communication Responsibilities

    The practitioner shall consider whether any matter has come to attention that is to be communicated with:

  • The responsible party
  • The measurer or evaluator
  • The engaging party
  • Those charged with governance
  • Others

    • 4.15 Documentation

    Documentation Requirements:

    The practitioner shall prepare on a timely basis engagement documentation that provides a record of the basis for the assurance report, sufficient to enable an experienced practitioner to understand:

  • The nature, timing and extent of procedures performed
  • The results of procedures and evidence obtained
  • Significant matters arising, conclusions reached, and significant professional judgments made

    • Additional Documentation Requirements:

  • If information is identified that is inconsistent with the final conclusion regarding a significant matter, document how the inconsistency was addressed
  • Assemble the engagement file on a timely basis after the date of the assurance report
  • Do not delete or discard documentation before the end of its retention period
  • If amendments or additions are made after assembly, document the specific reasons, when and by whom they were made and reviewed

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    5. Key Takeaways Summary

    AreaKey Points
    ScopeApplies to assurance engagements other than audits/reviews of historical financial information; includes both attestation and direct engagements
    Engagement TypesReasonable assurance (positive conclusion) vs. Limited assurance (negative conclusion)
    PreconditionsAppropriate subject matter, suitable criteria, access to evidence, written report, rational purpose
    Criteria CharacteristicsRelevance, completeness, reliability, neutrality, understandability
    Ethical RequirementsCode of Ethics applies; independence required; five fundamental principles
    Quality ManagementHKSQM 1 applies; engagement partner responsible; engagement quality review for required engagements
    Professional SkepticismQuestioning mind, alertness to misstatement, critical assessment of evidence
    PlanningEffective planning; materiality consideration; understanding subject matter and circumstances
    EvidenceSufficiency and appropriateness; risk assessment; procedures design; written representations
    ReportingWritten report with minimum elements; clear conclusion; modified conclusions when necessary
    DocumentationTimely preparation; sufficient for experienced practitioner to understand; retention period

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