08 Audit Khidmat Pengesahan, Insuran Dan Tanggungjawab Selepas Audit

UDE 2005 – AUDITING II
08- OTHER ASSURANCE SERVICES AND

RESPONSIBILITY AFTER AUDIT
MUSTAFFA BUKHARI
OTHER ASSURANCE SERVICES
Learning Objective 1
Understand the level of assurance and evidence

requirements for review and compilation
services.
Review and Compilation Services
The standards for compilations and

reviews of financial statements are
called Statements on Standards
for Accounting and Review
Services (SSARS).
Relationship Between Evidence
Accumulation and Assurance Attained
High
Assurance Attained
(Audit)
Level of
Moderate
(Review)
None
(Compilation)
Minimal Significant Extensive
(Compilation) (Review) (Audit)
Amount of Evidence Accumulated
Review Services
A review service (SSARS review) engagement

is designed to allow the accountant to express
limited assurance that the financial statements
are in accordance with GAAP.
Procedures Suggested
for Reviews
Obtain Make
Know the
industry inquiries of
client
knowledge management
Perform Obtain a
Prepare
analytical representation
documentation
procedures letter
Form of Review Report
Compilation Services
Defined in SSARS as one in which accountants

present to a client or third party, financial
statements that the accountant has prepared.
The CPA firm does not express any assurance

on the statements.
Requirements for Compilation
➢ Document services to be
performed and a description
of the report
➢ Know the industry accounting

principles and practices
➢ Know the client

Requirements for Compilation
➢ Determine whether the client’s information

is satisfactory
➢ Review the compiled financial statements

for any obvious omissions or errors in
math and GAAP
Form of Compilation Report
Full
Disclosure
No
Disclosure
Compilation
without
independence
Full
Disclosure
No
Disclosure
(without disclosures)
Full
Disclosure
No
Disclosure
Describe special engagements to review interim

financial information for public
companies.
Review of Interim Financial Information for
Public Companies
The SEC requires quarterly financial statements

to be reviewed by the company’s external auditor
prior to the company’s filing of the Form 10-Q.
Like reviews under SSARS, a public company

interim review includes the five requirements for
review service engagements.
Review of Interim Financial Information for
Public Companies
Like reviews under SSARS, a review for a public

company does not provide a basis for expressing
a positive form opinion.
The review is conducted according to the

standards of the PCAOB and there is no
reference to the SSARS in a review report.
Distinguish AICPA attestation standards from

auditing standards and know the type of
engagements to which they apply.
Attestation Engagements
Attestation
standards
Types of
engagements
Levels
of service
Types of Engagements and Related
Reports
Type of Amount of Level of Form of
Engagement Evidence Assurance Conclusion Distribution
Examination Extensive High Positive General

Review Significant Moderate Negative General
Agreed-upon
procedures Varying Varying Findings Limited
Understand the nature of WebTrust and

SysTrust assurance services.
WebTrust Services
In a WebTrust attestation engagement, a

client engages a CPA to provide reasonable
assurance that a company’s Web site complies
with certain Trust Services principles and criteria
for one or more aspects of e-commerce activities.
Five Trust Services Principles
Security The system is protected against

unauthorized access
Availability The system is available for operation
and use as committed or agreed
Processing System processing is complete,
integrity accurate, timely, and authorized
Online Personal information obtained as a result o
privacy e-commerce is collected, used, disclosed,
and retained as committed or agreed
Confidentiality Information designated as confidential
is protected as committed or agreed
SysTrust Services
In a SysTrust engagement, the SysTrust

licensed CPA evaluates a company’s
computer system using Trust Services
principles and criteria.
The service provides assurance to

management, directors, or third parties
about the reliability of information systems
used to generate real-time information
Describe engagements to report on internal

controls at service organizations.
Internal Control Reports at Service
Organizations
➢ Historically referred to as
SAS 70 engagements
➢Two types of reports
➢Type I – report on the design

of controls
➢ Type II – report on the
operating effectiveness
of controls
Describe special engagements to attest to

prospective financial statements.
Prospective Financial Statements
Forecasts
and
Projections
Use of
prospective
financial
statements
Types of
engagements
Examinations of Prospective Financial
Statements
➢Evaluating the preparation of the prospective

financial statements
➢Evaluate the underlying support for assumptions
➢Evaluate the presentation for conformity with

AICPA guidelines
➢Issuing an examination report

Describe agreed-upon procedures engagements.

Agreed-Upon Procedures
Engagements
The audit is limited to certain specific
audit procedures.
These are referred to as procedures

and findings engagements.
The SASs deal with financial statement

items, whereas the SSAEs deal with
nonfinancial statement matters.
Describe other audit and limited assurance

engagements related to historical financial
statements.
Other Comprehensive
Basis of Accounting
Cash or Regulatory
modified agency
cash basis basis
Definite
Tax basis set of
criteria
Specified Elements,
Accounts, or Items
Auditors are often asked to audit and issue
reports on specific aspects of financial
statements.
Specified Elements,
Accounts, or Items
Two differences in these types of audits:
1. Materiality is defined by the item audited
2. GAAS (first standard) does not apply.

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 the auditor has done an
audit of the overall financial statements.
Debt Compliance Letters
and Similar Reports
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.
RESPONSIBILITY AFTER AUDIT
Conduct a post-balance-sheet review for

subsequent events.
Period Covered by Subsequent Events
Review
Client’s ending Audit Date client
balance sheet report issues financial
date date statements
12-31-09 3-11-10 3-26-10
Period to which review for Period for

subsequent events applies processing
the financial
statements
Types of Subsequent Events
➢ Those that have a direct effect

on the financial statements
and require adjustment
➢ Those that do not have a direct

effect on the financial statements
but for which disclosure is required
Requiring Adjustment
➢ Declaration of bankruptcy by a customer

with an accounts receivable balance
➢ Settlement of a litigation at an amount
different from the amount recorded
on the books
➢ Disposal of equipment not being used in
operations at a price below the current
book value
➢ Sale of investments at a price below
recorded cost
Advisability of Disclosure
➢ Decline in the market value of securities

held for temporary investment or resale
➢ Issuance of bonds or equity securities
➢ Decline in the market value of inventory
as a consequence of government action
barring further sale of a product
➢ Uninsured loss of inventories as a result
of fire
➢ A merger or an acquisition
Identify the auditor’s responsibilities when facts

affecting the audit report are
discovered after its issuance.
Review for Subsequent Events and
Discovery of Facts
Client’s ending Audit Date client
balance sheet report issues financial
date date statements
12-31-09 3-11-10 3-26-10
Period to which Period for Period in which

review for processing subsequent
subsequent the financial discovery of
events applies statements facts is made

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UDE 2005 – AUDITING II

08- OTHER ASSURANCE SERVICES AND

Understand the level of assurance and evidence

The standards for compilations and

A review service (SSARS review) engagement

Defined in SSARS as one in which accountants

The CPA firm does not express any assurance

➢ Know the industry accounting

➢ Know the client

➢ Determine whether the client’s information

➢ Review the compiled financial statements

Describe special engagements to review interim

The SEC requires quarterly financial statements

Like reviews under SSARS, a public company

Like reviews under SSARS, a review for a public

The review is conducted according to the

Distinguish AICPA attestation standards from

Examination Extensive High Positive General

Understand the nature of WebTrust and

In a WebTrust attestation engagement, a

Security The system is protected against

In a SysTrust engagement, the SysTrust

The service provides assurance to

Describe engagements to report on internal

➢Type I – report on the design

Describe special engagements to attest to

➢Evaluating the preparation of the prospective

➢Evaluate the underlying support for assumptions

➢Evaluate the presentation for conformity with

➢Issuing an examination report

Describe agreed-upon procedures engagements.

These are referred to as procedures

The SASs deal with financial statement

Describe other audit and limited assurance

Two differences in these types of audits:

1. Materiality is defined by the item audited

2. GAAS (first standard) does not apply.

The auditor should provide a debt

The auditor’s opinion is in the form of a

Conduct a post-balance-sheet review for

12-31-09 3-11-10 3-26-10

Period to which review for Period for

➢ Those that have a direct effect

➢ Those that do not have a direct

➢ Declaration of bankruptcy by a customer

➢ Decline in the market value of securities

Identify the auditor’s responsibilities when facts

12-31-09 3-11-10 3-26-10

Period to which Period for Period in which

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