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AUDITING CHAPTER 18

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

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  1. AUDITINGCHAPTER 18 Other Assurance & Attestation Services By David N. Ricchiute

  2. TOPICS • AICPA Special Committee on Assurance Services • Assurance services • Attestation services GBW 8th ed., Ch. 18

  3. 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

  4. ASSURANCE SERIVCES • Electronic commerce • Health care performance • Risk assessment • Information systems reliability • Business performance • Elder care GBW 8th ed., Ch. 18

  5. 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

  6. DATA SECURITY • Parties to a transaction are authentic • Transactions, documents are protected GBW 8th ed., Ch. 18

  7. WEBTRUST PRINCIPLES Principle The Company GBW 8th ed., Ch. 18

  8. 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

  9. SYSTRUST PRINCIPLES Principle The Company’s System GBW 8th ed., Ch. 18

  10. 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

  11. 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

  12. ATTESTATION SERVICES • Review • Compilation • OCBOA • Other GBW 8th ed., Ch. 18

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

  18. COMPILATION REPORT States explicitly that • Audit not performed • Opinion not expressed GBW 8th ed., Ch. 18

  19. 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

  20. 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

  21. 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

  22. 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

  23. 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

  24. AGREED-UPON PROCEDURES • Procedures are engagement specific • Procedures not sufficient to express opinion • Provides limited assurance GBW 8th ed., Ch. 18

  25. 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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