©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder The Demand for Audit and Other Assurance Services الحاجة الى خدمات التدقيق والضمان Chapter 1

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Sarbanes-Oxley Act The Act established the Public Company Accounting Oversight Board. It also requires auditors to attest (يصادق او يؤكد على صحة) To management reports on the effectiveness (فعالية) of internal control over financial reporting.

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Nature of Auditing طبيعة التدقيق Auditing (التدقيق)is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence(توافق) between the information and established criteria. Auditing should be done by a competent(كفؤ), Independent) (مستقلperson.

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Information and Established Criteria المعلومات وتأسيس المقاييس To do an audit, there must be information in a verifiable form and some standards (criteria مقياس ) by which the auditor can evaluate the information. Accumulating Evidence and Evaluating Evidence تجميع وتقييم ادلة الاثبات Evidence (الاثبات) is any information used by the auditor to determine whether the information being audited is stated in accordance with the established criteria.

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Competent, Independent Person شخص كفؤ ومستقل 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 ( الجدارة اوالاهلية)of the individual performing the audit is of little value if he or she is biased(متحيز) in the accumulation and evaluation of evidence.

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Audit Reportتقرير المدقق The final stage (المرحلة النهائية) in the auditing process is preparing the Audit Report, which is the communication of the auditor’s findings to users. المرحة النهائية في عملية التدقيق هو اعداد تقرير التدقيق والذي يعتبر عملية توصيل نتائج التدقيق التي توصل اليها المدقق الى الجهات المستخدمة للتقرير

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Distinguish Between Auditing and Accounting الفرق بين التدقيق والمحاسبة 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.

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder the importance of auditing in reducing information risk اهمية التدقيق في الحد من مخاطر المعلومات Economic Demand for Auditing الحاجة الاقتصادية للتدقيق Information risk reflects the possibility that the information upon which the business risk decision was made was inaccurate. Auditing can have a significant effect on information risk.

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Causes of Information Risk اسباب مخاطر المعلومات  Remoteness of informationمصدر المعلومات بعيد) ): you can not get the accurate information from the source  Biases and motives of the provider تحيز ودوافع مزود المعلومة  Voluminous data كبر حجم البيانات بسبب حجم الشركات :  Complex exchange transactions تعقيدات عمليات التبادل بين الشركات : مثل الاندماج والاستحواذ

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Reducing Information Risk تقليل مخاطر المعلومات  User verifies information : the use may go to the business locations to examines records and obtain information about the reliability of statements تحقق المستخدم من صحة المعلومة  User shares information risk with management المستخدم يشارك الادارة في تحمل مخاطر المعلومة The company is responsible for providing reliable information to users if the users used inaccurate information and caused loss, so the user has right to raise a case on the court against the company management  Audited financial statements are provided: it is the most common way to get reliable information. تقديم قوائم مالية مدققة

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Assurance Services خدمات الضمان او السلامة للمعلومات An assurance service is an independent professional service that improves the quality of information for decision makers. خدمات مهنية مستقلة تهدف الى تحسين جودة المعلومات المقدمة لصناع القرار Assurance services can be performed by CPAs or by a variety of other professionals.

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Attestation Services خدمات المصادقة او الشهادة An attestation service is a type of assurance service in which the CPA firm issues a report about the reliability of an assertion(جزم او تأكيد) that is the responsibility of another party. مسؤلية طرف اخر

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Attestation Services 1.Audit of historical financial statements تدقيق القوائم المالية التاريخية, اكثر الانواع شيوعا 2. Attestation of internal control over financial reporting المصادقة على سلامة نظام الرقابة الداخلى على الابلاغ المالي 3. Review of historical financial statements مراجعة القوائم المالية التاريخية, تأكيد متوسط 4. Attestation services on information technology 5. Other attestation services

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Relationships Among Auditors, Client, and External Users العلاقة بين المدقق والعميل وامستخدم الخارجي للبيانات المدقق Client Auditor Client or audit committee hires auditor ExternalUsers Auditor issues report relied upon by users

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Other Assurance Services Most of the other assurance services that CPAs provide do not meet the formal definition of attestation services. The CPA is not required to issue a written report. The assurance does not have to be about the reliability of another party’s assertion about compliance with specified criteria.

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Nonassurance Services Provided by CPAs خدمات اخرى(غير خدمات التدقيق) مقدمة من قبل المدقق 1.Accounting and bookkeeping services المحاسبة ومسك الدفاتر 2. Tax services الخدمات الضريبية 3. Management consulting services خدمات الاستشارات الادارية

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Types of Audits  Operational التدقيق التشغيلي Evaluate the efficiency and effectiveness of any part of organization operating procedures and methods. The management expect recommendation for improving operation it is not limited to accounting procedures, it may include Evaluate of organisation structure, computer operation and Production methods.  Compliance تدقيق معني بمدى تقيد الشركة بالتعليمات Is conducted to determine whether the auditee is following specific procedures, rules or regulation set by some higher authority  Financial Statementالقوائم المالية تدقيق financial statement audit is conducted to determine whether the financial statements are stated in accordance with specific criteria, normally GAAP.

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Operational Audit Example Evaluate computerized payroll system for efficiency and effectiveness Information Number of records processed, costs of the department, and number of errors Established Criteria Company standards for efficiency and effectiveness in payroll department Available Evidence Error reports, payroll records, and payroll processing costs

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Compliance Audit Example Determine whether bank requirements for loan continuation have been met InformationCompany records Established Criteria Loan agreement provisions Available Evidence Financial statements and calculations by the auditor

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Audit of Historical Financial Statements Example Annual audit of Boeing’s financial statements InformationBoeing's financial statements Established Criteria Generally accepted accounting principles Available Evidence Documents, records, and outside sources of evidence

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Types of Auditors  Internal auditors المدقق الداخلي  Independent certified public accounting firms المدقق المستقل The most common are CPA firms اكثر الانواع شيوعا  Internal Revenue agents مهمتهم تدقيق مدى الالتزام بقانون الفدرالي للضريبة  Governmental general accounting office auditors, يرفع تقريرة الى مجلس النواب مدققين الحكومة, في الاردن مدققو ديوان المحاسبة

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Three Requirements for Becoming a CPA  Educational requirement  Uniform CPA examination requirement  Experience requirement

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder CPA Examination Sections  Auditing and Attestation  Financial Accounting and Reporting  Regulation  Business Environments and Concepts