REALLYGREATSITE

OTHER ASSURANCE

SERVICES
Ilham Maulana Yorza
Muhammad Gaza Wiriadi
 OBJECTIVES

Distinguish AICPA attestation

Understand the level of assurance and Describe special engagements to

Describe engagements to report

standards from auditing standards

evidence requirements for review,

review interim financial information for on internal controls at service

and know the types of engagements

compilation, and preparation services. public companies. organizations (SOC reports).

to which they apply.

Understand special engagements to

Describe other audit and limited

attest to prospective financial

Define agreed-upon procedures

assurance engagements related to

statements. engagements
historical financial statements.
 UNDERSTAND THE LEVEL OF ASSURANCE AND

EVIDENCE REQUIREMENTS FOR REVIEW, COMPILATION,

AND PREPARATION SERVICES.

The requirements for review, compilation, and preparation services are now
discussed in greater detail.

Review Service
A review service (SSARS review) engagement allows the accountant to
express limited assurance that the financial statements are in accordance
with applicable accounting standards.
 UNDERSTAND THE LEVEL OF ASSURANCE AND

EVIDENCE REQUIREMENTS FOR REVIEW, COMPILATION,

AND PREPARATION SERVICES.

Recommended Procedures For Review :

1. Obtain agreement on engagement terms.
2. Obtain knowledge of the accounting principles and practices of the
client’s industry.
3. Obtain knowledge of the client.
4. Make inquiries of management.
5. Perform analytical procedures.
6. Read the financial statements.
7. Reconcile the financial statements to underlying accounting records.
8. Obtain letter of representation.
9. Prepare documentation.
 Compilation Services
A compilation service engagement is
defined in SSARS as one in which
accountants apply accounting and financial
reporting expertise to assist management
in the preparation of financial statements
and issue a report to a client or third party
without providing any CPA assurance
about those statements.
Preparation Services
In a preparation service engagement, the
CPA is engaged by the client to prepare or
assist in preparing financial statements,
but the CPA does not provide any
assurance on the financial statements or
issue a report, even if the financial
statements are expected to be used by, or
provided to, a third party.
 DESCRIBE SPECIAL ENGAGEMENTS TO
REVIEW INTERIM FINANCIAL INFORMATION
FOR PUBLIC COMPANIES.

Like reviews under SSARS, a public company interim review includes five

requirements for review service engagements. The auditor must:

(1) obtain knowledge of the accounting principles of the client’s industry,
(2) obtain knowledge of the client,
(3) make inquiries of management,
(4) perform analytical procedures, and
(5) obtain a letter of representation.
DISTINGUISH AICPA ATTESTATION STANDARDS FROM

AUDITING STANDARDS AND KNOW THE TYPES OF

ENGAGEMENTS TO WHICH THEY APPLY.

Attestation
Attestation

Engagement Standard
In an attestation engagement, the
To provide additional guidance for

CPA reports on the reliability of

doing attestation engagements, the

information or an assertion made by

Auditing Standards Board of the

another party. AICPA issues Statements on

Standards for Attestation

Engagements (SSAE). These are

normally called attestation standards.

DISTINGUISH AICPA ATTESTATION STANDARDS FROM

AUDITING STANDARDS AND KNOW THE TYPES OF

ENGAGEMENTS TO WHICH THEY APPLY.

Level of Services
The attestation standards define three levels of engagements and related forms of conclusions:

Examinations. An examination results in a positive conclusion, which is expressed by the CPA in

the form of an opinion.

Reviews. In a review, the CPA provides a moderate level of assurance that is expressed by the

CPA in the form of a negative assurance conclusion.

Agreed-upon procedures. In an agreed-upon procedures engagement, all procedures the CPA

will perform are agreed upon by the CPA, the responsible party making the assertions, and the

specific persons who are the intended users of the CPA’s report.
DESCRIBE ENGAGEMENTS TO REPORT ON INTERNAL CONTROLS AT

SERVICE ORGANIZATIONS (SOC REPORTS).

SOC 1 REPORTS
SOC 1 reports are used to plan and perform audits of the user
entity’s financial statements by their auditors, who are referred
to as user auditors.

Have two types of SOC 1 Reports :

1) Report on management’s description of a service
organization’s system and the suitability of the design of
controls (referred to as a Type 1 report).
2) Report on management’s description of a service
organization’s system and the suitability of the design and
operating effectiveness of controls (referred to as a Type 2
report).
DESCRIBE ENGAGEMENTS TO REPORT ON INTERNAL CONTROLS AT

SERVICE ORGANIZATIONS (SOC REPORTS).

An SOC 2 report, is intended to meet the needs of a broad range of

SOC 2 REPORTS users who need information and assurance about controls at a service
organization that affect the security, availability, and processing
integrity of the systems the service organization uses to process users’
data and the confidentiality and privacy of the information processed by
these systems.

Similar to SOC 1 reports, there are two types of SOC 2 reports:

1) Report on management’s description of a service organization’s
system and the suitability of the design of controls (referred to as a
Type 1 report).
2) Report on management’s description of a service organization’s
system and the suitability of the design and operating effectiveness of
controls (referred to as a Type 2 report).
DESCRIBE ENGAGEMENTS TO REPORT ON INTERNAL CONTROLS AT

SERVICE ORGANIZATIONS (SOC REPORTS).

An SOC 3 report, Trust Services Report for Service Organizations, is

similar to an SOC 2 report except that the SOC 3 report is intended for
SOC 3 REPORTS wide distribution to current or potential users of the service
organization. SOC 3 reports are prepared using the Trust Services
principles and criteria shown in Table 25-2.
UNDERSTAND SPECIAL ENGAGEMENTS TO

ATTEST TO PROSPECTIVE FINANCIAL

STATEMENTS.

Prospective financial statements refer to

predicted or expected financial statements
in some future period (income statement)
or at some future date (balance sheet). An
example is management’s predictions of
the income statement and balance sheet
one year in the future.
UNDERSTAND SPECIAL ENGAGEMENTS TO

ATTEST TO PROSPECTIVE FINANCIAL

STATEMENTS. Forecast & Projection

1. Forecasts are prospective financial statements

that present an entity’s expected financial position,
results of operations, and cash flows, to the best of
the responsible party’s knowledge and belief.

2. Projections are prospective financial statements

that present an entity’s financial position, results of
operations, and cash flows, to the best of the
responsible party’s knowledge and belief, given one or
more hypothetical assumptions
 UNDERSTAND SPECIAL ENGAGEMENTS TO

ATTEST TO PROSPECTIVE FINANCIAL

STATEMENTS.
Use of prospective Financial Statements

1. General use statements are prepared for use by

any third party, such as the inclusion of a financial
forecast in a prospectus for the sale of hospital
bonds
2. Limited use statements are prepared solely for
third parties with whom the responsible party is
dealing directly, such as the inclusion of a financial
projection in a bank loan application document.
 UNDERSTAND SPECIAL ENGAGEMENTS TO

ATTEST TO PROSPECTIVE FINANCIAL

Types of Engagement STATEMENTS.

1. An examination engagement in which the CPA

obtains satisfaction as to the completeness and
reasonableness of all the assumptions.
2. A compilation engagement in which the CPA is
primarily involved with the computational accuracy
of the statements, and not the reasonableness of the
assumptions.
3. An agreed-upon procedures engagement in
which the CPA and all users of the statements agree
on specific, limited attestation procedures.
 UNDERSTAND SPECIAL ENGAGEMENTS TO

ATTEST TO PROSPECTIVE FINANCIAL

Examination of Prospective Financial Statements STATEMENTS.

In an examination level engagement, the CPA:

1. Evaluates the preparation of the prospective
financial statements
2. Evaluates the support underlying the
assumptions
3. Evaluates the presentation of the prospective
financial statements for conformity with AICPA
presentation guidelines
4. Issues an examination report
DEFINE AGREED-UPON PROCEDURES ENGAGEMENTS.

Many CPAs refer to these as procedures and findings engagements because the resulting
reports emphasize the specific procedures performed and the findings of those completed
procedures. Agreed-upon procedures engagements appeal to CPAs because management, or
a third-party user, specifies the procedures they want done.
 DESCRIBE OTHER AUDIT AND LIMITED

ASSURANCE ENGAGEMENTS RELATED TO

HISTORICAL FINANCIAL STATEMENTS.

OTHER COMPREHENSIVE BASIS OF ACCOUNTING

Auditors often audit statements prepared on a basis other than GAAP or IFRS. Bases
other than GAAP or IFRS for which reports may be issued include:
1) Cash or modified cash basis. With cash basis accounting, only cash receipts and
disbursements are recorded.
2) Basis used to comply with the requirements of a regulatory agency.
3) Income tax basis.
4) Financial Reporting Framework for Small- and Medium-Sized Businesses.
5) A definite set of criteria having substantial support.
 SPECIFIED ELEMENTS, ACCOUNTS, OR ITEMS

The audit of specified elements, accounts, or items is much like

an ordinary audit of financial statements except it is applied to

less than the full financial statements.

The effect is to require more evidence than if the item being verified is just one of many parts of the statements.
 DEBT COMPLIANCE LETTERS AND

SIMILAR REPORTS

The auditor must observe the following matters in such engagements:

Auditors must be qualified to evaluate whether the client has met the
provisions in the engagement.
The auditor should provide a debt compliance letter only for a client for
whom the auditor has done an audit of the overall financial statements. A
debt compliance letter on a matter such as the existence of a current ratio
of 2.5 or better would be difficult to accomplish without having
conducted a complete financial statement audit.
The auditor’s opinion is a negative assurance, stating that nothing came
to the auditor’s attention that would lead the auditor to believe there was
noncompliance.
THANK
YOU!