Presentation on theme: "Additional Assurance Services: Other Information"— Presentation transcript:
1 Additional Assurance Services: Other Information 11
2 Assurance and Attestation Services Assurance Services – broad range of information enhancing services provided by CPAs.AICPA def. – services that “improve the quality of information, or its context, for decision makers.”Two types of assurance services:1. Those that increase information reliability (attest)2. Those that involve putting information into a certain form or context
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.
4 Relationship Between Assurance and Attestation Assurance ServicesAssurance Services that are Attestation ServicesHistorical FinancialStatement RelatedOther InformationAuditsReviewsSpecial ReportsPersonal financialsComfort lettersProspective financial informationComplianceWebTrustSysTrustInternal controlOther:ElderCare
5 Important Aspects of an Attest Engagement Subject matterReasonable criteriaAttestation risk and materiality
6 Subject Matter Historical or prospective performance or condition Physical characteristicsHistorical eventsAnalysesSystems or processesBehavior
7 Criteria Suitable Available (and understandable) Objective Permits reasonable consistent measurementsCompleteRelevantAvailable (and understandable)Publicly availablePresented in a summary, the assertion or the practitioners’ report
8 Attestation Risk and Materiality Analogous to audit riskInherent risk, control risk and detection riskMaterialityMay 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.
9 Character of Attestation Engagements ExaminationsReviewsAgreed-upon procedures2
10 INDEPENDENT ACCOUNTANTS’ REPORT Examination ReportINDEPENDENT ACCOUNTANTS’ REPORTWe 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 Fund’s 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 AmericanInstitute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidencesupporting the schedule and performing such other procedures as we considered necessary in thecircumstances. 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 allmaterial 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 InvestmentManagement Research, Inc., as described in Note 1.Will Bailey, CPAJanuary 30, 20X3
11 Examples of Assurance Services Financial forecasts and projectionsForecasts 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.
12 Examples of Assurance Services Assurance on Internal ControlMust have control criteria, such as COSO’s 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.
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 Companyby Will JonesChief Executive OfficerJanuary 20, 20x6 by Linda BeokChief Financial Officer77
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 Company’s management is responsible for maintaining effective internal control over financial reporting. Our responsibility is to express an opinion on management’s assertions based on our examination.88
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.99
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.1010
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.1111
18 Examples of Assurance Services WebTrust – Assurance on Electronic CommerceTypical assertionsDisclosure 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 proceduresReport covers period of at least two months and must be updated at least annually.
19 Examples of Assurance Services Systrust – Assurance on System ReliabilityEvaluation 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 proceduresReport covers period of at least two months and must be updated at least annually.
20 Examples of Assurance Services Eldercare servicesCPAs provide assurance to individuals that the needs of elderly family members with assisted-living are being met. May include reporting on:Financial mattersPerformance of healthcare providersPerformance of caregivers