1-1

All

rights reserved.

2002 McGraw-Hill Ryerson

Limited.

INTRODUCTION TO AUDITING
AND ASSURANCE SERVICES

All

rights reserved.

Part One

1-2

2002 McGraw-Hill Ryerson

Limited.

CHAPTER 1
AN INTRODUCTION TO
AUDITING AND ASSURANCE
SERVICES

All

rights reserved.

Chapter 1

1-3

2002 McGraw-Hill Ryerson

Limited.

1-4

THE DEMAND FOR AUDITING

All

rights reserved.

Why do organizations request an audit?

It allows contracting to take place in an agency
relationship
Evidence supporting a demand for auditing without
regulation:
Early Greece
Extensive non-regulated audit

2002 McGraw-Hill Ryerson

Limited.

1-5

AUDITING, ATTESTATION, AND ASSURANCE

SERVICES

All

AUDITING (broadly defined) 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 examinations of financial statements for a client.

rights reserved.

2002 McGraw-Hill Ryerson

Limited.

1-6

AUDITING, ATTESTATION, AND ASSURANCE

SERVICES

All

ATTESTATION occurs when a practitioner is engaged to issue or

does issue a written communication that expresses a conclusion
about the reliability of a written assertion that is the responsibility
of another party.
Examples:
The effectiveness of internal control
Financial information other than the financial statements
Future-oriented financial information
Compliance with statutory, regulatory, or contractual
obligations
Managements discussion and analysis

rights reserved.

2002 McGraw-Hill Ryerson

Limited.

1-7

AUDITING, ATTESTATION, AND ASSURANCE

SERVICES

All

ASSURANCE services are independent professional

services that improve the quality of information, or its
context, for decision makers.
Examples:
Risk assessment
Information system reliability
Electronic commerce
Health care performance measurement

rights reserved.

2002 McGraw-Hill Ryerson

Limited.

1-8

THE RELATIONSHIP BETWEEN

AUDITING, ATTESTATION, AND
ASSURANCE SERVICES

Auditing

All

rights reserved.

Attestation

Assurance

2002 McGraw-Hill Ryerson

Limited.

1-9

TYPES OF AUDITS

All

Financial statements audits

Compliance audits
Operational audits
Comprehensive audits
Forensic audits

rights reserved.

2002 McGraw-Hill Ryerson

Limited.

1-10

TYPES OF AUDITORS

All

External auditors
Internal auditors
Government auditors
Forensic auditors

rights reserved.

2002 McGraw-Hill Ryerson

Limited.

1-11

THE PUBLIC ACCOUNTING

PROFESSION

All

Public accounting firms

Types of services
Audits
Tax services
Management advisory services
Accounting and review services

rights reserved.

2002 McGraw-Hill Ryerson

Limited.

1-12

ISSUES AFFECTING THE PROFESSION

All

rights reserved.

Expanded services
Globalization
Litigation
Independence issues

2002 McGraw-Hill Ryerson

Limited.

1-13

ORGANIZATIONAL GROUPS THAT

IMPACT INDEPENDENT AUDITORS

All

Canadian Institute of Chartered Accountants (CICA)

Assurance Standards Board (ASB)

rights reserved.

2002 McGraw-Hill Ryerson

Limited.

1-14

GENERALLY ACCEPTED AUDITING

STANDARDS (GAAS)

All

General standards
Examination standards
Reporting standards

rights reserved.

2002 McGraw-Hill Ryerson

Limited.

1-15

INTERNATIONAL STANDARDS ON
AUDITING

All

International Federation of Accountants (IFAC)

International Standards on Auditing (ISAs)

rights reserved.

2002 McGraw-Hill Ryerson

Limited.