Chapter 21

Assurance, Attestation, and Internal Auditing

Services

Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

Assurance Services

Assurance services

are independent

professional services

that improve the

quality of information,

or its context, for

decision makers.

LO# 1

21-2

LO# 1

Assurance Services

21-3

Types of Assurance Services

Risk

Assessment

Business

Performance

Measurement

Information

System

Reliability

Electronic

Commerce

Health Care

Performance

Measurement

PrimePlus

LO# 2

21-4

Attest Engagements

Attest services occur when

a practitioner is engaged to

issue, or does issue, an

examination, a review, or an

agreed upon procedures

report on subject matter, or

an assertion about subject

matter, that is the

responsibility of another

party.

LO# 3

21-5

LO# 3

Attest Engagements Figure 21-3

21-6

Types of Attest Engagements

Attest

Engagements

Examination

Review

Agreed-

Upon

Procedures

LO# 4

21-7

Attestation Standards

Attestation

Standards

General Fieldwork Reporting

LO# 5

21-8

Reporting on an Entity’s Internal

Control over Financial Reporting The Federal Deposit Insurance Corporation

Improvement Act of 1991 requires that the

management of large financial institutions issue a

report on the effectiveness of the institution’s

internal control and that they engage accountants to

attest to management’s report.

The Sarbanes-Oxley

Act of 2002 imposed

similar requirements

on all publicly held

companies.

LO# 6

21-9

Financial Forecasts

and Projections

CPAs can be engaged to examine, apply agreed-

upon procedures, or compile the prospective

financial statements if such statements are expected

to be used by a third party.

LO# 7

21-10

Accounting and Review Services

Compilations Reviews

Many nonpublic companies do not choose to

contract for an audit of their financial statements.

However, these entities often employ a CPA to assist

with preparing their financial statements, tax

returns, or other financial documents.

LO# 8

21-11

Internal Auditing

Internal auditing is an independent, objective assurance

and consulting activity designed to add value and

improve an organization’s operations.

It helps an organization accomplish its objectives by

bringing a systematic, disciplined approach to evaluate

and improve the effectiveness of risk management,

control, and governance processes.

LO# 9

21-12

Internal Auditors’ Roles

Evaluating Risks and

Controls

Reviewing

Compliance

Financial Auditing Operational Auditing

LO# 9

21-13

Trust Services

Security

Availability

Processing

Integrity

Online

Privacy

Confidentiality

Five Principles

of Trust

Services

LO# 10

21-14

End of Chapter 21

21-15