Chapter 19 Additional Assurance Services: Historical Financial Information McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights.

Slides:



Advertisements
Similar presentations
Assurance Services Independent professional services that “improve the quality of information, or its context, for decision makers” Assurance service encompass.
Advertisements

Reports on Audited Financial Statements
©2010 Prentice Hall Business Publishing, Auditing 13/e, Arens/Elder/Beasley Audit Reports Chapter 3.
Third Party Verification Requests The Letter of Comfort
Chapter 1 Management’s Assertions When auditing the completeness, existence and valuation assertions for deferred revenue, the sample of.
Learning Objectives LO1 Prepare reports for review and compilation of unaudited financial statements, given specific facts. LO2 Write a report on a review.
Special Reports and Accounting and Review Services.
Chapter 20 Additional Assurance Services: Other Information
Other Assurance & Attestation Services By David N. Ricchiute
Assurance, Attestation, and Internal Auditing Services
BA 427 – Assurance and Attestation Services Lecture 18 The Types of Services Offered by Public Accounting Firms.
McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved Chapter 21 CHAPTER 21 ASSURANCE, ATTESTATION, AND OTHER FORMS OF SERVICES.
Copyright  2003 Pearson Education Canada Inc. CHAPTER 23 Assurance Services: Attest Engagements.
Module A1 Other Public Accounting Services ACCT 4080.
©2006 Prentice Hall Business Publishing, Auditing 11/e, Arens/Beasley/Elder Other Assurance Services Chapter 25.
OTHER SERVICES AND REPORTS. STATEMENTS FOR CPAS PROVIDING ACCOUNTING AND AUDITING SERVICES COMMITTEE ON AUDITING PROCEDURES –STATEMENTS ON AUDITING.
MODERN AUDITING 7th Edition
Auditors’ Reports. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved We have audited the accompanying balance sheet.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley Other Assurance Services Chapter 24.
2-1 McGraw-Hill/Irwin ©2002 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 2 Professional Standards: “The Rules of the Road”
Filmmaker Krisztof Kieslowski
Auditing & Assurance Services, 6e
CHAPTER 2 FINANCIAL STATEMENT AUDITS AND AUDITORS’ RESPONSIBILITIES Fall 2007 u G enerally Accepted Auditing Standards u Assurance Provided by an Audit.
Professional Standards. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 2-2 Generally Accepted Auditing Standards-- General.
Audit Reports - Overview
Reports on Audited Financial Statements
Reports By David N. Ricchiute
Chapter 18 Reports on Audited Financial Statements McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Additional Assurance Services: Historical Financial Information Chapter 19 McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights.
Additional Assurance Services: Historical Financial Information Chapter 19 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights.
Learning Objectives LO1 Describe the association framework. LO2 Determine whether a PA is associated with financial statements. LO3 Describe the three.
Impact of the New Clarity Standards on Governmental Audits Presented by Beila Sherman, CPA and Enrique Llerena, CPA.
Reports on Audited Financial Statements
International Auditing and Assurance Standards Board (IAASB) Issues:
Chapter 19 Additional Assurance Services: Historical Financial Information McGraw-Hill/IrwinCopyright © 2014 by The McGraw-Hill Companies, Inc. All rights.
19-1 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Washington, D.C. For the people in government, rather than the people who pester it, Washington is an early-rising, hard- working city. It is a popular.
Insert Your Firm’s Logo Here
CHAPTER 14 Audit Reports.
2 - 1 Copyright  2003 Pearson Education Canada Inc. CHAPTER 2 The Auditor’s Reports.
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
©2010 Prentice Hall Business Publishing, Auditing 13/e, Arens//Elder/Beasley Other Assurance Services Chapter 25.
17 -1 Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter 20 Additional Assurance Services: Other Information McGraw-Hill/IrwinCopyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
BA 427 – Assurance and Attestation Services
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 17 Auditors’ Reports McGraw-Hill/IrwinCopyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
1 Rittenberg/Schwieger/Johnstone Auditing: A Business Risk Approach Sixth Edition Chapter 17 Communicating Audit and Attestation Results Copyright © 2008.
Slide Auditors’ Reports. Slide Review of Audit Process 1. Obtain an understanding of internal control sufficient to plan the audit. 2. Determine.
Chapter 02 Professional Standards McGraw-Hill/IrwinCopyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
Module A1 Other Public Accounting Services ACCT 4080.
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
Auditors’ Reports Chapter 17. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved We have audited the accompanying balance.
Additional Assurance Services: Historical Financial Information Chapter 19.
Audit Reports Chapter 3. Audit Reports What is an audit report? Different reporting guidelines exist depending on the type of company upon which the auditor.
©2005 Prentice Hall Business Publishing, Auditing and Assurance Services 10/e, Arens/Elder/Beasley Other Assurance Services Chapter 25.
Reports on Audited Financial Statements
Reports on Audited Financial Statements
Parts of standard unmodified opinion audit report
COMPLETING THE AUDIT AND REPORTING RESPONSIBILITIES
Other Public Accounting Services
Chapter 19 Additional Assurance Services: Historical Financial Information McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights.
Professional Standards
Other Assurance Services
Other Assurance Services
Other Assurance Services
Canadian Auditing Standards (CAS)
Communicating Levels of Assurance
Review of Audit Process
Presentation transcript:

Chapter 19 Additional Assurance Services: Historical Financial Information McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.

Engagements that involve historical information Audit based services: assurance on additional information Reporting on compliance Letters for underwriters Summary financial statements Auditing financial statements that use a financial reporting framework other than GAAP Special purpose frameworks Another country’s framework Additional GAAS Audits Single financial statements and specified elements Personal financial statement Reviews of historical financial statements Compilations of historical financial statements 19-2

Types of Attestation Services Examinations Review Agreed-upon procedures 19-3

Audit Based Services: Assurance on Additional Information Reports on compliance with aspects of contractual agreements or regulatory requirements related to audited financial statements. Letter for Underwriters Summary Financial Statements 19-4 3 3

Reports on Compliance Regulatory requirements and debt agreements Example: Report prepared for bond trustees as evidence of company’s compliance with restrictions contained in bond indenture. To provide this service auditor must have first performed an audit of related financial statements Report provides negative assurance 19-5

Letters for Underwriters Comfort Letter Investment banking firms that underwrite a securities issue request letter from independent auditors who audited financial statements in registration statement Includes 1. The independence of the auditors. 2. Whether the audited financial statements and financial statement schedules included in the registration statement comply with the accounting requirements of the Securities Act of 1933 and related regulations. 3. Unaudited financial statements, condensed interim financial information, and pro forma financial information. 4. Changes in selected financial statement items during a period subsequent to the date and period of the latest financial statements included in the registration statement. 5. Tables, statistics, and other financial information included in the registration statement. 6. Negative assurance as to whether certain nonfinancial statement information included in the registration statement complies with SEC regulations. 19-6

Summary Financial Statements Also referred to as condensed financial statements Include less detail than the audited financial statements Auditors who have issued an audit report on the audited financial statements may issue a report on the summary financial statements Report indicates whether they are consistent, in all material respects, with the audited financial statements. 19-7

Auditing Financial Statements using Frameworks other than GAAP This includes financial statements prepared In accordance with special purpose financial reporting frameworks. Using a financial reporting framework generally accepted in another country 19-8

Special Purpose Financial Reporting Frameworks Comprehensive bases of accounting other than GAAP Cash basis Tax basis Regulatory basis Contractual basis 19-9

Financial Reporting Framework Generally Accepted in Another Country US company prepare financial statements for use in other countries Example: US company with subsidiary in Germany may prepare financial statements for that subsidiary Auditors follow general and fieldwork standards of AICPA to the extent appropriate Report depends on the expected use of the financial statements Only outside the US Issue a US report modified to reflect accounting principles of other country OR Issue a report form of the other country Use in the US and outside the US—2 reports US unmodified report with emphasis of matter paragraph indicating basis of accounting. Either option from “Only outside the US” above. 19-10

Audits of Single Financial Statements and Specified Elements of Financial Statements Auditors may be engaged to attest only to (1) a single financial statements (e.g., balance sheet) or (2) specified elements, accounts or items of a financial statement Example of specified elements: Report on lessee’s revenue requested by lessee. May be required by provisions of lease agreement. Materiality for specified elements is generally less than would be in audit - in relation to other information presented 19-11

Audits of Personal Financial Statements Examples: Politicians or large loan applications GAAP to personal financial statements Assets shown at estimated current values Liabilities presented at estimated current amounts Balance sheet = statement of financial condition shown individual net worth Income statement = statement of changes in net worth Completeness of statements is audit concern 19-12

Reviews for Nonpublic Companies Nonpublic companies may not need an audit of annual financial information CPAs follow Statement on Standards for Accounting and Review Services (SSARS) Review Attest service in which the accountants Perform analytical procedures Make inquiries of management and others Obtain representation from management relating to financial statements Report provides limited (negative) assurance 19-13

Nonpublic Company Review Report Modifications Departure from GAAP Modify third paragraph and describe departure in separate paragraph No modifications required for: Lack of consistent application of GAAP Existence of major uncertainties including going-concern uncertainties Scope limitation – no review report 19-14

Review of Public Companies Public companies required to file quarterly financial information with SEC on 10-Q Auditor reviews not audits information Objective of review Provide accountants a basis for communicating whether they are aware of any material modifications to conform with GAAP Steps in review Engagement letter to document understanding Understand the client’s business and internal control This required understanding of internal control for public company reviews is not required for nonpublic company reviews. Other Review procedures—similar to nonpublic companies 19-15

Accounting Services Reports provide no explicit assurance that the information constitutes a fair presentation Types Compilation of financial statement for nonpublic companies Compilations of prospective financial information Compilation Nonattest service in which accountants assist in the preparation of financial statements without providing any assurance on them Must at least read compiled statements for appropriate format and obvious material misstatements 19-16

Comparison of Audits, Reviews and Compilations Agreed-Upon Procedures Review Examination Explicit assurance None State findings or negative assurance Limited (negative) assurance Opinion Distribution of report General when a report is issued (limited when none issued) Limited to specified parties involved General, unless based on agreed- upon criteria Minimum procedures Read statements Agreed-upon procedures Limited procedures, such as inquiry and analytical procedures Collection of sufficient evidence to support opinion Comments Referred to as “audits” for financial statements 19-17