Chapter 1 - Chapter 1 The Demand for Audit and Other...

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1 Chapter 1 The Demand for Audit and Other Assurance Services 1. Nature of Auditing Auditing – Definition Information Accumulate Evaluate - Correspondence - Established Criteria Evidence Report Results Breaking down into various elements in auditing: a. Information b. Established criteria c. Evidence d. Reports Your Tasks : 1. Write down your definition of “auditing”: 2. Give an example of auditing: Review Question 1-5, Problem 1-19 2. Distinction between Auditing and Accounting Your Tasks: 1. Differentiate auditing and accounting 3. Why Do We Need Auditing? (i.e. Economic Demand for Auditing) – To reduce information risk a. Three types of risks – What are they? (Define each type of risk.) (1)
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(2) (3) Review Question 1-3 b. Causes of information risk (i.e. reasons for unreliable information) (1) (2) (3) (4) c. How do we (measures, methods, etc.) reduce information risk? – Consider also the effectiveness of each method. (1) (2) (3) Review Question 1-4, Problem 1-17 (Ah, now you see why you will need auditing and auditors, because method 3 above is the most effective method!) 4. Assurance Services Your tasks: 1. Define “assurance services”? 2. Why do we need assurance services? 5. Attestation Services Your tasks: 1. Define “attestation services” 2. What’s the difference between “assurance services” and “attestation services”? a. Five categories of attestation services
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Chapter 1 - Chapter 1 The Demand for Audit and Other...

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