ACT 4497 Lecture ch01

ACT 4497 Lecture ch01 - Assurance Services and the...

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Unformatted text preview: Assurance Services and the Integrity of th Modern Auditing: Modern Auditing: Financial Reporting, 8 Edition California Polytechnic State University at San Luis Obispo William C. Boynton Portland State University Raymond N. Johnson Chapter 1 – Auditing and the Public Accounting Profession – Integrity of Financial Reporting Chapter 1 Overview Chapter 1 Overview Auditing Defined Auditing Defined • Systematic process • Objectively obtaining and evaluating evidence • Assertions about economic actions and events • Degree of correspondence Auditing Defined (cont.) Auditing Defined (cont.) • Established criteria • Communicating the results • Interested users Comparative Summary of Types of Comparative Summary of Types of Audits Types of Auditors Types of Auditors • Independent Auditors • Internal Auditors • Government Auditors Assurance Services Assurance Services (Broad View) • Based upon level and type – – – – – Financial Statement Audits Reviews of financial statements Compilation of financial statements Other attestation services Other assurance services Assurance Services Assurance Services (Broad View) • • • • Independence Professional services Quality of information Decision making Example Assurance Services Example Assurance Services • Audit Engagements • Attest Services – Examination – Review Engagement – Agreed­upon Procedures Engagement • Accounting Services • Compilation Services Levels of Assurance Levels of Assurance • Reasonable Assurance • Negative Assurance • Agreed­upon Procedures • Compilation Without Assurance Universe of Assurance Services Universe of Assurance Services The Accountant’s Value Chain The Accountant’s Value Chain The Roots of Auditing The Roots of Auditing • • • • • British influence and migration Stock market crash 1929 Legislation of the 1930’s Important changes in the 1940’s Changes since the 1940s including Sarbanes­Oxley Act of 2002 Economic Benefits of an Audit Economic Benefits of an Audit • Access to Capital Markets • Lower Cost of Capital • Deterrent to Inefficiency and Fraud • Control and Operational Improvements Limitations of a Financial Statement Limitations of a Financial Statement Audit • Economic Limitations – Reasonable Cost – Reasonable Length of Time • Accounting Framework Limitations – Alternative Accounting Principles – Accounting Estimates Organizations Associated with the Public Organizations Associated with the Public Accounting Profession Regulatory Framework for Ensuring Regulatory Framework for Ensuring High­Quality Services • Standard Setting • Firm Regulation • Inspection and Peer Review • Government Regulation Standard­Setting Organizations in the Standard­Setting Organizations in the United States ...
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