Auditing and assurance services 14e by arens chapter 25

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Other Assurance Services Chapter 25 http://downloadslide.blogspot.com ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 5-5 Learning Objective Understand the level of assurance and evidence requirements for review and compilation services ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - Review and Compilation Services The standards for compilations and reviews of financial statements are called Statements on Standards for Accounting and Review Services (SSARS) ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - Level of Assurance Attained Relationship Between Evidence Accumulation and Assurance Attained High (Audit) Moderate (Review) None (Compilation) Minimal Significant Extensive (Compilation) (Review) (Audit) Amount of Evidence Accumulated ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - Review Services A review service (SSARS review) engagement is designed to allow the accountant to express limited assurance that the financial statements are in accordance with GAAP ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - Procedures Suggested for Reviews Obtain industry knowledge Know the client Perform analytical procedures Obtain a representation letter ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley Make inquiries of management Prepare documentation 25 - Form of Review Report ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - Compilation Services Defined in SSARS as one in which accountants present to a client or third party, financial statements that the accountant has prepared The CPA firm does not express any assurance on the statements ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - Requirements for Compilation  Document services to be performed and a description of the report  Know the industry accounting principles and practices  Know the client ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - Requirements for Compilation  Determine whether the client’s information is satisfactory  Review the compiled financial statements for any obvious omissions or errors in math and GAAP ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 10 SysTrust Services In a SysTrust engagement, the SysTrust licensed CPA evaluates a company’s computer system using Trust Services principles and criteria The service provides assurance to management, directors, or third parties about the reliability of information systems used to generate real-time information ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 23 Learning Objective Describe engagements to report on internal controls at service organizations ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 24 Internal Control Reports at Service Organizations  Historically referred to as SAS 70 engagements Two types of reports Type I – report on the design of controls  Type II – report on the operating effectiveness of controls ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 25 Learning Objective Describe special engagements to attest to prospective financial statements ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 26 Prospective Financial Statements Forecasts and Projections Use of prospective financial statements Types of engagements ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 27 Examinations of Prospective Financial Statements Evaluating the preparation of the prospective financial statements Evaluate the underlying support for assumptions Evaluate the presentation for conformity with AICPA guidelines Issuing an examination report ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 28 Learning Objective Describe agreed-upon procedures engagements ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 29 Agreed-Upon Procedures Engagements The audit is limited to certain specific audit procedures These are referred to as procedures and findings engagements The SASs deal with financial statement items, whereas the SSAEs deal with nonfinancial statement matters ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 30 Learning Objective Describe other audit and limited assurance engagements related to historical financial statements ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 31 Other Comprehensive Basis of Accounting Regulatory agency basis Cash or modified cash basis Tax basis Definite set of criteria ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 32 Specified Elements, Accounts, or Items Auditors are often asked to audit and issue reports on specific aspects of financial statements ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 33 Specified Elements, Accounts, or Items Two differences in these types of audits: Materiality is defined by the item audited GAAS (first standard) does not apply ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 34 Debt Compliance Letters and Similar Reports The engagement and report should be limited to compliance matters the auditor is qualified to evaluate The auditor should provide a debt compliance letter only for a client for whom the auditor has done an audit of the overall financial statements ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 35 Debt Compliance Letters and Similar Reports The auditor’s opinion is in the form of a negative assurance, stating that nothing came to the auditor’s attention that would lead the auditor to believe there was noncompliance ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 25 - 36 End of Chapter 25 ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 5-5 ... Understand the level of assurance and evidence requirements for review and compilation services ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/ Elder/Beasley 25 - Review and Compilation... Limited 25 - 19 Learning Objective Understand the nature of WebTrust and SysTrust assurance services ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/ Elder/Beasley 25 - 20 WebTrust Services. .. AICPA attestation standards from auditing standards and know the type of engagements to which they apply ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/ Elder/Beasley 25 - 17 Attestation
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