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

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Unformatted text preview: The Demand for Audit The and Other Assurance Services Services 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 is recorded information properly reflects the economic events that occurred during the accounting period. 1-2 Nature of Auditing Nature Auditing is the accumulation and evaluation evaluation of evidence about information to determine and report on the degree of correspondence and degree between the information and established criteria. between established Auditing should be done by a competent, Auditing competent independent person. 1-3 Economic Demand for Auditing 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, Relationships Client, and External Users Client, Client or audit committee hires auditor Client Auditor Auditor issues report relied upon by users External Users 1-5 Causes of Information Risk Remoteness of information Biases and motives of the provider Voluminous data 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 An attestation 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 financial reporting financial 3. Review of historical financial statements 4. Other attestation services 1-9 Assurance, Attestation, and Assurance, Nonassurance Services Nonassurance ASSURANCE SERVICES ATTESTATION SERVICES Audits Reviews Internal Control over Financial Reporting Other Attestation Services (e.g., WebTrust, SysTrust) (e.g., WebTrust, Certain Management 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.

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