Reviewer for Auditing

Chapter 1

 Everyday, people make decisions.

 Relevance and reliability of information is critical for making the best decision in a given
situation.
 Reliable Information – information that is fairly stated, information that presents a true
and fair view of what it purports to represent.
 Reliability of information depends on credibility of the source of the information and the
ability to verify its accuracy or fairness.

User of financial statements Examples for Economic Decisions

Investors To buy, hold, or sell shares of the company
Creditors To approve loans applied for by the debtor or borrower
Government To amend or retain the taxation rules and regulations
Customers To continue doing business with the company, or find
suppliers
Employees Demand salary increase, stay with the company, or look for
another job

 CPAs provide assurance that they need – assurance that the information that is audited
is fairly stated.
 Assurance – auditor’s satisfaction as to the reliability
 To assure means “to give confidence or conviction”
 Assurance Services/Assurance Engagement – are three-party contracts in which the
assurers (CPAs) reports on the quality of information.
 Enhances the credibility of the information about the subject matter.

Elements of Assurance Engagements

1. Three party relationship
 Responsible Party and Intended users may be from different or the same entity.
 Practitioner – auditor
 Responsible Party – responsible for the subject matter
 Intended Users – whom the practitioners prepares the assurance report
2. Appropriate subject matter
3. Suitable Criteria
4. Sufficient Appropriate Evidence
5. Written Assurance Report

 Criteria – are benchmarks used to evaluate or measure the subject matter

- Can be formal or less formal
