1、Assurance Services and the CPA Profession,Chapter 1,Learning Objective 1,Describe assurance services and distinguish audit services from other assurance and nonassurance services provided by CPAs.,Assurance Services,Assurance services are professional services that improve the quality of information
2、 for decision makers.,Assurance services can be performed by CPAs or by a variety of other professionals.,Attestation Services,An attestation service is a type of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party
3、.,Other Assurance Services,Most other assurance services do not meet the formal definition of attestation services.,The CPA must be independent.,The CPA is not required to provide a written report.,The CPA must provide assurance.,Assurance Services on Information Technology,There is an increased dem
4、and for assurance about computer controls surrounding information transacted electronically and the security of the information related to the transactions., assurance over Web site controls, assurance about information system reliability,Assurance Services on Information Technology,WebTrust is an a
5、ttestation service, and the WebTrust seal is a symbolic representation of the CPAs report on managements assertions about its disclosure of electronic commerce practices.,Assurance Services on Information Technology,SysTrust is an attest-type engagementto evaluate and test system reliability in area
6、s such as security and data integrity.,Assurance Services on Other Types of Information,CPA Performance View,CPA ElderCare Services,CPA Risk Advisory Services,Assurance, Attestation, and Nonassurance Services,Assurance, Attestation, and Nonassurance Services,NONASSURANCE SERVICES,Other Management Co
7、nsulting,Tax Services,Certain Management Consulting,Accounting and Bookkeeping,Learning Objective 2,Explain the causes of information risk and the importance of auditing in reducing this risk.,Economic Demand for Auditing,Information risk reflects the possibility that the information upon which the
8、business risk decision was made was inaccurate.,Auditing can have a significant effect on information risk.,Causes of Information Risk,1. Remoteness of information,2. Biases and motives of the provider,3. Voluminous data,Reducing Information Risk,1. User verifies information,2. User shares informati
9、on risk with management,3. Audited financial statements are provided,Learning Objective 3,Describe auditing and distinguish between auditing and accounting.,Nature of Auditing,Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspon
10、dence between the information and established criteria.,Auditing should be done by a competent, independent person.,Accumulating and Evaluating Evidence,Evidence is any information used by the auditor to determine whether the information being audited is stated in accordance with the established cri
11、teria.,Competent, Independent Person,The auditor must be qualified to understand the criteria used and must be competent to know the types and amount of evidence to accumulate to reach the proper conclusion after the evidence has been examined.,The competence of the individual performing the audit i
12、s of little value if he or she is biased in the accumulation and evaluation of evidence.,Reporting,The final stage in the auditing process is preparing the Audit Report which is the communication of the auditors findings to users.,Audit of a Tax Return Example,Distinction Between Auditing and Accoun
13、ting,Accounting is the recording, classifying, and summarizing of economic events for the purpose of providing financial information used in decision making.,Auditing is determining whether recorded information properly reflects the economic events that occurred during the accounting period.,Learnin
14、g Objective 4,Differentiate the three main types of audits.,Types of Audits,Financial Statement Audit,Operational Audit,Compliance Audit,Efficiency,Effectiveness,Operational Audit,Compliance Audit,Financial Statement Audit,Learning Objective 5,Identify the primary types of auditors.,Types of Auditor
15、s,Internal Auditors,Certified Public Accounting Firms,Internal Revenue Agents,General Accounting Office Auditors,Learning Objective 6,Discuss how e-commerce and the Internet affect CPA firm operations.,E-Commerce and CPA Firm Operations,CPA firms are using the Internet to market their services.,They
16、 also use the Internet to connect their global professional staff.,Senders mail server,Receivers mail server,Learning Objective 7,Describe the requirements for becoming a CPA.,Three Requirements for Becoming a CPA,Educational,Passing the CPA Exam,Experience,Learning Objective 8,Describe the AICPA an
17、d its role in setting standards.,The AICPA sets professional requirements for CPAs, conducts research, and publishes materials on many different subjects related to accounting, auditing, attestation and assurance services, management consulting services, and taxes.,AICPA,Vision for the Future,The AI
18、CPA has established the CPA Vision Project to provide a core purpose and a vision for the CPA profession in the year 2011 and beyond.,The core purpose of the CPA Vision Project is “CPAsmaking sense of a changing and complex world.”,Vision for the Future,The future success of the CPA profession relie
19、s a great deal on public perceptions of CPAs abilities and roles.,CPAs must become market driven and not dependent on regulations to keep them in business.,The market demands less audit and accounting and more value-adding consulting services.,Vision for the Future,Specialization is critical for the
20、 future of the CPA profession.,The market demands that CPAs beconversant in global business practices and strategies.,The AICPA is empowered to set standards (guidelines) and rules that all members and other practicing CPAs must follow.,The requirements are set by committees made up of AICPA members
21、.,Establishing Standards and Rules,Establishing Standards and Rules,1. Auditing Standards,2. Compilation and Review Standards,3. Other Attestation Standards,4. Code of Professional Conduct,Learning Objective 9,Use generally accepted auditing standards as a basis for further study.,1. The audit is to
22、 be performed by a person orpersons having adequate technical trainingand proficiency as an auditor.,2. In all matters relating to the assignment,an independence in mental attitude is tobe maintained by the auditor or auditors.,General Standards,3. Due professional care is to be exercised inthe plan
23、ning and performance of the auditand the preparation of the report.,1. The work is to be adequately planned andassistants, if any, are to be properlysupervised.,2. A sufficient understanding of internalcontrol is to be obtained to plan the auditand to determine the nature, timing, andextent of tests
24、 to be performed.,Standards of Field Work,Standards of Field Work,3. Sufficient competent evidential matter is tobe obtained through inspection, observation,inquiries, and confirmations to afford areasonable basis for an opinion regardingthe financial statements under audit.,1. The report shall stat
25、e whether the financialstatements are presented in accordance withgenerally accepted accounting principles.,2. The report shall identify those circumstancesin which such principles have not beenconsistently observed in the current periodin relation to the preceding period.,Standards of Reporting,3.
26、Informative disclosures in the financialstatements are to be regarded as reasonablyadequate unless otherwise stated in the report.,4. The report shall contain an expression ofopinion regarding the financial statements,taken as a whole.,Standards of Reporting,Summary of General Standards,Learning Obj
27、ective 10,Identify quality control standards and practices within the accounting profession.,Elements of Quality Control,Independence, integrity, and objectivity,Personnel management,Acceptance and continuation of clients and engagements,Engagement performance,Monitoring,Relationships,Learning Objec
28、tive 11,Summarize the role of the Securities and Exchange Commission in accounting and auditing.,The overall purpose of the Securities and Exchange Commission (SEC) is to assist in providing investors with reliable information upon which to make investment decisions.,Securities and Exchange Commissi
29、on,CPAs Encouraged to Conduct Themselves at a High Level,CPA examination,GAAS and interpretations,Conduct of CPA firm personnel,Continuing education requirements,CPAs Encouraged to Conduct Themselves at a High Level,Conduct of CPA firm personnel,SEC,Peer review,Quality control,CPAs Encouraged to Conduct Themselves at a High Level,Conduct of CPA firm personnel,Legal liability,Division of CPA firms,Code of Professional Conduct,End of Chapter 1,
