CHAPTER 1 AN INTRODUCTION TO AUDITING AND ASSURANCE SERVICES

1
CHAPTER 1AN INTRODUCTION TO AUDITING AND
ASSURANCE SERVICES
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THE DEMAND FOR AUDITING AND ASSURANCE SERVICES

• Why is auditing demanded?
• It plays a vital role in monitoring the
  contractual relationships of the organization

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AUDITING DEFINED

• AUDITING is a systematic process of objectively
  obtaining and evaluating evidence regarding
  assertions about economic actions and events to
  ascertain the degree of correspondence between
  those assertions and established criteria and
  communicating the results to interested parties.
• AUDITING (narrowly defined) is a written report
  on the examination of financial statements for an
  entity.

4
ATTEST AND ASSURANCE SERVICES DEFINED

• ATTEST services occur when a practitioner is
  engaged to issue or does issue a report on
  subject matter, or an assertion about subject
  matter, that is the responsibility of another
  party.
• ASSURANCE services are independent professional
  services that improve the quality of information,
  or its context, for decision makers.

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THE RELATIONSHIP AMONG AUDITING, ATTEST, AND
ASSURANCE SERVICES
Auditing
Attestation
Assurance
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THE ACCOUNTABILITY CYCLE

• See Figure 1-3
• There are four elements to accountability cycle
• Governance
• Measurement
• Management systems
• Reporting

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TYPES OF SERVICES

• Auditing
• Financial statement audits
• Compliance audits
• Operational audits
• Forensic audits

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TYPES OF SERVICES

• Attest
• Reporting on internal control
• Financial forecasts and projections
• Managements discussion and analysis

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TYPES OF SERVICES

• Assurance
• Risk assessment
• Performance measurement
• Information system reliability and E-Commerce

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TYPES OF AUDITORS

• External auditors
• Internal auditors
• Government auditors
• Forensic auditors

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ISSUES AFFECTING THE PROFESSION

• Expanded services
• Litigation
• Earnings management and fraud
• Independence issues
• Globalization