Modern Auditing:Modern Auditing:Assurance Services and the Assurance Services and the

Integrity of Financial Reporting, 8Integrity of Financial Reporting, 8thth EditionEdition

Modern Auditing:Modern Auditing:Assurance Services and the Assurance Services and the

Integrity of Financial Reporting, 8Integrity of Financial Reporting, 8thth EditionEdition

William C. BoyntonWilliam C. BoyntonCalifornia Polytechnic State California Polytechnic State

University at San Luis ObispoUniversity at San Luis Obispo

Raymond N. Raymond N. JohnsonJohnson

Portland State UniversityPortland State University

Chapter 20 – Attest and Assurance Services, and Related Reports

Chapter OverviewChapter OverviewChapter OverviewChapter Overview

Universe of Assurance Universe of Assurance ServicesServices

Universe of Assurance Universe of Assurance ServicesServices

Levels of AssuranceLevels of AssuranceLevels of AssuranceLevels of Assurance

• Audit or Examination-level Assurance

• Review-level Assurance– Negative Assurance

• Agreed-upon Procedures

• No Assurance– Accounting and Compilation Services

Assurance/Service MatrixAssurance/Service MatrixAssurance/Service MatrixAssurance/Service Matrix

Types of EngagementsTypes of EngagementsTypes of EngagementsTypes of Engagements

• Statements on Auditing Standards (SAS)

• Statements on Standards for Attestation Engagements (SSAE)

• Statements on Standards for Accounting and Review Services (SSARS)

Other SAS Engagements – Other SAS Engagements – Special ReportsSpecial Reports

Other SAS Engagements – Other SAS Engagements – Special ReportsSpecial Reports

• Other Comprehensive Bases of Accounting

• Specified Elements, Accounts, or Items of a Financial Statement

• Compliance Reports Related to Audited Financial Statements

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1. This level of assurance intends to give the positive expression of opinion by the CPA regarding an assertion by management.

A. Audit-level assuranceB. Review-level assuranceC. Agreed-upon proceduresD. No assurance

A. Audit-level assurance

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2. This defines the services associated with the review or the compilation of financial statements of a nonpublic entity.

A. SASB. SSAEC. SSARSD. GAAS

C. SSARS

Accepting and Performing Accepting and Performing Attest EngagementsAttest Engagements

Accepting and Performing Accepting and Performing Attest EngagementsAttest Engagements

• Attest Engagement– Gathers evidence– Objectively assesses the measurements

and communication– Reports the findings

• Attestation Standards– SSAE 1 (Figure 20-7)– General Standards– Standards of Fieldwork– Standards of Reporting

Engagements Performed Engagements Performed Under Attestation StandardsUnder Attestation Standards

Engagements Performed Engagements Performed Under Attestation StandardsUnder Attestation Standards

• SSAE 101 Engagements– CPA WebTrust

•Business and information privacy practices

•Transaction integrity• Information protection

– CPA SysTrust•Availability•Security• Integrity•Maintainability

Engagements Performed Engagements Performed Under Attestation StandardsUnder Attestation Standards

Engagements Performed Engagements Performed Under Attestation StandardsUnder Attestation Standards

• Agreed-upon Procedure Engagements– Report of Procedures and Findings

• Reporting on Prospective Financial Information– Types of Prospective Financial Information

• Financial Forecast• Financial Projection

– Types of Services• Compilation• Examination• Application of Agreed-upon Proceures

Engagements Performed Engagements Performed Under Attestation StandardsUnder Attestation Standards

Engagements Performed Engagements Performed Under Attestation StandardsUnder Attestation Standards

• Compliance Attestation– Examination Engagements

•Nature of Compliance Requirements•Nature and Frequency of Noncompliance•Qualitative Considerations

– Agreed-upon Procedure Engagements•Compliance with Specified Requirements•Effectiveness of Entity’s Internal Control•Both of the Above

Accounting and Review Accounting and Review ServicesServices

Accounting and Review Accounting and Review ServicesServices

• Nonpublic Companies– Review of Financial Statements

•Review Engagement

– Compilation of Financial Statements•Compilation Engagement

Other Assurance OpportunitiesOther Assurance OpportunitiesOther Assurance OpportunitiesOther Assurance Opportunities

• CPA Risk Advisory– Business Risk Management

• Identification and assessment of primary potential risks

• Independent assessment of identified risks

•Evaluate system of identification and limitation of risks

Other Assurance OpportunitiesOther Assurance OpportunitiesOther Assurance OpportunitiesOther Assurance Opportunities

• CPA Performance View– Performance Measurement

•Assess whether systems a properly measuring activities

•Evaluate employees

•Measure actual performance against objectives

• Identify areas providing best opportunities for improvement

Other Assurance OpportunitiesOther Assurance OpportunitiesOther Assurance OpportunitiesOther Assurance Opportunities

• CPA Eldercare– Attestation Engagements

– Direct Services

– Consulting Services

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3. All of the following are risks associated with doing business electronically, except:

A. Business and information privacy practices

B. Transaction integrityC. Information protectionD. All of the above

D. All of the above

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4. Of the four SysTrust Principles, this one describes the system being protected against unauthorized physical and logical access.

A. AvailabilityB. SecurityC. IntegrityD. Maintainability

B. Security

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5. This type of prospective financial information presents, to the best of the responsible party’s knowledge and belief, an entity’s expected financial position, results of operations, and cash flows.

A. BudgetB. Financial forecastC. Financial projectionD. All of the above

B. Financial forecast

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6. This is the AICPA’s branded version of performance measure.

A. CPA CompilationsB. CPA Risk AdvisoryC. CPA Performance ViewD. CPA Eldercare

C. CPA Performance View