Presentation on theme: "Slide 20- 1 Additional Assurance Services: Other Information."— Presentation transcript:
Slide 20- 1 Additional Assurance Services: Other Information
Slide 20- 2 Assurance and Attestation Services l Assurance Services – broad range of information enhancing services provided by CPAs. l AICPA def. – services that improve the quality of information, or its context, for decision makers. l Two types of assurance services: 1. Those that increase information reliability (attest) 2. Those that involve putting information into a certain form or context
Slide 20- 3 Assurance and Attestation Services Attest engagement as defined by AICPA: a practitioner is engaged to issue or does issue an examination, a review, or an agreed-upon procedures report on subject matter or an assertion about subject matter that is the responsibility of another party.
Slide 20- 4 Relationship Between Assurance and Attestation Assurance Services Assurance Services that are Attestation Services Historical Financial Statement Related Other Information Audits Reviews Special Reports Personal financials Comfort letters Prospective financial information Compliance WebTrust SysTrust Internal control Other: ElderCare
Slide 20- 5 Important Aspects of an Attest Engagement l Subject matter l Reasonable criteria l Attestation risk and materiality
Slide 20- 6 Subject Matter l Historical or prospective performance or condition l Physical characteristics l Historical events l Analyses l Systems or processes l Behavior
Slide 20- 7 Criteria l Suitable »Objective »Permits reasonable consistent measurements »Complete »Relevant l Available (and understandable) »Publicly available »Presented in a summary, the assertion or the practitioners report
Slide 20- 8 Attestation Risk and Materiality l Attestation risk »Analogous to audit risk –Inherent risk, control risk and detection risk l Materiality »May be considered in quantitative or qualitative terms. »Often difficult to measure for non-financial or qualitative subject matter. »Professional judgment especially important for qualitative subject matter.
Slide 20- 9 Character of Attestation Engagements l Examinations l Reviews l Agreed-upon procedures
Slide 20- 10 Examination Report INDEPENDENT ACCOUNTANTS REPORT We have examined the accompanying schedule of investment performance statistics of Keller Investment Fund for the year ended December 31, 20X2. This schedule is the responsibility of Keller Investment Funds management. Our responsibility is to express an opinion on this schedule based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence supporting the schedule and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. In our opinion, the schedule of investment performance statistics referred to above presents fairly, in all material respects, the performance of Keller Investment Fund for the year ended December 31, 20X2, in conformity with the measurement and disclosure criteria set forth by the Association of Investment Management Research, Inc., as described in Note 1. Will Bailey, CPA January 30, 20X3
Slide 20- 11 Examples of Assurance Services l Financial forecasts and projections »Forecasts may be for general use, while projections should have restricted use. »Both should include: –Certain minimum prospective financial statement items and background information. –List of major assumptions and accounting policies. »Only examinations or agreed-upon procedures (attestation standards prohibit reviews of prospective financial information). –Opinions from examinations may be unqualified, qualified, adverse or disclaimer.
Slide 20- 12 Examples of Assurance Services l Assurance on Internal Control »Must have control criteria, such as COSOs Internal Control – Integrated Framework. »Increased scope over consideration of internal control for audit purposes. »CPA is required to obtain an appropriate assertion from management concerning internal control. –May report on either internal control directly or the assertion. »Only examinations or agreed-upon procedures (standards prohibit reviews of internal control). –Opinions from examinations may be unqualified, qualified, adverse or disclaimer. –Examination of internal control now required as part of financial statement audit for public companies under Sarbanes-Oxley 2002.
Slide 20- 13 Management Report on Internal Control Winstad Company maintains internal control over financial reporting, which is designed to provide reasonable assurance to the Company's management and board of directors regarding the preparation of reliable published financial statements. Internal control contains self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified. Even with effective internal control, no matter how well designed, has inherent limitations---including the possibility of the circumvention or overriding of controls---and therefore can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, internal control effectiveness may vary over time. The Company assessed its internal control as of December 31, 20x5, in relation to criteria for effective internal control over financial reporting described in Internal Control--- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, the Company believes that, as of December 31, 20x5, its internal control over financial reporting met those criteria. Winstad Company by Will Jones Chief Executive Officer January 20, 20x6by Linda Beok Chief Financial Officer
Slide 20- 14 Accountants Report on Internal Control First Paragraph We have examined management's assertion that Winstad Company has maintained an effective internal control over financial reporting as of December 31, 20X5, included in the accompanying Management Report on Internal Control, based on the criteria for effective internal control over financial reporting established in Internal Control – Integrated Framework, issued by COSO of the Treadway Commission. Winstad Companys management is responsible for maintaining effective internal control over financial reporting. Our responsibility is to express an opinion on managements assertions based on our examination.
Slide 20- 15 Accountants Report on Internal Control Second Paragraph Our examination was made in accordance with standards established by the American Institute of Certified Public Accountants and, accordingly, included obtaining an understanding of internal control over financial reporting, testing and evaluating the design and operating effectiveness of internal control, and such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion.
Slide 20- 16 Accountants Report on Internal Control Third Paragraph Because of inherent limitations of internal control, errors or irregularities may occur and not be detected. Also, projections of any evaluation of internal control over financial reporting to future periods are subject to the risk that internal control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Slide 20- 17 Accountants Report on Internal Control Fourth Paragraph In our opinion, management's assertion that Winstad Company has maintained an effective internal control over financial reporting as of December 31, 20X5, is fairly stated, in all material respects, based upon criteria established in Internal Control---Integrated Framework issued by the Sponsoring Organizations of the Treadway Commission.
Slide 20- 18 Examples of Assurance Services l WebTrust – Assurance on Electronic Commerce »Typical assertions –Disclosure of business practices for electronic transactions and execution of transactions in accordance with the disclosed practices. –Maintenance of effective controls to provide reasonable assurance that customers orders were completed and billed as agreed. –Maintenance of effective controls to provide reasonable assurance that private customer information was protected from unrelated uses. »Report may be examination or agreed-upon procedures l Report covers period of at least two months and must be updated at least annually.
Slide 20- 19 Examples of Assurance Services l Systrust – Assurance on System Reliability »Evaluation of the following four principles of a reliable system (criteria): –Availability. The system was available for use at times set forth in service-level statements or agreements. –Security. The system was protected against unauthorized physical or logical access. –Integrity. The system processing was complete, accurate, timely and authorized. –Maintainability. The system could be updated when required in a manner that continued to provide for system availability, security, and integrity. »Report may be examination or agreed-upon procedures l Report covers period of at least two months and must be updated at least annually.
Slide 20- 20 Examples of Assurance Services l Eldercare services »CPAs provide assurance to individuals that the needs of elderly family members with assisted-living are being met. May include reporting on: –Financial matters –Performance of healthcare providers –Performance of caregivers