Chapter 1 – The Demand for Audit and Other Assurance Services · PDF file · 2012-11-12©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1 - 1 The Demand

©2008 Prentice Hall Business Publishing, ©2008 Prentice Hall Business Publishing, Auditing 12/e,Auditing 12/e, Arens/Beasley/Elder Arens/Beasley/Elder 1 - 1

The Demand for Audit and Other Assurance Services

Chapter 1

©2008 Prentice Hall Business Publishing, ©2008 Prentice Hall Business Publishing, Auditing 12/e,Auditing 12/e, Arens/Beasley/Elder Arens/Beasley/Elder 1 - 1 - 22

Sarbanes-Oxley Act

The Act established the Public CompanyAccounting Oversight Board.

It also requires auditors to attest tomanagement reports on the effectivenessof internal control over financial reporting.


Learning Objective 1Learning Objective 1

Describe auditing.


Nature of Auditing (Konrath, 2002:5)

Auditing Suatu Proses sistematis untuk secara objektif mendapatkan & mengevaluasi bukti Mengenai asersi tentang kegiatan-kegiatan dan kejadian-kejadian ekonomi untuk meyakinkan tingkat keterkaitan antara asersi tersebut dan kriteria yang telah ditetapkan & mengkomunikasikan hasilnya kepada pihak-pihak yang berkepentingan

Auditing merupakan salah satu bentuk ATESTESIYakni Suatu komunikasi dari seorang expert perihalKesimpulan tentang realibilitas dari pernyataan seseorang


Nature of Auditing

Auditing is the accumulation and evaluationof evidence about information to determineand report on the degree of correspondencebetween the information and established criteria.

Auditing should be done by a competent,independent person.


Information and Established Criteria

To do an audit, there must be information in averifiable form and some standards (criteria)by which the auditor can evaluate the information.


Accumulating Evidence and Evaluating Evidence

Evidence is any information used by the auditorto determine whether the information beingaudited is stated in accordance with theestablished criteria.


Competent, Independent Person

The auditor must be qualified to understand thecriteria used and must be competent to knowthe types and amount of evidence to accumulateto reach the proper conclusion after theevidence has been examined.

The competence of the individual performingthe audit is of little value if he or she is biasedin the accumulation and evaluation of evidence.


Audit Report

The final stage in the auditing process ispreparing the Audit Report, which is thecommunication of the auditor’s findings to users.


Audit of a Tax Return Example

InternalInternalRevenueRevenue

agentagent

Competent,independent

person

Examines cancelledchecks and other

supporting records

Accumulates andevaluates evidence

Determinescorrespondence

Federal taxFederal taxreturns filedreturns filedby taxpayerby taxpayer

Information

Internal RevenueCode and all

interpretations

Established criteria

Report on taxdeficiencies

Report on results


Learning Objective 2

Distinguish between auditingand accounting.


Distinguish BetweenAuditing and Accounting

Accounting is the recording, classifying,and summarizing of economic eventsfor the purpose of providing financialinformation used in decision making.

Auditing is determining whetherrecorded information properlyreflects the economic events thatoccurred during the accounting period.




Explain the importance of auditingin reducing information risk.


Economic Demandfor Auditing

Information risk reflects the possibility thatthe information upon which the businessrisk decision was made was inaccurate.

Auditing can have a significant effecton information risk.


Learning Objective 4Learning Objective 4

List the causes of informationrisk, and explain how this riskmay be reduced.


Causes of Information RiskCauses of Information Risk

Remoteness of information

Biases and motives of the provider

Voluminous data

Complex exchange transactions


Reducing Information Risk

User verifies information

User shares information risk with management

Audited financial statements are provided



Describe assurance servicesand distinguish audit servicesfrom other assurance andnonassurance servicesprovided by CPAs.


Assurance Services

An assurance service is an independentprofessional service that improves thequality of information for decision makers.

Assurance services can be performed byCPAs or by a variety of other professionals.


Assurance Services (Konrath, 2002:4)

Yang dikelola adalah:• Reliabilitas (keandalan) dari sistem informasi• Cukup tidaknya sistem manajemen resiko• Efektifitas dari sistem pengukuran kinerja• Cukup tidaknya keamanan atas transaksi komersial


Attestation Services

An attestation service is a type of assuranceservice in which the CPA firm issues areport about the reliability of an assertionthat is the responsibility of another party.

An attestation memberikan opini atas reliabilitas dari pernyataan seseorang


Attestation Services

1. Audit of historical financial statements

2. Attestation of internal control over financial reporting

3. Review of historical financial statements

4. Attestation services on information technology

5. Other attestation services


Attestation Services (Konrath, 2002:4)

1. Assersion on Internal Control

2. Assersion on Compliance to the Contract Points Agreement

3. Assersion on Compliance to the Acts and Roles


Relationships Among Auditors, Client, and External Users

Client

AuditorAuditorClient or auditcommittee hiresauditor

ExternalExternalUsersUsers

Auditor issuesreport reliedupon by users


Other Assurance Services

Most of the other assurance services that CPAsprovide do not meet the formal definitionof attestation services.

The CPA is not required to issue a written report.

The assurance does not have to be about thereliability of another party’s assertion aboutcompliance with specified criteria.


AICPA Assurance Services

The AICPA formed the Special Committeeon Assurance Services (SCAS).


Attestation Services on Information Technology

WebTrust is an attestation service, and theWebTrust seal is a symbolic representationof the CPA’s report on management’sassertions about its disclosure ofelectronic commerce practices.


Attestation Services on Information Technology

SysTrust is an attest-type engagementto evaluate and test system reliability inareas such as security and data integrity.


Principles for WebTrust and SysTrust Services

1. Online privacy2. Security3. Processing integrity4. Availability5. Confidentiality6. Certification authorities (WebTrust only)


Nonassurance Services Provided by CPAs

1. Accounting and bookkeeping services2. Tax services3. Management consulting services


Other Assurance Services Examples

Controls over and risks related to investments,including policies related to derivatives…

assessing the processes in a company’sinvestment practices to identify risks and todetermine the effectiveness of those processes.



Mystery shopping…

performing anonymous shopping to assesssales personnel dealing with customers andprocedures they follow.



Assess risks of accumulation, distribution,and storage of digital information…

assessing security risks and relatedcontrols over data and other informationstored electronically, including theadequacy of backup and off-site storage.



Fraud and illegal acts risk assessment…

developing fraud risk profiles and assessing theadequacy of company systems and policies inpreventing and detecting fraud and illegal acts.



Compliance with trading policies and procedures

Compliance with entertainment royalty agreements

ISO 900 certification

Environmental audit


Assurance, Attestation, and Nonassurance Services

Other Assurance Services

CertainManagementConsulting

Other Attestation Services(e.g., WebTrust, SysTrust)

ATTESTATION SERVICES

Audits Reviews

Internal Controlover Financial Reporting

ASSURANCE SERVICES


Assurance, Attestation, and Nonassurance Services

CertainManagementConsulting

NONASSURANCE SERVICESNONASSURANCE SERVICES

Other ManagementConsulting

TaxServices

Accounting andBookkeeping



Differentiate the three maintypes of audits.


Types of Audits

Operational

Compliance

Financial Statement


Audit Manajemen (Agus Soekrisno, 2012:12)

Audit Prosedur yang dilakukan mencakup: Analytical Review Procedures, yaitu membanding kan LK periode berjalan dengan Masa Lalu, Budget dg realisasinya serta Analisis Rasio. Evaluasi atas Management Control System, yaitu Tujuannya utk mengetahui SPM dan SPI memadai Pengujian Ketaatan (Compliance Test), yaitu Menilai Efektivitas dari SPM dan SPI


4 Tahapan Audit Manajemen (Agus Soekrisno, 2012:12)

4 Tahapan Audit Manajemen yang mencakup: Preliminary Survey Review and Testing Management Control System Detailed Examination Report Developement

Audit Manajemen dilakukan oleh: Internal Auditor KAP Management Consultant


3 Type Audit Manajemen (Agus Soekrisno, 2012:12)

3 Type Audit Manajemen yang mencakup: Functional Audits Organizational Audits Special Assignment


Operational Audit

Example Evaluate computerized payroll systemfor efficiency and effectiveness

Information Number of records processed, costs ofthe department, and number of errors

EstablishedCriteria

Company standards for efficiency andeffectiveness in payroll department

AvailableEvidence

Error reports, payroll records, andpayroll processing costs


Auditing (Agus Soekrisno, 2012:4)

Auditing Suatu pemeriksanaan yang dilakukan Secara kritis & sistematis, oleh pihak yang independenTerhadap LK yang telah disusun oleh Manajemen, beserta catatan” pembukuan & bukti” pendukungnya, dg tujuan utk memberikan pendapat mengenai kewajaran Laporan Keuangan tersebut


Auditing (Agus Soekrisno, 2012:4)

Laporan Keuangan yg wajib diperiksa: Statement of Financial Posisition Statement of Comprehensive Income Statement of Changes EquityCash Flow Statement


Auditing & Asersi Manajemen (Agus Soekrisno, 2012:4)

Asersi adalah Representasi manajemen mengenai Kewajaran Laporan Keuangan

Klasifikasi asersi Laporan Keuangan terdiri dari: Existence atau Occurance Completeness Rights and Obligations Valuation/ Allocation Presentation and Disclosure


Auditing & Asersi Manajemen (Agus Soekrisno, 2012:4)

Tugas Auditor - Asersi adalah untuk menentukan apakah representasi (asersi) tersebut betul-betul wajar,Maksudnya untuk meyakinkan apakah “tingkat keterkaitan antara asersi dan kriteria yang ditetapkan”

Kriteria: GAAP, SFAS, APBO, ARB Indonesia: ETAP, PSAK &/ IFRS


Tahapan – tahapan Audit (Agus Soekrisno, 2012:4)

KAP dihubungi oleh Klien KAP bertemu klien membicarakan alasan audit, Pernah diaudit?, jenis usaha, data akuntansi manual/komputerisasi?, sistem enyimbapan bukti KAP mengajukan audit Proposal KAP melakukan Audit Field Work KAP membuat Audit Report


Jenis-jenis Audit (Agus Soekrisno, 2012:4)

General AuditSuatu Pemeriksaan umum atas LK yg dilakukan KAP Independen dg tujuan utk bisa memberikan pendapat atas kewajaran atas LK secara keseluruhan. (Sesuai dg Standard Professional Akuntan Publik/ ISA/ Panduan Audit Entitas Bisnis dan memperhatikan Kode Etik Profesi Akuntan Publik)

Special AuditSuatu Pemeriksaan terbatas yang dimintakan oleh Auditee yg dilakukan oleh Auditor Independen dan tidak perlu memberikan Pendapat atas Kewajaran LK. Semisal cek atas Piutang apa terjadi fraud? Berapa besar? Bgm modus?


Audit Kepatuhan/ Compliance Audit (Agus Soekrisno, 2012:11)

Pemeriksaan untuk mengetahui apakah perusahaan sudah mentaati peraturan-peraturan dan kebijakan yang berlaku baik yang ditetapkan leh internal perusahaan maupun external perusahaan


Compliance Audit

Example Determine whether bank requirementsfor loan continuation have been met

Information Company records

EstablishedCriteria Loan agreement provisions

AvailableEvidence

Financial statements andcalculations by the auditor


Audit Internal (Agus Soekrisno, 2012:12)

Pemeriksaan yang dilakukan oleh bagian internal perusahaan baik untuk LK ataupun Catatan Akuntansi Perusahaan, maupun ketaatan terhadap kebijakan manajemen yang telah ditentukan


Computer Audit(Agus Soekrisno, 2012:12)

Pemeriksaan oleh KAP thd pemrosesan data akuntansi yang menggunakan Electronic Data Processing (EDP), ada 2 metode:• Audit Around the Computer (pemeriksaan thd input & output saja) • Audit Through the Computer (pemeriksanaan thd sistem EDP nya)


Audit of Historical Financial Statements

Example Annual audit of Boeing’s financialstatements

Information Boeing's financial statements

EstablishedCriteria

Generally accepted accountingprinciples

AvailableEvidence

Documents, records, and outsidesources of evidence



Identify the primary typesof auditors.


Types of Auditors

Internal auditors

Independent certified public accounting firms

Internal Revenue agents

Governmental general accounting office auditors



Describe the requirementsfor becoming a CPA.


Three Requirements forBecoming a CPA Educational requirement

Uniform CPA examination requirement

Experience requirement


CPA Examination Sections

Auditing and Attestation

Financial Accounting and Reporting

Regulation

Business Environments and Concepts

©2008 Prentice Hall Business Publishing, ©2008 Prentice Hall Business Publishing, Auditing 12/e,Auditing 12/e, Arens/Beasley/Elder Arens/Beasley/Elder 1 - 61

End of Chapter 1