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The Demand for Audit and Other m en Services Assurance t

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ev Sarbanes-Oxley Act ia Do cu The Act established the Public Company m Accounting Oversight Board. en tC on ve on the It also requires auditors to report rte financial effectiveness of internal control over rP reporting. ro v6

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ev Learning Objective 1 ia Do cu Describe auditing. m en tC on ve rte rP ro

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ia Nature of Auditing Do cu Auditing is the accumulation and evaluation m en of evidence about information to determine tC and report on the degree of correspondence between the information and established criteria. on ve rte Auditing should be done by a competent, rP independent person. ro v6 .1
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Ne Information and Established ev ia Criteria Do cu must be information in a To do an audit, there m verifiable form and some standards (criteria) en tC by which the auditor can evaluate the information. on ve rte rP ro v6 .1
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Ne Accumulating Evidence and ev ia Evaluating Evidence Do cu Evidence is anym information used by the auditor en to determine whether the information being tC audited is stated in accordance with the established criteria. on ve rte rP ro v6 .1
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Competent, Independent ev ia Person Do cu The auditor must be qualified to understand the m en criteria used and must be competent to know the types and amount t evidence to accumulate of Co after the to reach the proper conclusion nv evidence has been examined. er te rP The competence of the individual performing ro the audit is of little value if he or she is biased v6 in the accumulation and evaluation of evidence. .1
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cu the auditing process is The final stage in m preparing the Audit Report, which is the en tC communication of the auditors findings to users. on ve rte rP ro v6 .1
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Audit Report

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ev Learning Objective 2 ia Do cu Distinguish between auditing m and accounting. e nt Co nv er te rP ro

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ev Distinguish Between ia Auditing and Accounting Do cu Accounting is the recording, classifying, m en and summarizing of economic events for the purpose oftproviding financial Co information used in decision making. nv er Auditing is determining whether te recorded information properly r Pr reflects the economic events that o occurred during the accounting period. v 6

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ev Learning Objective 3 ia Do cu Explain the importance of auditing m in reducing information risk. en tC on ve rte rP ro

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ev Economic Demand ia Do for Auditing cu reflects the possibility that Information risk m the information e upon which the business nt was inaccurate. risk decision was made Co nv effect Auditing can have a significant er on information risk. te rP ro v6

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ev Learning Objective 4 ia Do cu List the causes of information mhow this risk risk, and explain e nt may be reduced. Co nv er te rP ro

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ev Causes of Information Risk ia Do cu of information Remoteness m en Biases and motives of the provider tC on ve Voluminous data rte rP Complex exchange transactions ro v6

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eReducing Information Risk vi a Do cuinformation User verifies m en User shares information risk with management tC on ve Audited financial statements are provided rte rP ro v6 .1
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ev Learning Objective 5 ia Do cu Describe assurance services m services and distinguish audit en tC from other assurance and nonassurance services on ve provided by CPAs. rte rP ro

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ev Assurance Services ia Do cu service is an independent An assurance m professional service that improves the en tC quality of information for decision makers. on Assurance services can beve performed by rte CPAs or by a variety of other professionals. rP ro v6 .

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ev Attestation Services ia Do cu An attestation m service is a type of assurance en service in which the CPA firm issues a tC report about the reliability of an assertion that is the responsibility of another party. on ve rte rP ro v6 .

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ev Attestation Services ia Do cu m en 1. Audit of historical financial statements tC 2. Attestation of internal control over financial on reporting ve 3. Review of historical financial statements rte rP 4. Attestation services on information technology ro 5. Other attestation services v6 .1
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Ne Relationships Among Auditors, ev ia Client, and External Users Do cu m Auditor issues Client or audit en report relied committee hires Auditor tC upon by users to reduce auditor information risk on ve rte Provides capital rP External Client ro Users v6 Client provides financial .1 statements to users
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eOther Assurance Services vi a Do cu assurance services that CPAs Most of the other m provide do not meet the formal definition en of attestation services.t Co nv a written report. The CPA is not required to issue er te rP The assurance does not have to be about the ro reliability of another partys assertion about v6 compliance with specified criteria. .1
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evNonassurance Services ia Provided by CPAs Do cu and bookkeeping services 1. Accounting m 2. Tax services e nt 3. Management consulting services Co nv er te rP ro

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eOther Assurance Services vi a Do Examples cuaccumulation, distribution, Assess risks of m and storage of digital information en tC on ve rte assessing security risks and related rP controls over data and other information ro stored electronically, including the adequacy of backup and off-site storage. v6

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eOther Assurance Services vi a Do Examples cu trading policies and procedures Compliance with m en Compliance with entertainment royalty agreements tC on ve ISO 900 certification rte rP Environmental audit ro v6 .1
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Assurance, Attestation, and ev ia Nonassurance Services Do cu ASSURANCE SERVICES m en tC on ve rte rP ro v6

ATTESTATION SERVICES Audits Reviews Internal Control over Financial Reporting Other Attestation Services (e.g., WebTrust, SysTrust) Certain Management Consulting Other Assurance Services

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Assurance, Attestation, and ev ia Nonassurance Services Do cu NONASSURANCE SERVICES m en tC on ve rte rP ro v6

Other Management Consulting Certain Management Consulting Accounting and Bookkeeping Tax Services

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ev Learning Objective 6 ia Do Differentiate cu three main the m types of audits. e nt Co nv er te rP ro

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Types of Audits Do cu Operational m en Compliance t Co nv Financial Statement er te rP

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ia Operational Audit Do cu computerized payroll system Evaluate m Example for efficiency and effectiveness en trecords processed, costs of Number of C Information on number of errors the department, and ve rte Established Company standards for efficiency and rP Criteria effectiveness in payroll department ro Available Error reports, payroll records, and v6 Evidence payroll processing costs .1
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ia Compliance Audit Do cu Determine whether bank requirements m continuation have been met Example for loane nt Co Information Company records nv er Established te Loan agreement provisions rP Criteria ro Available Financial statements and v6 Evidence calculations by the auditor .1
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Audit of Historical Financial ev ia Do Statements cu audit of Boeings financial Annual m Example statements en tC Information Boeing's financial statements on ve rte Established Generally accepted accounting rP Criteria principles ro Available Documents, records, and outside v6 Evidence sources of evidence
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ev Learning Objective 7 ia Do c primary types Identify theu m of auditors. en tC on ve rte rP ro

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ia Types of Auditors Do cu Independent certified public accounting firms m en Governmental general accounting office auditors tC on Internal Revenue agents v er te rP Internal auditors ro v6 .1
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ev Learning Objective 8 ia Do cu Describe the requirements m e CPA. for becoming a n tC on ve rte rP ro

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evThree Requirements for ia Becoming a CPA Do cu requirement Educational m en Uniform CPA examination requirement tC on ve Experience requirement rte rP ro v6

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ev CPA Examination Sections ia Do cu and Attestation Auditing m en Financial Accounting and Reporting tC on ve Regulation rte Business Environments and r P Concepts ro v6

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