Key Services for Public Accounting Firms
Audits High Assurance (95% - 99%)
Reviews Moderate Assurance (60% - 70%)
Compilation Low to No Assurance (0% - 10%)
Assurance Engagements (Triangle diagram based on the subject matter at hand)
Practitioner (Auditor) Users Accountable Party (Management)
Practitioners give the Users a written conclusion
Accountable party must have an accountability relationship with the Users
Auditors in an engagement must be independent because they would be perceived as unbiased
Definitions:
Accounting Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information to have a proper decision making process
Assurance An engagement where a practitioner is engaged to issue a written communication expressing a conclusion concerning a subject matter for which the accountable party is responsible
Auditing Accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria (GAAS, IFRS, ASPE). Auditing should be done by a competent, independent person.
Audit of F/S (Triangle diagram based on the conformity of the F/S with IFRS, GAAS, ASPE)
Auditor Shareholder’s Management
Auditor gives their written opinion to the Shareholders
Management gives a stewardship relationship (to manage and look after the company for the S/H) with the shareholders
Audit Objectives
To gain reasonable assurance of F/S
To ensure F/S are free from material misstatements
For the auditor to express an opinion about the F/S being prepared with respects to the financial reporting frameworks (IFRS, ASPE)
Chapter 2 – The Public Accounting Profession
Quality Control for Firms (Table 2.2. p 39)
Leadership for Quality Control
Should be present for all audits
Quality control