Continuation in Auditing Overview

7/28/2019 Continuation in Auditing Overview

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Assurance Services

Deal with the audit or review of historicalfinancial information and assurances dealingwith subject matters other than historicalfinancial information

Non- assurance Services

(Related Services)

Pertain to compilation of financial information,agreed-upon procedures and other relatedservices which do not result in the expressionof a conclusion that provides a level of

assurance


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1. Systematic process

2. Objectivity3. Obtaining and evaluating evidence

4. Assertions about economic events

5. Degree of correspondenceestablished criteria (closeness with

which the assertions can be identified

with established criteria)

6. Communicating results

7. Interested users


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Auditor

Must have a thorough understanding of the

entity and its environment (PSA 315). The

final stage of audit process is preparing the

Audit Report which is the communication of

the auditors findings to users.


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generally refers to an experts writtencommunication of a conclusion about thereliability of someone elses assertions. It occurswhen a practitioner is engaged to issue a written

communication that expresses a conclusionabout the reliability of a written assertion that isthe responsibility of another party. Attestationservice is a type of ASSURANCE SERVICEwhose subject matter (both financial and non-financial in nature) is the responsibility of anotherparty. It includes audit and reviews.

Attestation


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Assurance Services

are designed to enhance the degree of

confidence of the intended users other

than the responsible party about the

outcome of the evaluation ormeasurement of a subject matter against

criteria. They pertain to independent

professional services designed to improvethe quality of information for decision

making. Broader in scope than auditing

and attestation


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Examples

Risk Assessment- environmental risk, business

process, asset and information risks

Information system reliability Adequacy of security over electronic

transactions

Effectiveness of health care performancemeasurement systems

Reliability and relevance of business

performance measurement


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ASSURANCE

AUDIT

OTHERS

REVIEW

FinancialStatementsAudit

Audits of

InternalControlOverFinancial

*Examination ofProspectiveFinancialInformation

*CPAPerformance View

* CPA RiskAdvisory

*Review ofFinancialStatements

*Review of

interiminformation

RELATED SERVICES(Non-Assurance)

*Agreed-upon

procedures*Compilation of

financial orotherinformation

*Preparation of tax

returns and taxconsulting

*Managementconsulting

*Other advisoryservices


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Consulting Services

Are professional services that provide advice

and assistance concerning an entitysorganization, personnel, finances,

operations, systems or other activities.


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Includes the following

1. Consultations

2. Advisory

3. Implementation4. Transactions

5. Staff and other support

6. Product


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Assurance Consulting

Services Services

1. Parties involved Three-party contracts Two-party contracts

2. Primary purpose To improve quality of To recommend

information uses for information

3. Focus Decision makers and Outcomesinformation used for

optimum decisions

4. Outputs objective intended to improve to improve clients decision makers condition condition directly

indirectly through recommen- through findings,

dations conclusions and

recommendations


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Auditing vs. Accounting

-Auditing is primarily concerned with the

verification of financial statement information

and its fairness, emphasizing evidence andthe odds.

-A financial statement is the object of auditing, is

generated by the accounting system that deals

with the collecting, sorting, summarizing and

reporting financial measurements, plus

interpreting financial information.


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Types of Audit

1. Management Audit

2. Performance Audit

3. Comprehensive Audit4. Environmental Audit

5. Forensic Audit eg. Sales records to

determine the quantum of rent owing undera lease agreement, which is the subject of

litigation


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Types of Assurance

EngagementsReasonable Assurance

Objective- Reduction in assurance engagementrisk to an acceptably low level in the circumstanceof the engagement

Conclusion- Positive form of expressionLimited Assurance

Objective- Reduction in assurance engagementrisk to a level that is acceptable in the

circumstance of the engagement, but where thatrisk is greater than for a reasonable assuranceengagement as the basis for conclusion

Conclusion- Negative form of expression


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The Professional Standards

Standards- are established to measure the quality of

performance of individuals and organizations

The Board of Accountancy promulgated 10

generally accepted auditing standards (GAAS) PSAs are issued to clarify the meaning of these 10

GAAS.

Auditing procedures are the means used by the

auditors in attaining the quality required by the

standards.


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GAAS

represent measures of the quality of the

auditors performance

These are grouped into GENERAL,

FIELDWORK, REPORTING STANDARDS.


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General Standards

Technical Training and Proficiency Independence

Professional Care

Standards of Fieldwork

Planning

Internal Control Consideration Evidential Matter


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Reporting Standards

Generally Accepted Accounting Principles

Inconsistency

Disclosure Opinion


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System of Quality Control

It is only by implementing quality control

policies and procedures that CPAs can

ensure that all members of the audit teams

perform the same level of quality of work.

Quality Control

These are policies and procedures adoptedby CPAs to provide reasonable assurance of

conforming with professional standards in

performing audit and related services


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Ethical Requirements

Integrity

Objectivity

Professional Competence and due care Confidentiality

Professional Behavior

Documents

Continuation in Auditing Overview