AUDITS AND AUDITS AND ASSURANCE SERVICESASSURANCE SERVICES

The Attest FunctionThe Attest Function

Chapter 1Chapter 1

Attestation servicesAttestation services

To help improve the reliability and To help improve the reliability and relevance of informationrelevance of information

Types:Types: Audit of financial statements – Audit of financial statements –

expressing an opinion about expressing an opinion about whether the financial statements whether the financial statements are in conformity with GAAPare in conformity with GAAP

Review of financial statementsReview of financial statements Agreed upon proceduresAgreed upon procedures

Non - Attestation servicesNon - Attestation services

Types:Types: AccountingAccounting Bookkeeping servicesBookkeeping services Tax servicesTax services Management consulting servicesManagement consulting services Litigation supportLitigation support Fraud investigationFraud investigation Personal financial planningPersonal financial planning

Economic Demand for AuditingEconomic Demand for Auditing

Business risk – risk associated with Business risk – risk associated with a company’s survival and a company’s survival and profitabilityprofitability

Information risk – reflects the Information risk – reflects the possibility that the information possibility that the information upon which the business risk upon which the business risk decision was made was decision was made was innacurate. Causes are:innacurate. Causes are: Remoteness of informationRemoteness of information Biases and motives of providerBiases and motives of provider Voluminous dataVoluminous data Complex exchange transactionsComplex exchange transactions

Nature of AuditingNature of Auditing

Auditing is the accumulation and Auditing is the accumulation and evaluation about information to evaluation about information to determine and report on the determine and report on the degree of correspondence degree of correspondence between the information and between the information and established criteria. Auditing established criteria. Auditing should be done by a competent, should be done by a competent, independent person.independent person.

Types of AuditsTypes of Audits Financial statements audits - to Financial statements audits - to

determine whether the overall financial determine whether the overall financial statements are stated in accordance statements are stated in accordance with GAAPwith GAAP

Operational audits – to review any part Operational audits – to review any part of an organization’s operating of an organization’s operating procedures and methods for the procedures and methods for the purpose of evaluating EFFICENCY & purpose of evaluating EFFICENCY & EFFECTIVENESS EFFECTIVENESS

Compliance audits – to determine Compliance audits – to determine whether the auditee is following specific whether the auditee is following specific procedures, rules, or regulations set by procedures, rules, or regulations set by some higher authoritysome higher authority

Types of AuditorsTypes of Auditors

Certified public accountants – all Certified public accountants – all types of auditstypes of audits

General Accounting Office – General Accounting Office – compliance and operational auditscompliance and operational audits

Contralor de PR – compliance auditsContralor de PR – compliance audits Auditores de Hacienda – compliance Auditores de Hacienda – compliance

auditsaudits Internal auditors – compliance and Internal auditors – compliance and

operational audits operational audits

Questions?Questions?