Framework of Philippine Standards on Auditing (PSA 120) – CPA Philippine Auditing Standards


1. The Auditing Standards and Practices Council has been authorized to issue Philippine Standards on Auditing (PSAs). The purpose of this document is to describe the framework within which PSAs are issued in relation to the services which may be performed by auditors.

2. For ease of reference, except where indicated, the term “auditor” is used throughout the PSAs when describing both auditing and related services which may be performed. Such reference is not intended to imply that a person performing related services need be the auditor of the entity’s financial statements.

Philippine Standards on Auditing - Framework of Philippine Standards on Auditing

3. Financial statements are ordinarily prepared and presented annually and are directed toward the common information needs of a wide range of users. Many of those users rely on the financial statements as their major source of information because they do not have the power to obtain additional information to meet their specific information needs. Thus, financial statements need to be prepared in accordance with one, or a combination of:

  • (a) accounting standards generally accepted in the Philippines;
  • (b) International Accounting Standards; and
  • (c) 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

4. This Framework distinguishes audits from related services. Related services comprise reviews, agreed-upon procedures and compilations. As illustrated in the diagram below, audits and reviews are designed to enable the auditor to provide high and moderate levels of assurance respectively, such terms being used to indicate their comparative ranking. Engagements to undertake agreed-upon procedures and compilations are not intended to enable the auditor to express assurance.

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