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AUDITING CHAPTER 18. Other Assurance & Attestation Services By David N. Ricchiute. TOPICS. AICPA Special Committee on Assurance Services Assurance services Attestation services. ASSURANCE vs. ATTESTATION SERVICES. Assurance services Improve or report on information Attestation services

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Auditing chapter 18

AUDITINGCHAPTER 18

Other Assurance & Attestation Services

By

David N. Ricchiute


Topics
TOPICS

  • AICPA Special Committee on Assurance Services

  • Assurance services

  • Attestation services

GBW 8th ed., Ch. 18


Assurance vs attestation services
ASSURANCE vs. ATTESTATION SERVICES

  • Assurance services

    • Improve or report on information

  • Attestation services

    • Offer assurance about a matter that is responsibility of another party

GBW 8th ed., Ch. 18


Assurance serivces
ASSURANCE SERIVCES

  • Electronic commerce

  • Health care performance

  • Risk assessment

  • Information systems reliability

  • Business performance

  • Elder care

GBW 8th ed., Ch. 18


Electronic commerce assurances webtrust
ELECTRONIC COMMERCE ASSURANCES: WebTrust

CPA offers assurance in form of opinion

  • Data integrity

    • Does processing alter transactions?

  • Data security

    • Do systems preclude unauthorized disclosure?

GBW 8th ed., Ch. 18


Data security
DATA SECURITY

  • Parties to a transaction are authentic

  • Transactions, documents are protected

GBW 8th ed., Ch. 18


Webtrust principles
WEBTRUST PRINCIPLES

Principle The Company

GBW 8th ed., Ch. 18


Electronic commerce assurances systrust
ELECTRONIC COMMERCE ASSURANCES: SysTrust

CPA offers assurance in form of opinion

  • Reliability of company’s information system

    • Availability

    • Security

    • Integrity

    • Maintainability

GBW 8th ed., Ch. 18


Systrust principles
SYSTRUST PRINCIPLES

Principle The Company’s System

GBW 8th ed., Ch. 18


Health care assurances examples
HEALTH CARE ASSURANCES:Examples

  • Testing research programs (UC-SD) for

    • False insurance claims

    • Unjustifiable billings

    • Illegal use embryos

  • Benchmarking performance

  • Quality assurance for healthcare

GBW 8th ed., Ch. 18


Past core competencies
PAST CORE COMPETENCIES

  • Knowledge of accounting principles, auditing standards

  • Facility in evaluating evidence

  • Knowledge how to manage risk

  • Tack in engaging, maintaining clients

GBW 8th ed., Ch. 18


Attestation services
ATTESTATION SERVICES

  • Review

  • Compilation

  • OCBOA

  • Other

GBW 8th ed., Ch. 18


Review engagement non public companies
REVIEW ENGAGEMENT: Non-Public Companies

  • Complies with attestation standards

  • Procedures

    • Inquiries

    • Analytical procedures

  • Report

    • Negative assurance

    • Accountant “not aware of any material modifications” necessary for GAAP

GBW 8th ed., Ch. 18


Analytical procedures for reviews
ANALYTICAL PROCEDURES FOR REVIEWS

  • Analytical procedures to identify unusual matters

    • Compare current to prior period financials

    • Compare financial to budgets, forecasts

    • Study relationships for predictable patterns

GBW 8th ed., Ch. 18


Inquiries for reviews
INQUIRIES FOR REVIEWS

  • Inquiries about

    • Accounting principles, practices, GAAP

    • Actions of Board

    • Reports of subsidiaries’ accountants

    • Changes in entity’s business, accounting principles

    • Questions, concerns

    • Subsequent events

GBW 8th ed., Ch. 18


Compilation engagement non public companies
COMPILATION ENGAGEMENT: Non-Public Companies

“presenting in the form of financial statements information that is the representation of management without undertaking to express any assurance on the statements”

SSARS No. 1

GBW 8th ed., Ch. 18


Requisite knowledge for compilations
REQUISITE KNOWLEDGE FOR COMPILATIONS

  • Knowledge of accounting principles, practices in industry

  • Understanding of entity’s transactions, accounting records, & qualifications of accounting personnel

GBW 8th ed., Ch. 18


Compilation report
COMPILATION REPORT

States explicitly that

  • Audit not performed

  • Opinion not expressed

GBW 8th ed., Ch. 18


Interim financial statements public companies
INTERIM FINANCIAL STATEMENTS: Public Companies

  • Reviews required by SEC for 10-Q of publicly traded companies

  • Reviews not adequate to form opinion

    • Report gives negative assurance

GBW 8th ed., Ch. 18


Interim review analytical procedures
INTERIM REVIEW: Analytical Procedures

  • Analytical procedures to identify unusual matters

    • Compare interim to prior interim

    • Compare recorded amounts, ratios to budgets, forecasts, industry gross margin

    • Consider plausible relationships, ratios

    • Compare disaggregated revenue information

GBW 8th ed., Ch. 18


Interim review other procedures
INTERIM REVIEW: Other Procedures

  • Inquiries about

    • Internal controls, changes

    • Reports of subsidiaries’ accountants

    • Changes in entity’s business, accounting principles

    • Questions, concerns

    • Subsequent events

  • Read board minutes

  • Consider conformity with GAAP

  • Obtain management’s written representation

GBW 8th ed., Ch. 18


Comprehensive bases of accounting other than gaap
COMPREHENSIVE BASES OF ACCOUNTING OTHER THAN GAAP

4 generally accepted comprehensive bases of accounting

  • Cash basis

  • Regulatory basis

  • Tax basis

  • Criteria having substantial support

    • Price-level adjusted statements

GBW 8th ed., Ch. 18


Specified elements
SPECIFIED ELEMENTS

  • Includes

    • Accounts or items of financial statements

    • Nonfinancial statement assertions

  • Procedures & report

    • GAAS & express opinion

    • Agreed-upon procedures & express limited assurance

GBW 8th ed., Ch. 18


Agreed upon procedures
AGREED-UPON PROCEDURES

  • Procedures are engagement specific

  • Procedures not sufficient to express opinion

  • Provides limited assurance

GBW 8th ed., Ch. 18


Other attest engagements
OTHER ATTEST ENGAGEMENTS

  • Compliance with contracts, regulations

  • Letters for underwriters

  • Financial forecasts, projections

  • Personal financial statements

  • Application of accounting principles

GBW 8th ed., Ch. 18


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