Auditing Notes
Chapter 1
Assurance Services
The broad range of information enhancement services that are provided by CPAs
There are two types:
-Increase reliability of information
-Putting information into a form or context that facilitates decision making
Types of Services
Assurance Services
-Attestation Services
Example: Audits of Financial Statements, Examinations of Internal Control
-Other Assurance Services
Example: CPA ElderCare Prime Plus Services
Non Assurance Services
-Tax Services
-Management Consulting Services
-Other
Attestation Services
-to attest to information means to provide assurance as to its reliability
-Attest Engagement: A practitioner is engaged to issue or does issue an examination, a review, or an agreed-upon procedures report on subject matter or that is the responsibility of another party (e.g management)
Attest Function-Diagram
Suitable Criteria
-standards established or developed by groups of experts
-Example: Internal control audit- standards established by a committee of experts on internal control
-Example: Financial statement audit- standards are GAAP. For a financial statement audit suitable criteria are referred to as the “applicable financial reporting framework”
Forms of Attestation-Diagram
Audit of Financial Statements-Diagram
Financial Statement Audit
-Auditors gather evidence and provide a high level of assurance that the financial statements follow GAAP, or some other appropriate basis of accounting
-Audit involves searching and verifying accounting records and examining other documents
-Evidence necessary to ussue an audit report that states auditors;’ opinion
Audit Evidence
Evidence focuses on whether financial statements are presented in accordance with GAAP
Examples
-Balance sheet contains all liabilities
-Income statement -sales really occurred -sales have been recorded at appropriate amounts -recorded costs and expenses are applicable to period -all expenses have
Assurance Services
The broad range of information enhancement services that are provided by CPAs
There are two types:
-Increase reliability of information
-Putting information into a form or context that facilitates decision making
Types of Services
Assurance Services
-Attestation Services
Example: Audits of Financial Statements, Examinations of Internal Control
-Other Assurance Services
Example: CPA ElderCare Prime Plus Services
Non Assurance Services
-Tax Services
-Management Consulting Services
-Other
Attestation Services
-to attest to information means to provide assurance as to its reliability
-Attest Engagement: A practitioner is engaged to issue or does issue an examination, a review, or an agreed-upon procedures report on subject matter or that is the responsibility of another party (e.g management)
Attest Function-Diagram
Suitable Criteria
-standards established or developed by groups of experts
-Example: Internal control audit- standards established by a committee of experts on internal control
-Example: Financial statement audit- standards are GAAP. For a financial statement audit suitable criteria are referred to as the “applicable financial reporting framework”
Forms of Attestation-Diagram
Audit of Financial Statements-Diagram
Financial Statement Audit
-Auditors gather evidence and provide a high level of assurance that the financial statements follow GAAP, or some other appropriate basis of accounting
-Audit involves searching and verifying accounting records and examining other documents
-Evidence necessary to ussue an audit report that states auditors;’ opinion
Audit Evidence
Evidence focuses on whether financial statements are presented in accordance with GAAP
Examples
-Balance sheet contains all liabilities
-Income statement -sales really occurred -sales have been recorded at appropriate amounts -recorded costs and expenses are applicable to period -all expenses have