The Demand for Audit and Other Assurance Services

The Demand for Audit and Other Assurance Services Chapter 1 1 -1

Auditing

Sarbanes-Oxley Act Enron World. Com The Act established the Public Company Accounting Oversight Board. It also requires auditors to report on the effectiveness of internal control over financial reporting. Tyco Adelphia 1 -3

Nature of Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria. Auditing should be done by a competent, independent person. 1 -4

Information and Established Criteria To do an audit, there must be information in a verifiable form and some standards (criteria) by which the auditor can evaluate the information. FASB Criteria IASB 1 -5

Accumulating Evidence and Evaluating Evidence is any information used by the auditor to determine whether the information being audited is stated in accordance with the established criteria. Transaction data Client inquiry Written and electronic Communications with outsiders Observations 1 -6

Competent, Independent Person Judgment and Experience Competence Independence Evaluation of Evidence Proper Conclusion 1 -7

Audit of a Tax Return Example 1 -8

Auditing Vs Accounting 1 -9

Distinguish Between Auditing and Accounting is the recording, classifying, and summarizing of economic events for the purpose of providing financial information used in decision making. Auditing is determining whether recorded information properly reflects the economic events that occurred during the accounting period. 1 - 10

Auditing and Reducing Information Risk 1 - 11

Economic Demand for Auditing Demand Driver Information risk Auditing can have a significant effect on information risk. What is meant by “Information risk”? 1 - 12

Causes of Information Risk Ø Remoteness of information Ø Biases and motives of the provider Ø Voluminous data Ø Complex exchange transactions 1 - 13

Reducing Information Risk Ø User verifies information Ø User shares information risk with management Ø Audited financial statements are provided 1 - 14

Relationships Among Auditors, Client, and External Users Client or audit committee hires auditor Auditor issues report relied upon by users to reduce information risk Provides capital Client External Users Client provides financial statements to users 1 - 15

Assurance Services 1 - 16

Assurance Services An independent professional service Can be performed by CPAs or by a variety of other professionals 1 - 17

Attestation Services ØA type of assurance service ØCPA reports on the reliability of an assertion ØThat is the responsibility of another party. 1 - 18

Attestation Services 1. Audit 3. Review Historical Financial Statements 2. Internal Control over Financial Reporting 5. Other 4. Information Technology 1 - 19

Attestation Services on Information Technology Web. Trust and Sys. Trust also meet the criteria of attestation service 1 - 20

Other Assurance Services Most of the other assurance services that CPAs provide do not meet the formal definition of attestation services. The CPA is not required to issue a written report. The assurance does not have to be about the reliability of another party’s assertion about compliance with specified criteria. 1 - 21

Green Initiatives Bring Assurance Opportunities, Competition Global interest has triggered a surge in reports. 80% of the Global Fortune 250 released environmental, social, and governance data. Presented in standalone reports or integrated into annual financial reports. 1 - 22

Other Assurance Services Examples Assess risks of accumulation, distribution, and storage of digital information… including assessing security risks and related controls over data and other information stored electronically, including the adequacy of backup and off-site storage. 1 - 23

Other Assurance Services Examples Ø Compliance with trading policies and procedures Ø Compliance with entertainment royalty agreements Ø ISO 900 certification Ø Environmental audit 1 - 24

Assurance, Attestation, and Nonassurance Services

Types of Audits 1 - 26

Types of Audits Ø Operational Ø Compliance Ø Financial Statement 1 - 27

Operational Audit Example Evaluate computerized payroll system for efficiency and effectiveness Information Number of records processed, costs of the department, and number of errors Established Criteria Company standards for efficiency and effectiveness in payroll department Available Evidence Error reports, payroll records, and payroll processing costs 1 - 28

Compliance Audit Example Determine whether bank requirements for loan continuation have been met Information Company records Established Criteria Loan agreement provisions Available Evidence Financial statements and calculations by the auditor 1 - 29

Audit of Historical Financial Statements Example Annual audit of Boeing’s financial statements Information Boeing's financial statements Established Criteria Generally accepted accounting principles Available Evidence Documents, records, and outside sources of evidence 1 - 30

Types of Auditors 1 - 31

Types of Auditors Ø Independent certified public accounting firms Ø Governmental general accounting office auditors Ø Internal Revenue agents Ø Internal auditors 1 - 32

Requirements for CPA 1 - 33

Three Requirements for Becoming a CPA Ø Educational requirement Ø Uniform CPA examination requirement Ø Experience requirement 1 - 34

CPA Examination Sections Auditing and Attestation Financial Accounting And Reporting Business Environment and Concepts Regulation 1 - 35

Three Requirements for Becoming a CPA 1 - 36

Akuntan Publik Persyaratan dan Definisi Di Indonesia

Dasar Hukum Undang-undang Republik Indonesia Nomor 5 Tahun 2011 Tentang Akuntan Publik, tanggal 3 Mei 2011 Peraturan Pemerintah Republik Indonesia Nomor 20 Tahun 2015 Tentang Praktik Akuntan Publik, tanggal 6 April 2015

Definisi dan Jasa yang Diberikan Akuntan Publik adalah seseorang yang telah memperoleh izin untuk memberikan jasa asurans, yang meliputi: a. jasa audit atas informasi keuangan historis; b. jasa reviu atas informasi keuangan historis; dan c. jasa asurans lainnya. Jasa asurans tersebut hanya dapat diberikan oleh Akuntan Publik. Selain jasa asurans Akuntan Publik dapat memberikan jasa lainnya yang berkaitan dengan akuntansi, keuangan, dan manajemen sesuai dengan ketentuan peraturan perundang-undangan.

Persyaratan Izin Akuntan Publik (AP) Untuk mendapatkan izin menjadi Akuntan Publik seseorang harus memenuhi syarat sebagai berikut: a) memiliki sertifikat tanda lulus ujian profesi akuntan publik yang sah; b) berpengalaman praktik memberikan jasa; c) berdomisili di wilayah Negara Kesatuan Republik Indonesia; d) memiliki Nomor Pokok Wajib Pajak; e) tidak pernah dikenai sanksi administratif berupa pencabutan izin Akuntan Publik; f) tidak pernah dipidana yang telah mempunyai kekuatan hukum tetap karena melakukan tindak pidana kejahatan yang diancam dengan pidana penjara 5 (lima) tahun atau lebih; g) menjadi anggota Asosiasi Profesi Akuntan Publik yang ditetapkan oleh Menteri; dan h) tidak berada dalam pengampuan. Ijin diberikan untuk masa 5 Tahun Akuntan Publik wajib mendirikan atau menjadi Rekan pada KAP dalam jangka waktu 180 (seratus delapan puluh) hari sejak izin Akuntan Publik yang bersangkutan diterbitkan

Persyaratan Ujian Profesi Akuntan Publik (CPA) Untuk mengikuti ujian profesi Akuntan Publik, seseorang harus: memiliki pengetahuan dan kompetensi di bidang akuntansi atau telah terdaftar dalam register negara untuk akuntan. Pengetahuan dan kompetensi di bidang akuntansi iperoleh melalui: a) program pendidikan sarjana (S-1) atau diploma empat (D-IV) di bidang akuntansi pada perguruan tinggi Indonesia atau perguruan tinggi luar negeri yang telah disetarakan oleh pihak yang berwenang sesuai dengan ketentuan peraturan perundang-undangan; b) program pendidikan pascasarjana (S-2) atau doktor (S-3) di bidang akuntansi yang diselenggarakan perguruan tinggi Indonesia atau perguruan tinggi luar negeri yang telah disetarakan oleh pihak yang berwenang sesuai dengan ketentuan peraturan perundang-undangan; c) pendidikan profesi akuntansi sesuai dengan ketentuan Peraturan Perundang-undangan; atau d) pendidikan profesi Akuntan Publik sesuai dengan ketentuan Peraturan Perundang-undangan.

Persyaratan Sertifikat Tanda Lulus Ujian Profesi Akuntan Publik (CPA) Untuk memperoleh sertifikat tanda lulus ujian profesi Akuntan Publik yang diterbitkan oleh Asosiasi Profesi, seseorang harus memenuhi persyaratan sebagai berikut: a) lulus ujian profesi Akuntan Publik; b) lulus pendidikan sebagaimana dimaksud dalam Pasal 3 ayat (2) atau terdaftar dalam register negara untuk akuntan; c) lulus penilaian pengalaman kerja di bidang akuntansi dari Asosiasi Profesi; dan d) terdaftar sebagai anggota Asosiasi Profesi. Seseorang yang telah memperoleh sertifikat tanda lulus ujian profesi Akuntan Publik mendapatkan sebutan profesi dari Asosiasi Profesi. Saat ini sebutannya adalah Certified Public Accountant (CPA)

End of Chapter 1 1 - 43