AUDITS AND ASSURANCE SERVICES The Attest Function Chapter 1

Attestation services To help improve the reliability and relevance of information Types: Audit of financial statements – expressing an opinion about whether the financial statements are in conformity with GAAP Audit of financial statements – expressing an opinion about whether the financial statements are in conformity with GAAP Review of financial statements Review of financial statements Agreed upon procedures Agreed upon procedures

Non - Attestation services Types: Accounting Accounting Bookkeeping services Bookkeeping services Tax services Tax services Management consulting services Management consulting services Litigation support Litigation support Fraud investigation Fraud investigation Personal financial planning Personal financial planning

Economic Demand for Auditing Business risk – risk associated with a company’s survival and profitability Information risk – reflects the possibility that the information upon which the business risk decision was made was innacurate. Causes are: Remoteness of information Remoteness of information Biases and motives of provider Biases and motives of provider Voluminous data Voluminous data Complex exchange transactions Complex exchange transactions

Nature of Auditing Auditing is the accumulation and evaluation about information to determine and report on the degree of correspondence between the information and established criteria. Auditing should be done by a competent, independent person.

Types of Audits Financial statements audits - to determine whether the overall financial statements are stated in accordance with GAAP Financial statements audits - to determine whether the overall financial statements are stated in accordance with GAAP Operational audits – to review any part of an organization’s operating procedures and methods for the purpose of evaluating EFFICENCY & EFFECTIVENESS Operational audits – to review any part of an organization’s operating procedures and methods for the purpose of evaluating EFFICENCY & EFFECTIVENESS Compliance audits – to determine whether the auditee is following specific procedures, rules, or regulations set by some higher authority Compliance audits – to determine whether the auditee is following specific procedures, rules, or regulations set by some higher authority

Types of Auditors Certified public accountants – all types of audits Certified public accountants – all types of audits General Accounting Office – compliance and operational audits General Accounting Office – compliance and operational audits Contralor de PR – compliance audits Contralor de PR – compliance audits Auditores de Hacienda – compliance audits Auditores de Hacienda – compliance audits Internal auditors – compliance and operational audits Internal auditors – compliance and operational audits

Questions?