Using International Standard on Assurance Engagements 3000 by Audit Firms in Reviews of Reports by Residents of Diia.City

Abstract

The article gives a detailed account of the requirements to material assurance engagements on reports by residents of Diia.City legal regime in conformity with International Standard on Assurance Engagements 3000 (ISAE 3000) “Assurance Engagements Other Than Audit or Reviews of Historical Financial Information” (revised). Because conformity assurance is neither audit nor review of historical financial information, it is carried out using methods and procedures designed for material assurance engagements. The criteria for assessment of statements in reports of Diia.City residents, e.g. with reference to the Law of Ukraine “Stimulating the Development of Digital Economy in Ukraine” are analyzed. The risks of information misstatements, phases of the service on reviews of reports by ISAE 3000 (client acceptance, assessment of the engagement background, planning, evidence collection, formulation of conclusion, quality assurance) are highlighted. A method is proposed for review of three key statements of “Diia City” residence: the average monthly compensation ((≥1200 euro), the average book number of employees and gig-specialists (≥9 persons), the share of qualified income in the total income (≥90%), including using table formats (working documents) for consolidating the results of review. The levels of materiality for each statement in a report were determined. The author classified evidence collection procedures such as verification of documents, sample scrutiny, recalculation, inspection, analytical procedures, as well as the procedures for assessment of the start-ups’ conformity with the residency requirements of Diia.City with reference to the Law of Ukraine No. 1667. Because engagement quality assessment is required by International Standards for Quality Management, the author elaborated a working document of the auditor / independent practitioner “Quality assessment of the assurance engagement other than audit or review of historical financial information” (Report on the conformity of Diia.City resident with the requirements fixed by Paragraphs 2–4, Part 1, Article 5 of the Law of Ukraine “Stimulating the Development of Digital Economy in Ukraine”). Carrying out procedures of control allows all the interested users to get full and unbiased information on the subject of engagement, procedures of review, produced results and conclusions. The author’s development offers a methodological orientation for auditors and independent specialists engaged in reviews of reports by residents of Diia.City, taking into account the specifics of legal regime, legal requirements, and standards of assurance. The conclusions of an auditor / independent specialist are based on verification of each resident’s statement and provision of an independent conclusion on the conformity with legal requirements of Diia.City.