《2019审计基础(英文版).pptx》由会员分享，可在线阅读，更多相关《2019审计基础(英文版).pptx（28页珍藏版）》请在三一文库上搜索。
1、 Chapter 1 Chapter 1 Auditing and Assurance ServicesAuditing and Assurance Services “If you want to be successful, its just this simple: Know what youre doing. Love what youre doing. And believe in what youre doing.“ - Will Rogers McGraw-Hill/IrwinCopyright 2008 by The McGraw-Hill Companies, Inc. Al
2、l rights reserved. Chapter 1 ObjectivesChapter 1 Objectives 1.Define information risk and explain how auditing and assurance services play a role in reducing this business risk. 2.Define and contrast auditing, attestation, and assurance services. 3.Describe and define the management assertions embod
3、ied in financial statements, and explain why auditors use them as a focal point of the audit. 4.Explain some characteristics of professional skepticism. 5.Describe the organization of public accounting firms and identify the various services they offer. 6.Describe the audits and auditors in governme
4、ntal, internal, and operational auditing. 7.List and explain the requirements for becoming a certified information professional. 1-3 User Demand for Reliable InformationUser Demand for Reliable Information Business risk?Business risk? Todays informationTodays information More complex Demanded by rem
5、ote users Demanded in a more timely manner Has far reaching consequences Information riskInformation risk the risk (probability) that the information (mainly financial) disseminated by a company will be materially false or misleading. users demand an independent third party assessment of the informa
6、tion. 1-4 Distinguish BetweenDistinguish Between Auditing and AccountingAuditing and Accounting 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 informatio
7、n properly reflects the economic events that occurred during the accounting period Review CheckpointsReview Checkpoints 1. What is business risk? 2. What conditions increase demand for relevant, reliable information? 3. What risk creates a demand for objective outsiders to provide assurance to decis
8、ion makers? Exhibit 1.2Exhibit 1.2 Overview of Financial Statement Overview of Financial Statement AuditingAuditing 1-7 Definition of AuditingDefinition of Auditing Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and event
9、s to ascertain the degree of correspondence between the assertions and established criteria and communicating the results to interested users. Financial Statements (including footnotes) GAAP Auditors Report/ Other Reports Persons who rely on the financial reports Creditors Investors Source: American
10、 Accounting Association Committee on Basic Auditing Concepts. 1973. A Statement of Basic Auditing Concepts, American Accounting Association (Sarasota, FL). 1-8 The Relationships Among Auditing, The Relationships Among Auditing, Attestation, and Assurance Attestation, and Assurance EngagementsEngagem
11、ents Assurance Services Any Information Attestation Services Primarily Financial Information Auditing Financial Statements 1-9 Assurance ServicesAssurance Services Assurance servicesAssurance services are independent professional services that improve the quality of information, or its context, for
12、decision makers. ExamplesExamples Consumer reports Underwriters laboratories CPA WebTrust Performance View PrimePlus Services 1-10 Attestation EngagementsAttestation Engagements An attestation engagementattestation engagement - a practitioner is assesses and reports on “subject matter or an assertio
13、n about the subject matter that is the responsibility of another party.” Some financial attestation engagements (other than audits) Supplementary financial statistics Pro forma financial information Financial forecasts and projections Some non-financial attestation engagements Compliance with contra
14、ctual requirements Effectiveness of internal control systems Inventory quantities and locations 1-11 Sarbanes-Oxley Act of 2002Sarbanes-Oxley Act of 2002 In response to several accounting related corporate scandals Congress passed the Sarbanes-Oxley Act Sarbanes-Oxley Act The Acts major provisions i
15、nclude: Requirement of CEO/CFO certification of financial statements Requirement of auditor examination of company internal controls Creation of the Public Company Accounting Oversight Board (PCAOB) to serve as an auditing profession “watchdog.” Prohibition of certain client services by firms conduc
16、ting a clients audit. 1-12 Sarbanes-Oxley: Sarbanes-Oxley: Managements Responsibility For Financial Managements Responsibility For Financial ReportingReporting One of its most important provisions (Section 302) states that the key company officials must certify the financial statements. The company
17、CEO and CFO must sign a statement indicating: 1. They have read the financial statements. 2. They are not aware of any false or misleading statements (or any key omitted disclosures). 3. They believe that the financial statements present an accurate picture of the companys financial condition. Sourc
18、e: U.S. Congress, Sarbanes-Oxley Act of 2002, Pub. L. 107-204, 116 Stat/ 745 (2002). 1-13 PCAOB Management AssertionsPCAOB Management Assertions Existence or occurrence Existence or occurrence Assets included in accounts exists and events that give rise to transactions have taken place Rights and ob
19、ligationsRights and obligations- - Entity has a legal claim on all assets and revenues reported and has a legal responsibility for all liabilities and expenses Completeness Completeness - All transactions have been recorded Valuation or allocation Valuation or allocation Transactions are recorded at
20、 the correct amount in the proper period Presentation and disclosure Presentation and disclosure All accounts are presented in the appropriate place and all information required has been disclosed in the statements and footnotes. 1-14 Management AssertionsManagement Assertions ( (SAS 106SAS 106) ) T
21、ransaction AssertionsTransaction Assertions Occurrence Occurrence Events giving rise to transactions have taken place Completeness and cutoff Completeness and cutoff - All transactions have been recorded and are recorded in the appropriate period AccuracyAccuracy Transactions are recorded at the cor
22、rect amount Classifications Classifications Transactions have posted to the proper account 1-15 Management AssertionsManagement Assertions ( (SAS 106SAS 106) ) Balance AssertionsBalance Assertions Existence Existence Balances include only assets exist Rights and obligations Rights and obligations En
23、tity has legal claim on all assets and revenues reported Entity has a legal responsibility for all liabilities and expenses CompletenessCompleteness Balances include all items Accuracy and valuation Accuracy and valuation Balances included items recorded in the proper period at the proper amount 1-1
24、6 Management AssertionsManagement Assertions ( (SAS 106SAS 106) ) Presentation and Disclosure AssertionsPresentation and Disclosure Assertions Occurrence and rights and obligations Occurrence and rights and obligations items presented include information regarding ownership CompletenessCompleteness
25、- All accounts are included Classification and understandability Classification and understandability All accounts are appropriately grouped Users can comprehend statements and disclosures Accuracy and valuation Accuracy and valuation Statements include proper measurements 1-17 Exhibit 1.5Exhibit 1.
26、5 Example Assertions and their Example Assertions and their Relationships to the Financial StatementsRelationships to the Financial Statements 1-18 Professional SkepticismProfessional Skepticism Professional skepticism Professional skepticism - auditors questioning, evaluative, attitude toward evide
27、nce Managements assertions without sufficient corroboration. Financial trends need investigation Documents are checked for authenticity or alteration Ask questions, get answers, then verify the answers. A potential conflict of interest potential conflict of interest always exists between the auditor
28、 and the client. Management wants to portray the company and its operations in the best possible light. Auditors want to portray the company and its operations fairly. 1-19 Professional Service Firm OrganizationProfessional Service Firm Organization Executive Committee Managing Partner Practice Offi
29、ces Partners-in-Charge Consulting Services Audit, Assurance and Business Advisory Services Tax Consulting Services Partner ManagerManagerManager Senior (In-charge) Accountants Staff Accountants (or Associates) Partner ManagerManagerManager Senior (In-charge) Accountants Staff Accountants (or Associa
30、tes) 1-20 The Public Accounting ProfessionThe Public Accounting Profession Assurance servicesAssurance services Audit engagements Assurance engagements Attestation engagements Compilations Reviews Tax consulting servicesTax consulting services Consulting servicesConsulting services 1-22 Prohibited S
31、ervices to Audit ClientsProhibited Services to Audit Clients Sarbanes-Oxley and the PCAOB prohibit professional service firms from providing any of the following services to an audit client: 1) bookkeeping and related services 2) design or implementation of financial information systems 3) appraisal
32、 or valuation services 4) actuarial services 5) internal audit outsourcing 6) management or human resources services 7) investment or broker/dealer services 8) legal and expert services (unrelated to the audit) Professional service firms may provide client tax services (with some restrictions) and o
33、ther non-prohibited services to audit clients if the companys audit committee has approved them in advance. In summary, Sarbanes-Oxley prohibits professional service firms from performing any client services in which the auditors may find themselves making management decisions or auditing their own
34、firms work. 1-23 Types of Audits and Auditors Types of Audits and Auditors Financial (External Auditors/CPAs)Financial (External Auditors/CPAs) Ensure that financial statements are accurate. Operational (Internal and Governmental Operational (Internal and Governmental Auditors/CIAs)Auditors/CIAs) Im
35、prove operational economy Improve operational efficiency Compliance (Internal and Governmental Auditors)Compliance (Internal and Governmental Auditors) Ensure compliance with company and/or governmental rules and regulations Forensic (Fraud Auditors/CFEs)Forensic (Fraud Auditors/CFEs) Most audits ar
36、e a combination of financial, operational, and compliance audits. 1-24 Organization of the ProfessionOrganization of the Profession “Big Four” Accounting Firms“Big Four” Accounting Firms D&T, E&Y, KPMG, PwCD&T, E&Y, KPMG, PwC National National Grant Thornton, BDO Grant Thornton, BDO SeidmanSeidman L
37、ocal/Regional Local/Regional Melton & Melton (Houston)Melton & Melton (Houston) PlantePlante Moran Moran (Michigan/Illinois/Wisconsin)(Michigan/Illinois/Wisconsin) Goodman & Company (Virginia)Goodman & Company (Virginia) Sole ProprietorSole Proprietor 1-25 Become Certified!Become Certified! Educatio
38、nEducation ExaminationExamination ExperienceExperience Skills sets and your educationSkills sets and your education 1-26 Engagement OverviewEngagement Overview OBTAIN (OR RETAIN) CLIENT RISK ASSESSMENT EVIDENCE GATHERING REPORTING ENGAGEMENT PLANNING 1-27 Why are audits needed?Why are audits needed?
39、 Directors motivated to show good resultDirectors motivated to show good result Shareholders need realismShareholders need realism Impractical for shareholders to check Impractical for shareholders to check accountsaccounts Auditors also report on whether proper Auditors also report on whether proper books and records have been kept and on any books and records have been kept and on any weaknesses in the accounting systems weaknesses in the accounting systems