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Unformatted text preview: The Demand for Audit
and Other Assurance
Chapter 1 Highlights
1-1 Distinguish Between
Auditing and Accounting
Accounting is the recording, classifying,
and summarizing of economic events
for the purpose of providing financial
information used in decision making.
Auditing is determining whether
recorded information properly
reflects the economic events that
occurred during the accounting period.
1-2 Nature of Auditing
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.
Auditing should be done by a competent,
independent person. 1-3 Economic Demand
Information risk reflects the possibility that
the information upon which the business
risk decision was made was inaccurate.
Auditing can have a significant effect
on information risk. 1-4 Relationships Among Auditors,
Client, and External Users
Client or audit
auditor Client Auditor Auditor issues
upon by users External
1-5 Causes of Information Risk
Remoteness of information
Biases and motives of the provider
Complex exchange transactions 1-6 Assurance Services
Assurance services are professional
services that improve the quality of
information for decision makers.
Assurance services can be
performed by CPAs or by
a variety of other professionals. 1-7 Attestation Services
An attestation service is a type of assurance
service in which the CPA firm issues a
report about the reliability of an assertion
that is the responsibility of another party. 1-8 Attestation Services 1. Audit of historical financial statements
2. Effectiveness of internal control over
3. Review of historical financial statements
4. Other attestation services
1-9 Assurance, Attestation, and
ASSURANCE SERVICES ATTESTATION SERVICES
Audits Reviews Internal Control
over Financial Reporting
Other Attestation Services
(e.g., WebTrust, SysTrust)
(e.g., WebTrust, Certain
Consulting Other Assurance Services 1 - 10 ...
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This note was uploaded on 03/23/2012 for the course ECONOMICS eco 403 taught by Professor Talatafza during the Spring '10 term at Aachen University of Applied Sciences.
- Spring '10