Presentation on theme: "Assurance Services Independent professional services that “improve the quality of information, or its context, for decision makers” Assurance service encompass."— Presentation transcript:
2Assurance ServicesIndependent professional services that “improve the quality of information, or its context, for decision makers”Assurance service encompass attestation services but are broaderAttestation, a portion of assurance services, are restricted to examination, review or agreed-upon procedures engagementsAssurance services go beyond attestation, may involve analyzing data or putting them in a form to facilitate decision making
4Demand for Assurance Services Reduce information risk for outside parties and enable the company to contract at more favorable termsInformation technology has significantly changed expectations of information usersNew services being developedContinuous auditingAssurance on system reliabilityPerformed in accordance with Statement on Standards for Attestation Services
6Subject Matter Historical or prospective performance or condition Physical characteristicsHistorical eventsAnalysesSystems or processesBehavior
7AssertionDeclaration about whether the subject matter is presented in accordance with certain criteria.Practitioners generally must obtain appropriate assertion about subject matterReport can be on eitherThe assertion about the subject matter orThe subject matter itself
8Criteria Suitable Available Objective Permit reasonable consistent measurementsCompleteRelevantAvailablePublicly availablePresented in a summary, the assertion or the practitioners’ report
9Relationships Among Terms Used in Attestation Engagements
10Attestation RiskRisk that practitioners will unknowingly fail to appropriately modify their report on subject matter that is materially misstatedConsists ofInherent riskControl riskDetection riskMaterialityDifficult because subject matter may not be financialDetermine likely needs of intended users
11Types of Attestation Engagements ExaminationsHighest level of assuranceAttestation risk at low levelReviewsLimited or negative assuranceAttestation risk at moderate levelAgreed-upon proceduresRestricted use reports2
14Assurance on Internal Control over Financial Reporting Presented in Chapters 7 and 18.Public companies—Performed as a part of the integrated audit covering financial statements and internal control.Nonpublic Companies—Have the option of having a similar integrated audit.
15Prospective Financial Statements Financial ForecastsInformation about the entity’s expected financial position, results of operations and cash flowsFinancial ProjectionExpected results, given one or more hypothetical assumptionsCPAs engaged to examine or perform agreed-upon procedures but no review
16Examinations of Prospective Financial Statements Practitioners gather evidence relating to the client’s procedures for preparation of the statementsEvaluate the underlying assumptionsObtain a written representation letter from the clientEvaluate whether statements are in conformity with AICPA guidelines
17Reporting on Prospective Financial Statements Report on subject matterStates whether the statements are presented in conformity with AICPA guidelinesWhether underlying assumptions provide a reasonable basis for the statementsDoes not vouch for the achievability of the forecast or projection
18ComplianceTypes1. Attesting to an entity’s compliance with specified requirements of laws, regulations, rules, contracts, or grants.2. Attesting to the effectiveness of an entity’s internal control over compliance with specified requirements.
19Management’s Discussion and Analysis Management required to provide narrative explanation of financial results as part of 10-K and 10-QPractitioner may examine or reviewObjective to provide assurance on(1) the presentation includes, in all material respects, the required elements of the rules and regulations adopted by the SEC;(2) the historical financial amounts included in the presentation have been accurately derived, in all material respects, from the entity’s financial statements; and(3) the underlying information, determinations, estimates, and assumptions of the entity provide a reasonable basis for the disclosures contained in the presentation.
20Trust ServicesIntended to address user and preparer needs regarding issues of security, availability, processing integrity, online privacy and confidentiality within e-commerce and other systemsSystem consists ofInfrastructureSoftwarePeopleProceduresData
21Trust ServicesThe practitioner (1) performs procedures to determine that management’s description of the system is fairly stated and (2) obtains evidence that the controls over the system are designed and operating effectively to meet the Trust Services Principles and Criteria—the suitable criteria required for an attest engagement
22Principles and Criteria Principles 1. Security 2. Availability 3. Processing Integrity 4. Confidentiality 5. Privacy Criteria for each principle 1. Policies 2. Communications 3. Procedures 4. Monitoring
23Types of Trust Services Engagements Examination or agreed-upon proceduresWebTrustAssurance on electronic commerce systemsSysTrustAssurance on any system
24Reporting on Trust Services WebTrust and SysTrust reports are similar: Assurance is provided on management’s assertion relating to the principlesSysTrust reports may be on one or more of the five principlesDesigned to incorporate a seal management processSeal (logo) included on a client’s website as electronic representation of the reportEngagement must be updated at least annually to use the sealInitial reporting period must be at least 2 months
25PrimePlus/ElderCare Services FinancialGoal setting, funding analysis, needs assessmentNonfinancialInterpersonal and relationship managementManagement of interaction between service providers and clientTarget marketOlder clients of CPAChildren of older adultsOther professionals that deal with older adults
26XBRLeXtensible Business Reporting Language is an international information format designed for business information.Accounting profession is in process of developing guidance for CPAs to provide assurance on XBRL-Related Documents.
27Additional Future Assurance Services Committees working on:Health care performance measurementThis service provides assurance about the effectiveness of health care services provided by health maintenance organizations, hospitals, doctors, and other providers.Continuous auditingprovides assurance using a series of reports provided simultaneously or shortly after the related information is released.