Exam notes Audit
Chapter 1 – The role of Public Accountant in the America Economy
Assurance services
The broad range of information enhancement services that are provided by certified public accountants (CPAs).
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
NonAssurance Services
Tax Services
Management Consulting Services
Other
Notes:
Reliability reduces information risk.
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 an assertion about subject matter that is the responsibility of another party (e.g. management)
The Attest Function
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
Compilation: no assurance, can be not independent. Compile the adjusted trial balance to financial statement
Review: limited assurance (negative assurance) – we have reviewed and nothing came to our attention = needs to be independent
Audit = positive, reasonable assurance. In our opinion, this was presented fairly. High level of assurance.
Agreed upon procedures – special projects , follow procedures to accomplish the goal
Financial Statement Audit
Auditors gather evidence and provide a high level of assurance that the financial statements follow GAAP, or some
Assurance services
The broad range of information enhancement services that are provided by certified public accountants (CPAs).
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
NonAssurance Services
Tax Services
Management Consulting Services
Other
Notes:
Reliability reduces information risk.
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 an assertion about subject matter that is the responsibility of another party (e.g. management)
The Attest Function
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
Compilation: no assurance, can be not independent. Compile the adjusted trial balance to financial statement
Review: limited assurance (negative assurance) – we have reviewed and nothing came to our attention = needs to be independent
Audit = positive, reasonable assurance. In our opinion, this was presented fairly. High level of assurance.
Agreed upon procedures – special projects , follow procedures to accomplish the goal
Financial Statement Audit
Auditors gather evidence and provide a high level of assurance that the financial statements follow GAAP, or some