1. Other Assurance Services
Chapter 25

2. Learning Objective 1 Understand the level of assurance
and evidence requirements for
review and compilation services.

3. Review and Compilation Services
The standards for compilations and
reviews of financial statements are
called Statements on Standards
for Accounting and Review
Services (SSARS).

4. Relationship Between Evidence Accumulation and Assurance Attained
High
(Audit)
Assurance Attained
Level of
Moderate
(Review)
None
(Compilation)
Minimal
(Compilation)
Significant
(Review)
Extensive
(Audit)
Amount of Evidence Accumulated

5. Review Services A review service (SSARS review) engagement
is designed to allow the accountant to express
limited assurance that the financial statements
are in accordance with GAAP.

6. Procedures Suggested for Reviews
Obtain knowledge of the accounting
principles of the client’s industry
Obtain knowledge of the client
Make inquiries of management
Perform analytical procedures
Obtain letter of representation

7. Make Inquires of Management
1. Discover the company’s procedures for
recording, classifying, and summarizing
transactions and disclosing information
in the statements.
2. Inquire into actions taken at meetings of
stockholders and the board of directors.
3. Ask if each account on the financial
statements was prepared in conformity
with GAAP.

8. Compilation Services A compilation service engagement is defined in
SSARS as one in which accountants present
to a client or third party, financial statements that
the accountant has prepared.
The CPA firm does not express any assurance
on the statements.

9. Requirements for Compilation
Establish an understanding with the client about
the nature and limitations of the services to be
performed and a description of the report
Possess knowledge about the accounting
principles and practices of the client’s industry
Know the client, including the nature of its
business transactions, accounting records,
and content of its financial statements

10. Requirements for Compilation
Make inquiries to determine whether
the client’s information is satisfactory
Read the compiled financial statements
and be alert for any obvious omissions
or errors in arithmetic and GAAP

11. Form of Compilation Report
1. Compilation with full disclosure
2. Compilation that omits substantially all disclosures
3. Compilation without independence

12. Learning Objective 2 Describe special engagements
to review interim financial
information for public
companies.

13. Review of Interim Financial Information for Public Companies
The SEC requires quarterly financial statements
to be reviewed by the company’s external auditor
prior to the company’s filing of the Form 10-Q.
Like reviews under SSARS, a public company
interim review includes five requirements for
review service engagements.

14. Review of Interim Financial Information for Public Companies
Like reviews under SSARS, a review for a public
company does not provide a basis for expressing
a positive form opinion.
The review is conducted according to the
standards of the PCAOB and there is no
reference to the SSARS in a review report.

15. Learning Objective 3 Distinguish AICPA attestation
standards from auditing stan-
dards and know the type of
engagements to which they apply.

16. Attestation Engagements
Attestation standards
Types of attestation engagements
Levels of service

17. Types of Engagements and Related Reports
Type of
Engagement
Amount of
Evidence
Level of
Assurance
Form of
Conclusion
Distribution
Examination
Review
Agreed-upon
procedures
Extensive
Significant
Varying
High
Moderate
Varying
Positive
Negative
Findings
General
Limited

18. Learning Objective 4 Understand the nature of
WebTrust assurance services.

19. WebTrust Services In a WebTrust attestation engagement, a
client engages a CPA to provide reasonable
assurance that a company’s Web site complies
with certain Trust Services principles and criteria
for one or more aspects of e-commerce activities.

20. Five Trust Services Principles
Security
The system is protected against
unauthorized access
Availability
The system is available for operation
and use as committed or agreed
Processing
integrity
System processing is complete,
accurate, timely, and authorized
Online
privacy
Personal information obtained as a result of
e-commerce is collected, used, disclosed,
and retained as committed or agreed
Confidentiality
Information designated as confidential
is protected as committed or agreed

21. Learning Objective 5 Understand the nature of
SysTrust assurance services.

22. SysTrust Services In a SysTrust engagement, the SysTrust
licensed CPA evaluates a company’s
computer system using Trust Services
principles and criteria.
The report may address a single Trust
Services principle or any combination
of principles.

23. Learning Objective 6 Describe special engagements
to attest to prospective financial
statements.

24. Prospective Financial Statements
Forecasts and projections
Use of prospective financial statements
Types of engagements
Examination of prospective financial statements

25. Learning Objective 7
Describe agreed-upon procedures
engagements.

26. Agreed-Upon Procedures Engagements
The audit is limited to certain specific
audit procedures.
These are referred to as procedures
and findings engagements.
The SASs deal with financial statement
items, whereas the SSAEs deal with
nonfinancial statement matters.

27. Learning Objective 8 Describe other audit and limited
assurance engagements related
to historical financial statements.

28. Other Audits or Limited Assurance Engagements
Other comprehensive basis of accounting
Specified elements, accounts, or items
Debt compliance letters and similar reports

29. Other Comprehensive Basis of Accounting
Cash or modified cash basis
Basis used to comply with the
requirements of a regulatory agency
Income tax basis
A definite set of criteria having
substantial support

30. Specified Elements, Accounts, or Items
Auditors are often asked to audit and issue
reports on specific aspects of financial
statements.

31. Specified Elements, Accounts, or Items
Two differences in these types of audits:
1. Materiality is defined in terms of the elements,
accounts, or items being audited rather than
for the overall statements.
2. The first standard of reporting under
GAAS does not apply.

32. Debt Compliance Letters and Similar Reports
The engagement and report should be
limited to compliance matters the
auditor is qualified to evaluate.
The auditor should provide a debt
compliance letter only for a client
for whom the auditor has done an
audit of the overall financial statements.

33. Debt Compliance Letters and Similar Reports
The auditor’s opinion is in the form of a
negative assurance, stating that nothing
came to the auditor’s attention that would
lead the auditor to believe there was
noncompliance.

34. End of Chapter 25