Ch 1 Audit and Assurance services Auditing : Is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria

Audit of internal control over financial reporting

• Management asserts that internal controls have been developed following well established criteria .
• Auditors attest the effectiveness of internal control over financial reporting.

Review of historical financial statements

• Management asserts that the statements are fairly presented(as in Audits).
• The CPA provides only moderate level of assurance compared to high level for audits.
• Lower fees (less evidence ).
• Usually non-public companies.

Attestation services on information technology

• Management makes various assertions about the reliability and security of electronic information.
• Examples : Web Trust services.

Other Attestation services that may be applied to a broad range of subject matter

• Extensions of historical audits.
• Example : when a bank money to a company , the loan agreement may require the company to engage a CPA to provide assurance about the company’s compliance with the provisions of the loan.

Other Assurance Services

• Is not required to issue a written report.
• Example : mystery shopping.

Nonassurance Services Provided by CPAs

• 1. Accounting and bookkeeping services
• 2. Tax services
• 3. Management consulting services

• ATTESTATION SERVICES

• Audits

• Reviews

• Internal Control
• over Financial Reporting

• Other Attestation Services
• (e.g., WebTrust, SysTrust)

• Other Assurance Services

• Tax
• Services

• Accounting and
• Bookkeeping

• Other Management
• Consulting

Types of Audit

• Operational : evaluates the efficiency and effectiveness of any part of an organization’s operating procedures and methods.
• Compliance audit : determines whether the auditee is following specific procedures,rules,or regulations set by some higher authority.(Review wage rates for compliance with minimum wage laws).
• Financial statement audit.

Three Requirements for Becoming a CPA

• Educational requirement
• Uniform CPA examination requirement
• Experience requirement