Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
(CHAPTERS 24 - 25)
OTHER ASSURANCE
AND NONASSURANCE
SERVICES
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
24OTHER AUDITATTESTATION SERVICES,AND COMPILATION
ENGAGEMENTS
SKEPTICISM APPLIES TO ALL
TYPES OF ENGAGEMENTS
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Obtain knowledge of the accounting principles of the client’s industry.
Obtain knowledge of the client.
Make inquiries of management.
1,Inquire as the company’s procedures for recording,
classifying,and summarizing transactions,and
disclosing information in the statements.
2,Inquire into actions taken at meetings of stockholders
and board of directors.
3,Inquire of persons having responsibility for financial and
accounting matters.
Review Services
Procedures Suggested for Reviews
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Procedures Suggested
for Reviews (continued)
Perform analytical procedures
Obtain letter of representation
Relationship between
Evidence Accumulation
and Assurance
Attained
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Form of Report
1,The first paragraph is similar to an audit
report except for its reference to a
review service rather than an audit.
2,The second paragraph notes that a review
consists primarily of inquiries and
analytical procedures.
3,The third paragraph expresses limited
assurance in the form of a negative
assurance that,we are not aware of
any material modifications that
should be made to the financial s
statements.”
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Requirements for Compilation
Posses knowledge about the accounting principles
and practice of the client’s industry.
Know the client; the nature of the client’s business
transactions,accounting records,and
employees; and the basis,form,and content
of the financial statements.
Make inquiries to determine whether the client’s
information is satisfactory.
Read the compiled financial statements and be alert
for any obvious omissions or errors in
arithmetic and GAAP.
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Compilation with full disclosure requires
disclosures in accordance with GAAP.
Compilation that omits substantially all disclosures.
This type of statement is usually expected to be
used primarily for management purposes only.
Compilation without independence,A CPA
firm can issue a compilation report even if
it is not independent with respect to the client,
as defined by the Code of Professional Conduct.
Compilation Form of Report
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
INTERIM FINANCIAL INFORMATION
FOR PUBLIC COMPANIES
SAS 71 Reviews
An SAS 71 review does not provide a basis for expressing a
positive-form opinion,There are ordinarily no tests of the
accounting records,independent confirmations,or physical
examinations.
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Comprehensive Basis
of Accounting
Introductory Paragraph
Scope Paragraph
Middle paragraph Stating
the Accounting Basis
Opinion Paragraph
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
The specified elements,accounts,or items must be
identified.?
The basis on which the specified elements,accounts,or
items are presented and the agreements specifying the
basis must be described.?
Source of significant interpretations made by the client
about the provisions of a relevant agreement must be
indicated and described.?
If the specified element,account,or item is presented on
a basis that is not in conformity with GAAP,a
paragraph that restricts the distribution of the report to
those within the entity and the parties to the contract or
agreement must be added.
Specified Elements,
Accounts,or Items
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Information Accompanying
Basic Financial Statements
Detailed comparative statements supporting the control totals
on the primary financial statements for accounts such as
cost of good sold,operating expenses,and miscellaneous assets.
Supplementary information required by the Financial
Accounting Standards Board or the SEC.
Statistical data for past years in the form
of ratios and trends
A schedule of insurance coverage.
Specific comments on the changes that have
taken place in the statements.
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
FIGURE 24 - 8
Information Accompanying Basic Financial Statements
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Debt Compliance Letters
and similar Reports
The engagement and report should be limited to compliance matters
the auditor is qualified to evaluate.
The auditor should provide a debt compliance letter only for a
client for whom he or she has done an audit of the overall
financial statements.
The auditor’s opinion is in the form of a negative assurance,stating
that nothing came to the auditor’s attention that would lead
the auditor to believe there was noncompliance.
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Attestation Standards
Types of Attestation
Engagements
Levels of Service
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
FIGURE 24 - 11
Types of Engagements and Related Reports
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Forecasts and Projections
Use of Prospective financial Statements
Types of engagements
Examination of Prospective Financial Statements
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Reporting on
Internal Control
Comparison to Requirements for Audits
Requirements for an Examination of the Effectiveness
of Internal Control
Internal control for Service Organizations
WebTrust Business Practices and Controls over
Electronic Commerce
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Agreed-Upon Procedures
Engagements
1,The SASs deal with financial statement items,where
as the SSAEs deal with nonfinancial statement subject matter.
2,Management must provide a written assertion for an SSAE
engagement but not for an SAS engagement.
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Compilations,
Reviews &
Audits
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Agreed-upon procedures engagement
Attestation engagement
Compilation service
Examination
Forecasts
Projections
Prospective financial statements
Review
Review service (SSARS review)
SAS 71 reviews
Statements on Standards for Accounting
and Review Services (SSARS)
Statements on Standards for
Attestation Engagements (SSAE)
WebTrust
2000 Prentice Hall,Inc.
(CHAPTERS 24 - 25)
OTHER ASSURANCE
AND NONASSURANCE
SERVICES
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
24OTHER AUDITATTESTATION SERVICES,AND COMPILATION
ENGAGEMENTS
SKEPTICISM APPLIES TO ALL
TYPES OF ENGAGEMENTS
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Obtain knowledge of the accounting principles of the client’s industry.
Obtain knowledge of the client.
Make inquiries of management.
1,Inquire as the company’s procedures for recording,
classifying,and summarizing transactions,and
disclosing information in the statements.
2,Inquire into actions taken at meetings of stockholders
and board of directors.
3,Inquire of persons having responsibility for financial and
accounting matters.
Review Services
Procedures Suggested for Reviews
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Procedures Suggested
for Reviews (continued)
Perform analytical procedures
Obtain letter of representation
Relationship between
Evidence Accumulation
and Assurance
Attained
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Form of Report
1,The first paragraph is similar to an audit
report except for its reference to a
review service rather than an audit.
2,The second paragraph notes that a review
consists primarily of inquiries and
analytical procedures.
3,The third paragraph expresses limited
assurance in the form of a negative
assurance that,we are not aware of
any material modifications that
should be made to the financial s
statements.”
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Requirements for Compilation
Posses knowledge about the accounting principles
and practice of the client’s industry.
Know the client; the nature of the client’s business
transactions,accounting records,and
employees; and the basis,form,and content
of the financial statements.
Make inquiries to determine whether the client’s
information is satisfactory.
Read the compiled financial statements and be alert
for any obvious omissions or errors in
arithmetic and GAAP.
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Compilation with full disclosure requires
disclosures in accordance with GAAP.
Compilation that omits substantially all disclosures.
This type of statement is usually expected to be
used primarily for management purposes only.
Compilation without independence,A CPA
firm can issue a compilation report even if
it is not independent with respect to the client,
as defined by the Code of Professional Conduct.
Compilation Form of Report
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
INTERIM FINANCIAL INFORMATION
FOR PUBLIC COMPANIES
SAS 71 Reviews
An SAS 71 review does not provide a basis for expressing a
positive-form opinion,There are ordinarily no tests of the
accounting records,independent confirmations,or physical
examinations.
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Comprehensive Basis
of Accounting
Introductory Paragraph
Scope Paragraph
Middle paragraph Stating
the Accounting Basis
Opinion Paragraph
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
The specified elements,accounts,or items must be
identified.?
The basis on which the specified elements,accounts,or
items are presented and the agreements specifying the
basis must be described.?
Source of significant interpretations made by the client
about the provisions of a relevant agreement must be
indicated and described.?
If the specified element,account,or item is presented on
a basis that is not in conformity with GAAP,a
paragraph that restricts the distribution of the report to
those within the entity and the parties to the contract or
agreement must be added.
Specified Elements,
Accounts,or Items
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Information Accompanying
Basic Financial Statements
Detailed comparative statements supporting the control totals
on the primary financial statements for accounts such as
cost of good sold,operating expenses,and miscellaneous assets.
Supplementary information required by the Financial
Accounting Standards Board or the SEC.
Statistical data for past years in the form
of ratios and trends
A schedule of insurance coverage.
Specific comments on the changes that have
taken place in the statements.
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
FIGURE 24 - 8
Information Accompanying Basic Financial Statements
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Debt Compliance Letters
and similar Reports
The engagement and report should be limited to compliance matters
the auditor is qualified to evaluate.
The auditor should provide a debt compliance letter only for a
client for whom he or she has done an audit of the overall
financial statements.
The auditor’s opinion is in the form of a negative assurance,stating
that nothing came to the auditor’s attention that would lead
the auditor to believe there was noncompliance.
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Attestation Standards
Types of Attestation
Engagements
Levels of Service
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
FIGURE 24 - 11
Types of Engagements and Related Reports
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Forecasts and Projections
Use of Prospective financial Statements
Types of engagements
Examination of Prospective Financial Statements
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Reporting on
Internal Control
Comparison to Requirements for Audits
Requirements for an Examination of the Effectiveness
of Internal Control
Internal control for Service Organizations
WebTrust Business Practices and Controls over
Electronic Commerce
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Agreed-Upon Procedures
Engagements
1,The SASs deal with financial statement items,where
as the SSAEs deal with nonfinancial statement subject matter.
2,Management must provide a written assertion for an SSAE
engagement but not for an SAS engagement.
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Compilations,
Reviews &
Audits
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Arens,Loebbecke; Auditing,8/E
2000 Prentice Hall,Inc.
Agreed-upon procedures engagement
Attestation engagement
Compilation service
Examination
Forecasts
Projections
Prospective financial statements
Review
Review service (SSARS review)
SAS 71 reviews
Statements on Standards for Accounting
and Review Services (SSARS)
Statements on Standards for
Attestation Engagements (SSAE)
WebTrust
