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Other Assurance Services. Chapter 25. Learning Objective 1. Distinguish AICPA attestation standards from auditing stan- dards and know the type of engagements to which they apply. Attestation Engagements. Attestation standards. Types of attestation engagements. Levels of service.

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learning objective 1
Learning Objective 1
  • Distinguish AICPA attestation
  • standards from auditing stan-
  • dards and know the type of
  • engagements to which they apply.
attestation engagements
Attestation Engagements

Attestation standards

Types of attestation engagements

Levels of service

types of engagements and related reports

Type of


Amount of


Level of


Form of



















Types of Engagements and Related Reports
learning objective 2
Learning Objective 2
  • Understand the nature of
  • WebTrust assurance services.
webtrust services
WebTrust Services

In a WebTrustassurance services engagement,

a client engages a CPA to provide reasonable

assurance that a company’s Web site complies

with certain Trust Servicesprinciples and criteria

for one or more aspects of e-commerce activities.

webtrust services1
WebTrust Services

The WebTrustserviceis a specific service

developed under the broader Trust Services

principles and criteria jointly issued in 2003

by the AICPA and CICA.

five trust services principles


The system is protected against

unauthorized access

(both physical and logical).


The system is available for operation

and use as committed or agreed.



System processing is complete,

accurate, timely, and authorized.



Personal information obtained as a result of

e-commerce is collected, used, disclosed,

and retained as committed or agreed.


Information designated as confidential

is protected as committed or agreed.

Five TrustServices Principles
learning objective 3
Learning Objective 3
  • Understand the nature of
  • SysTrust assurance services.
systrust services
SysTrust Services

In a SysTrust engagement, the SysTrust

licensed accountant evaluates a

company’s computer system using

Trust Servicesprinciples and criteria.

systrust services1
SysTrust Services

A licensed SysTrustaccountant

may report on only one Trust Service

principle or any combination of principles.

learning objective 4
Learning Objective 4
  • Describe special engagements
  • to attest to prospective financial
  • statements.
prospective financial statements
Prospective Financial Statements

Forecasts and projections

Use of prospective financial statements

Types of engagements

Examination of prospective financial statements

learning objective 5
Learning Objective 5
  • Describe agreed-upon procedures
  • engagements.
agreed upon procedures engagements
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 subject matter.

learning objective 6
Learning Objective 6
  • Understand the level of assurance
  • and evidence requirements for
  • review and compilation services.
review and compilation services
Review and Compilation Services

The standards for compilations and

reviews of financial statements are called...

Statements on Standards for Accounting

and Review Services (SSARS)

relationship between evidence accumulation and assurance attained



Level of

Assurance Attained











Amount of Evidence Accumulated

Relationship between EvidenceAccumulation and Assurance Attained
review services
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.

procedures suggested for review engagements
Procedures Suggested for ReviewEngagements

Obtain knowledge of the accounting

principles of the client’s industry.

Obtain knowledge of the client.

Makeinquiries of management.

Perform analytical procedures.

Obtain letter of representation.

make inquires of management
Make Inquires of Management

1. Inquire as to the company’s procedures for

recording, classifying, and summarizing

transactions and disclosing information

in the statements.

2. Inquire into actions taken at meetings of

stockholders and the board of directors.

3. Inquire of persons having responsibility

for financial and accounting matters.

form of report
Form of Report

1. The first paragraph is similar to an audit report

except for its reference to a review service

rather than an audit.

2. The second paragraph notes that a review

consists primarily of inquiries and

analytical procedures.

form of report1
Form of Report

3. The third paragraph expresses limited assurance

in the form of a negative assurance that “we are

not aware of any material modifications that

should be made to the financial statements.”

failure to follow gaap
Failure to Follow GAAP

If a client has failed to follow GAAP in

a review engagement, a modification

of the report is needed.

compilation services
Compilation Services

A compilation service engagement is defined in

SSARS as one in which the accountant presents

to a client or third party financial statements that

the accountant has prepared.

The CPA firm does not express any assurance

on the statements.

requirements for compilation
Requirements for Compilation
  • Establish an understanding with the client about
  • the nature and limitations of the services to be
  • performed and a description of the report.
  • Possess knowledge about the accounting
  • principles and practices of the client’s industry.
  • Know the client; the nature of the client’s
  • business transactions; and the basis, form,
  • and content of the financial statements.
requirements for compilation1
Requirements for Compilation
  • Make inquiries to determine whether
  • the client’s information is satisfactory.
  • Read the compiled financial statements
  • and be alert for any obvious omissions
  • or errors in arithmetic and GAAP.
form of compilation report
Form of Compilation Report

Compilation with full disclosure:

It requires disclosures in accordance with GAAP.

Compilation that omits substantially all disclosures:

This type of statement is usually expected to be

used primarily for management purposes only.

form of compilation report1
Form of Compilation Report

Compilation without independence:

A CPA firm can issue a compilation report even

if it is not independent with respect to the client,

as defined by the Code of Professional Conduct.

learning objective 7
Learning Objective 7
  • Describe special engagements
  • to review interim financial
  • information for public
  • companies.
interim financial information for public companies
Interim Financial Information for Public Companies

The SEC requires quarterly financial statements

to be reviewed by the company’s external auditor

prior to the company’s filing of the Form 10Q.

Like reviews under SSARS, a review for a public

company does not provide a basis for expressing

a positive form opinion.

interim financial information for public companies1
Interim Financial Information for Public Companies

The review is conducted according to the

standards of the PCAOB, and there is no

reference to the SSARS in a review report.

learning objective 8
Learning Objective 8
  • Describe other audit and limited
  • assurance engagements related
  • to historical financial statements.
other comprehensive basis of accounting
Other Comprehensive Basisof Accounting

Cash or modified cash basis

Basis used to comply with the requirements

of a regulatory agency

Income tax basis

A definite set of criteria having substantial


reporting requirements
Reporting Requirements

Introductory paragraph

Scope paragraph

Middle paragraph stating the accounting basis

Opinion paragraph

specified elements accounts or items
Specified Elements, Accounts,or Items

The specified elements, accounts, or items

must be identified.

The basis on which the specified elements,

accounts, or items are presented and the

agreements specifying the basis must

be described.

specified elements accounts or items1
Specified Elements, Accounts,or Items

The source of significant interpretations made

by the client about the provisions of a relevant

agreement must be indicated and described.

If the specified element, account, or item is

presented on a basis that is not in conformity

with GAAP, a paragraph that restricts the

distribution of the report to those within

the entity and the parties to the contract

or agreement must be added.

debt compliance letters and similar reports
Debt Compliance Letters and Similar Reports

The engagement and report should be

limited to compliance mattersthe

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.

debt compliance letters and similar reports1
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