McGraw-Hill/Irwin

Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Module A Other Public Accounting Services

Learning Objectives
1. Explain and provide examples of attestation engagements. 2. Describe reviews and compilations of unaudited financial statements and prepare appropriate reports given specific factual circumstances. 3. Explain auditors responsibilities related to reporting on interim financial information. 4. Define, explain, and give examples of other special reports provided by auditors, including specified elements of financial statements, special purpose frameworks and application of requirements of appropriate financial reporting frameworks. 5. Explain and provide examples of assurance services engagements.
Mod A-2

Attestation Engagements
Report on subject matter or assertion about subject matter. Responsibility of another party Responsible partyacknowledge responsibility

Mod A-3

Types of Attestation Engagements Levels of Assurance

Examination Review Agreed upon procedures

Mod A-4

Standards
Statements on Standards for Attestation Engagements (SSAEs) From Auditing Standards Board (AICPA) Similar to fundamental auditing principles

Mod A-5

Agreed-Upon Procedures Engagements

Consists of performing procedures normally associated with an audit or special engagement Scope less than in an audit (responsibility of user) Accountant reports procedures and findings Must restrict distribution of report to users who established scope of engagement

Mod A-6

Financial Forecasts and Projections (AT 301)

Prospective Financial Information (PFI) Financial information representing the financial position, results of operations, and cash flows for some period of time in the future. Types of PFI Financial projection Financial forecast Distribution
limited use.

general use.

Mod A-7

Reporting on Pro Forma Financial Information (AT 401)

Pro Forma Financial Information Reporting "AS IF" a transaction had occurred by a specific date (retrospectively). Basic Engagement Objectives Management's assumptions on significant effects of transactions are reasonable Management's assumptions are properly reflected in pro forma adjustments The adjustments are properly made in the pro forma results
Mod A-8

Examination of an Entitys Internal Control over Financial Reporting (AT 501)--Conditions

Management accepts responsibility. Managements evaluation of control is based on suitable and available criteria. Managements evaluation of control is supported by sufficient evidence. Management presents its assertion in a written report that accompanies the auditors report.

Mod A-9

Compliance Attestation (AT 601)

Examples
dividend limitations loan limitations prescribed debt/equity ratios limitations on geographic operations

Examination parallels audit No reviews

Mod A-10

Management Discussion and Analysis (AT 701)

Management Discussion and Analysis (MD&A) accompanies audited financial statements in the annual report. Auditors are required to read the MD&A to ensure that information is consistent with the audited financial statements. Auditors may accept an engagement to perform an examination or review of the MD&A.

Mod A-11

Service Organizations (AT801)

Third-parties that process transactions for other entities. Many companies use third-parties to The controls exist at the third-party provider Types of Reports Included with Service Organization Reports (SOCs)

Mod A-12

Unaudited Financial Statements

Reviewsmoderate assurance Compilationsno assurance StandardsStatements on Standards for Accounting and Review Services (SSARs) From AICPA Accounting and Review Services Committee

Mod A-13

Review Engagements
Review engagement procedures Audit documentation Reports should include Statement that information is representation of management A description of the scope of a review engagement Level of assurance provided The date of completion Each page of the Financial Statements reviewed should include: SEE ACCOUNTANTS' REVIEW REPORT".

Mod A-14

Compilation Engagements
Do not have to include footnotes. Accountants do not have to be independent. No assurance provided. The date of completion Each page of the compiled financial statements should include: SEE ACCOUNTANTS' COMPILATION REPORT".

Mod A-15

Other Issues
Reviews, compilations and fraud Comparative financial statements Different levels of service Prescribed forms Predecessor accountants Additional paragraphs Personal financial plans
Mod A-16

Review of Interim Financial Information

Financial information that covers a period ending on a date other than the entitys fiscal year end. SEC companies are required to have a review of the interim financial information filed with the SEC. Need to gain sufficient knowledge of the entitys business and internal control. May have a report on interim financial information

Mod A-17

Special Reports

Special Reports refers to auditors' reports issued in connection with the following:
Specified elements, accounts, or items of a financial statement Financial statements that are prepared in conformity with a special purpose framework (SPF) Reporting on the requirements of appropriate financial reporting frameworks
Mod A-18

Reports on Elements of Financial Statements (AU 805)

Independent auditors may be requested to express an opinion on one or more specified elements, accounts, or items of a financial statement. GAAS audit performed. Report similar to audit report If adverse opinion or disclaimer is issued for the financial statements taken as a whole, the auditors may not accept engagement (i.e., the auditors may not reduce scope of service).

Mod A-19

Special Purpose Frameworks (SPFs) (AU 800)

Types of bases that may be used Statements conforming to regulatory agency accounting rules Basis used for income tax purposes Cash basis or Modified cash basis Some other method required for contractual purposes A GAAS audit is still performed. Report Modifications Introductory Paragraph Scope Paragraph Opinion Paragraph Emphasis of matter paragraph (unless regulatory basis for general use) Limited distribution.

Mod A-20

Assurance Services
Assurance Services are independent professional services that improve the quality of information, or its context, for decision makers.
Extensible Business Reporting Language (XBRL) Enhanced Business Reporting Trust Services WebTrust SysTrust Sustainability
Mod A-21