1 Auditing and Assurance Services PPT - 01

Chapter
Chapter11
The
TheAssurance
Assurance
Services
ServicesMarket
Market
Copyright © 2014 Pearson Education

Describe auditing.
Distinguish between auditing and

accounting.
Explain the importance of auditing in
reducing information risk.
List the causes of information risk, and
explain how this risk can be reduced.
1-2
Describe assurance services and
distinguish audit services from other
assurance and nonassurance services
provided by CPAs.
Differentiate the three main types of
audits.
Identify the primary types of auditors.
Describe the requirements for becoming a

CPA.
1-3
1
Describe auditing.
1-4
Auditing is the accumulation and evaluation
of evidence about information to determine
and report on the degree of correspondence
between the information and established
criteria
Audit adalah akumulasi dan evaluasi

bukti tentang informasi untuk ditentukan
dan melaporkan tingkat korespondensi
antara informasi dan kriteria yang ditetapkan.
Auditing should be done by a competent,
independent person.
1-5
audit adalah pemeriksaan pembukuan hingga
pemeriksaan fisik untuk memastikan suatu
departemen dalam organisasi atau perusahaan
sudah mengikuti sistem pencatatan yang
terdokumentasi.
Audit juga berfungsi untuk memastikan bahwa

sistem pembukuan dan tata kelola perusahaan
terhindar dari kesalahan penyajian atau penipuan
(fraud).
Audit adalah berfungsi untuk memastikan

keakuratan loporan keuangan yang disajikan oleh
organisasi atau perusahaan. Orang yang melakukan
audit disebut dengan auditor.
6
To do an audit, there must be information in a
verifiable form and some standards (criteria)
by which the auditor can evaluate the information.
Criteria
FASB IASB
1-7
Evidence is any information used by the auditor
to determine whether the information being
audited is stated in accordance with the
established criteria.
Transaction
data Written and
electronic Observations
Communications
Client with outsiders
Testimony
1-8
Judgment and
Competence Experience
Independence
Evaluation of
Evidence
Proper Conclusion
1-9
To the Board of Directors and Stockholders of
ABC Corporation and Subsidiaries
Anywhere, USA
We have audited the accompanying consolidated balance sheets of ABC Corporation and Subsidiaries (the
“Company”) as of December 31, 2010 and December 31, 2009, and the related consolidated statements of
income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31,
2010. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial
statements and financial statement schedule are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial
position of ABC Corporation and Subsidiaries as of December 31, 2010 and December 31, 2009, and the results
of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in
conformity with accounting principles generally accepted in the United States of America. Also, in our opinion,
such financial statement schedule, when considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the Company’s internal control over financial reporting as of December 31, 2010, based on the
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 28, 2011, expressed an unqualified
opinion on the Company’s internal control over financial reporting.
INTERNATIONAL CPA FIRM LLP

Anywhere, USA
February 28, 2011
The final step communicates the findings to users.

1-10
1-11
2
Distinguish between auditing
and accounting.
1-12
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.
1-13
Akuntansi, secara umum, meliputi proses pencatatan dan
dokumentasi segala peristiwa keuangan dalam suatu perusahaan.
Sedangkan,
auditing meliputi pemeriksaan pencatatan keuangan yang telah

dilakukan oleh akuntan.
14
3
Explain the importance of
auditing
in reducing information risk.
1-15
Demand Driver Information risk
Auditing can have a significant effect

on information risk.
What is meant by “Information risk”?
1-16
4
List the causes of information
risk, and explain how this
risk can be reduced.
1-17
 Remoteness of information
 Biases and motives of the provider
 Voluminous data
 Complex exchange transactions
1-18
 User verifies information
 User shares information risk with management
 Audited financial statements are provided
1-19
Client or audit Auditor issues
committee hires report relied
auditor Auditor upon by users to reduce
information risk
Provides capital
External
Client
Users
Client provides financial
statements to users
1-20
5
Describe assurance services and
distinguish audit services from other
assurance and non-assurance services
provided by CPAs.
1-21
An independent professional service
Can be performed by CPAs or by a variety

of other professionals
1-22
A type of assurance service
CPA reports on the reliability of an assertion
That is the made by another party.
1-23
Five
Categories
1. Audit 3. Review
Historical
Financial
Statements
2. Internal
Control over 4. Information
Financial 5. Other
Reporting
Technology
1-24
WebTrust and SysTrust also meet the
criteria of attestation service
1-25
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.
1-26
Global interest has triggered a surge in reports.
95% of the Global Fortune 250 released

environmental, social, and governance data.
Presented in standalone reports or integrated

into annual financial reports.
1-27
Assess risks of accumulation, distribution,
and storage of digital information…
including
assessing security risks and related

controls over data and other information
stored electronically, including the
adequacy of backup and off-site storage.
1-28
 Controls over and risks related to investments
 Compliance with entertainment royalty agreements
 ISO 9000 certifications
 Corporate responsibility and sustainability
1-29
1-30
6
Differentiate the three main types
of audits.
1-31
 Operational
 Compliance
 Financial Statement
1-32
Evaluate computerized payroll system
Example
for efficiency and effectiveness
Number of records processed, costs of
Information
the department, and number of errors
Established Company standards for efficiency and
Criteria effectiveness in payroll department
Available Error reports, payroll records, and
Evidence payroll processing costs
1-33
33
Determine whether bank requirements
Example
for loan continuation have been met
Information Company records
Established
Loan agreement provisions
Criteria
Available Financial statements and
Evidence calculations by the auditor
34
Annual audit of Boeing’s financial
Example
statements
Information Boeing's financial statements
Established Generally accepted accounting

Criteria principles
Available Documents, records, and outside
Evidence sources of evidence
1-35
Extensible Business Reporting Language
Enables sorting and comparing of financial data
Public companies required to provide interactive

financial statement data
1-36
7
Identify the primary types of
auditors.
1-37
 Certified public accounting firms
 Governmental accountability office auditors
 Internal Revenue agents
 Internal auditors
1-38
8
Describe the requirements
for becoming a CPA.
1-39
 Educational requirement
 Uniform CPA examination requirement
 Experience requirement
1-40
Financial
Auditing Accounting
and And
Attestation Reporting
Business
Environment
Regulation
and
Concepts
1-41
1-42
43
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All rights reserved. No part of this publication may be reproduced,

stored in a retrieval system, or transmitted, in any form or by any
means, electronic, mechanical, photocopying, recording, or
otherwise, without the prior written permission of the publisher.
Printed in the United States of America.
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Chapter

Copyright © 2014 Pearson Education

Distinguish between auditing and

Describe the requirements for becoming a

Audit adalah akumulasi dan evaluasi

Audit juga berfungsi untuk memastikan bahwa

Audit adalah berfungsi untuk memastikan

INTERNATIONAL CPA FIRM LLP

The final step communicates the findings to users.

Auditing is determining whether

auditing meliputi pemeriksaan pencatatan keuangan yang telah

Auditing can have a significant effect

What is meant by “Information risk”?

 Biases and motives of the provider

 Complex exchange transactions

 User shares information risk with management

 Audited financial statements are provided

Can be performed by CPAs or by a variety

CPA reports on the reliability of an assertion

That is the made by another party.

The CPA is not required to issue a written report.

The assurance does not have to be about the

95% of the Global Fortune 250 released

Presented in standalone reports or integrated

assessing security risks and related

 Compliance with entertainment royalty agreements

 ISO 9000 certifications

 Corporate responsibility and sustainability

Information Company records

Information Boeing's financial statements

Established Generally accepted accounting

Enables sorting and comparing of financial data

Public companies required to provide interactive

 Governmental accountability office auditors

 Internal Revenue agents

 Uniform CPA examination requirement

All rights reserved. No part of this publication may be reproduced,

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