7/29/2019 Mod_A.ppt

1/21

McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

7/29/2019 Mod_A.ppt

2/21

Module A Other Public Accounting ServicesLearning Objectives

1. Explain and provide examples of attestation engagements.

2. Describe reviews and compilations of unaudited financial

statements and prepare appropriate reports given specific

factual circumstances.

3. Explain auditors responsibilities related to reporting oninterim financial information.

4. Define, explain, and give examples of other special

reports provided by auditors, including specified elements

of financial statements, special purpose frameworks andapplication of requirements of appropriate financial

reporting frameworks.

5. Explain and provide examples of assurance services

engagements.Mod A-2

7/29/2019 Mod_A.ppt

3/21

Attestation Engagements

Report on subject matter or assertion about

subject matter.

Responsibility of another party

Responsible partyacknowledge

responsibility

Mod A-3

7/29/2019 Mod_A.ppt

4/21

Types of Attestation Engagements

Levels of Assurance

Examination

Review

Agreed upon procedures

Mod A-4

7/29/2019 Mod_A.ppt

5/21

Standards

Statements on Standards for Attestation

Engagements (SSAEs)

From Auditing Standards Board (AICPA)

Similar to fundamental auditing principles

Mod A-5

7/29/2019 Mod_A.ppt

6/21

Agreed-Upon Procedures

Engagements Consists of performing procedures normally

associated with an audit or special engagement

Scope less than in an audit (responsibility of user) Accountant reports procedures and findings

Must restrict distribution of report to users whoestablished scope of engagement

Mod A-6

7/29/2019 Mod_A.ppt

7/21

Financial Forecasts

and Projections (AT 301) Prospective Financial Information (PFI)

Financial information representing the financial position, results ofoperations, and cash flows for some period of time in the future.

Types of PFI

Financial projection Financial forecast

Distribution limited use.

general use.

Mod A-7

7/29/2019 Mod_A.ppt

8/21

Reporting on Pro Forma Financial

Information (AT 401)Pro Forma Financial Information

Reporting "AS IF" a transaction had occurred bya specific date (retrospectively).

Basic Engagement Objectives

Management's assumptions on significant effectsof transactions are reasonable

Management's assumptions are properly reflectedin pro forma adjustments

The adjustments are properly made in the proforma results

Mod A-8

7/29/2019 Mod_A.ppt

9/21

Examination of an Entitys Internal

Control over Financial Reporting (AT

501)--Conditions

Management accepts responsibility.

Managements evaluation of control is based on

suitable and available criteria.

Managements evaluation of control is supported

by sufficient evidence.

Management presents its assertion in a writtenreport that accompanies the auditors report.

Mod A-9

7/29/2019 Mod_A.ppt

10/21

Compliance Attestation (AT 601)

Examples

dividend limitations

loan limitations

prescribed debt/equity ratios

limitations on geographic operations

Examination parallels audit

No reviews

Mod A-10

7/29/2019 Mod_A.ppt

11/21

Management Discussion and Analysis

(AT 701)

Management Discussion and Analysis (MD&A)

accompanies audited financial statements in the

annual report.

Auditors are required to read the MD&A to ensure

that information is consistent with the audited

financial statements.

Auditors may accept an engagement to perform an

examination or review of the MD&A.

Mod A-11

7/29/2019 Mod_A.ppt

12/21

Service Organizations (AT801)

Third-parties that process transactions for other entities. Many

companies use third-parties to

The controls exist at the third-party provider

Types of Reports

Included with Service Organization Reports (SOCs)

Mod A-12

7/29/2019 Mod_A.ppt

13/21

Unaudited Financial

Statements Reviewsmoderate assurance

Compilationsno assurance

StandardsStatements on Standards for

Accounting and Review Services (SSARs)

From AICPA Accounting and Review

Services Committee

Mod A-13

7/29/2019 Mod_A.ppt

14/21

Review Engagements

Review engagement procedures

Audit documentation

Reports should include

Statement that information is representation of

management

A description of the scope of a review engagement Level of assurance provided

The date of completion

Each page of the Financial Statements reviewed

should include: SEE ACCOUNTANTS' REVIEWREPORT".

Mod A-14

7/29/2019 Mod_A.ppt

15/21

Compilation Engagements

Do not have to include footnotes.

Accountants do not have to be independent.

No assurance provided.

The date of completion

Each page of the compiled financial statementsshould include:

SEE ACCOUNTANTS' COMPILATIONREPORT".

Mod A-15

7/29/2019 Mod_A.ppt

16/21

Other Issues

Reviews, compilations and fraud

Comparative financial statements

Different levels of service

Prescribed forms

Predecessor accountants Additional paragraphs

Personal financial plans

Mod A-16

7/29/2019 Mod_A.ppt

17/21

Review of Interim Financial

Information Financial information that covers a period ending on a date

other than the entitys fiscal year end.

SEC companies are required to have a review of the

interim financial information filed with the SEC.

Need to gain sufficient knowledge of the entitys business

and internal control.

May have a report on interim financial information

Mod A-17

7/29/2019 Mod_A.ppt

18/21

Special Reports

Special Reports refers to auditors' reportsissued in connection with the following:

Specified elements, accounts, or items of afinancial statement

Financial statements that are prepared inconformity with a special purpose framework

(SPF)Reporting on the requirements of appropriate

financial reporting frameworks

Mod A-18

7/29/2019 Mod_A.ppt

19/21

Reports on Elements of Financial

Statements (AU 805) Independent auditors may be requested to express an

opinion on one or more specified elements, accounts, oritems of a financial statement.

GAAS audit performed. Report similar to audit report

Ifadverse opinion or disclaimer is issued for the financialstatements taken as a whole, the auditors may not acceptengagement (i.e., the auditors may not reduce scope of

service).

Mod A-19

7/29/2019 Mod_A.ppt

20/21

Special Purpose Frameworks (SPFs)

(AU 800)

Types of bases that may be used

Statements conforming to regulatory agency accounting rules Basis used for income tax purposes

Cash basis or Modified cash basis

Some other method required for contractual purposes

A GAAS audit is still performed.Report Modifications Introductory Paragraph Scope Paragraph Opinion Paragraph Emphasis of matter paragraph (unless regulatory basis for general use) Limited distribution.

Mod A-20

7/29/2019 Mod_A.ppt

21/21

Assurance Services

Assurance Services are independent professional services

that improve the quality of information, or its context, for

decision makers.

Extensible Business Reporting Language (XBRL)

Enhanced Business Reporting

Trust Services

WebTrust

SysTrust

Sustainability