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    The Demand For Audit and Assurance Services

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    PZahid
    The document discusses assurance, attestation, and nonassurance services provided by accountants. It defines auditing and describes the relationship between auditing, attestation, and assurance. It also outlines the auditing process and different types of audits.

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    The Demand For Audit and Assurance Services

    Uploaded by

    PZahid
    31 views17 pages
    The document discusses assurance, attestation, and nonassurance services provided by accountants. It defines auditing and describes the relationship between auditing, attestation, and assurance. It also outlines the auditing process and different types of audits.

    Original Title

    CHAPTER 1

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    The document discusses assurance, attestation, and nonassurance services provided by accountants. It defines auditing and describes the relationship between auditing, attestation, and assurance. It also outlines the auditing process and different types of audits.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    31 views17 pages

    The Demand For Audit and Assurance Services

    Uploaded by

    PZahid
    The document discusses assurance, attestation, and nonassurance services provided by accountants. It defines auditing and describes the relationship between auditing, attestation, and assurance. It also outlines the auditing process and different types of audits.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    You are on page 1of 17

    The Demand for Audit

    and Assurance Services

    Chapter 1

    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1-1
    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.
    Example
    Risk assessment
    Information system reliability
    Electronic commerce

    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1-2
    Attestation Services

    An attestation service involves an engagement resulting


    in the issuance of a report on subject matter or an assertion
    about the subject matter that is the responsibility
    of another party.

    Auditing is a specific type of attestation

    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1-3
    Assurance, Attestation, and
    Nonassurance Services
    ASSURANCE SERVICES

    ATTESTATION SERVICES

    Audits

    Reviews

    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1-4
    Assurance, Attestation, and
    Nonassurance Services
    NONASSURANCE SERVICES
    Other Management
    Consulting
    Certain
    Accounting and
    Management
    Bookkeeping
    Consulting

    Tax
    Services

    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1-5
    Definition of Auditing

    Auditing is a systematic process of


    objectively obtaining and evaluating
    evidence regarding assertions about
    Financial Statements economic actions and events to
    (including footnotes)
    ascertain the degree of
    correspondence between the
    assertions and established criteria GAAP
    and communicating the results to
    interested users. Auditor's Report/
    Persons who rely on Other Reports
    the financial reports
    • Creditors
    • Investors

    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1-6
    Definition of Auditing (cont.)

    Auditing should be done by a


    competent, independent person.

    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1-7
    Relationship between Auditing, Attestation and
    Assurance

    Auditing

    Attestation
    Assurance

    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1-8
    Competent, Independent Person

    The auditor must be qualified to understand the


    criteria used and must be competent to know
    the types and amount of evidence to accumulate
    to reach the proper conclusion after the
    evidence has been examined.
    The competence of the individual performing the
    audit is of little value if he or she is biased in the
    accumulation and evaluation of evidence.
    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1-9
    Accumulating and
    Evaluating Evidence

    Evidence is any information used by the auditor


    to determine whether the information being
    audited is stated in accordance with the
    established criteria.

    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1 - 10
    Reporting

    The final stage in the auditing process


    is preparing the Audit Report, which
    is the communication of the
    auditor’s findings to users.

    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1 - 11
    Distinction 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.
    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1 - 12
    Types of Audits

    Financial Statement Audit

    Operational Audit

    Efficiency Effectiveness

    Compliance Audit

    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1 - 13
    Financial Statement Audit

    Annual audit of Boeing’s


    Example
    financial statements
    Boeing's financial
    Information
    statements
    Established Generally accepted accounting
    Criteria principles
    Available Documents, records, and outside
    Evidence sources of evidence
    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1 - 14
    Operational Audit

    Evaluate computerized payroll system


    Example
    for efficiency and effectiveness
    Number of records processed, cost of
    Information
    the department, and number of errors
    Established Company standards for efficiency and
    Criteria effectiveness in payroll department
    Available Error reports, payroll records, and
    Evidence payroll processing costs
    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1 - 15
    Compliance Audit

    Determine whether bank requirements


    Example
    for loan continuation have been met

    Information Company records

    Established
    Loan agreement provisions
    Criteria
    Available Financial statements and
    Evidence calculations by the auditor
    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1 - 16
    End of Chapter 1

    ©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 1 - 17

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