The Demand for Audit and Other Assurance Services

The Demand for Audit and Other Assurance Services Chapter 1

©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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Sarbanes-Oxley Act The Act established the Public Company Accounting Oversight Board. It also requires auditors to attest to management reports on the effectiveness of internal control over financial reporting.


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Learning Objective 1 Describe auditing.


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Nature of Auditing (Konrath, 2002:5) Auditing Suatu Proses sistematis untuk secara objektif mendapatkan & mengevaluasi bukti Mengenai asersi tentang kegiatan-kegiatan dan kejadian-kejadian ekonomi untuk meyakinkan tingkat keterkaitan antara asersi tersebut dan kriteria yang telah ditetapkan & mengkomunikasikan hasilnya kepada pihak-pihak yang berkepentingan Auditing merupakan salah satu bentuk ATESTESI Yakni Suatu komunikasi dari seorang expert perihal Kesimpulan tentang realibilitas dari pernyataan seseorang ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1-4

Nature of Auditing 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.


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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.


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Accumulating Evidence and Evaluating Evidence Evidence is any information used by the auditor to determine whether the information being audited is stated in accordance with the established criteria.


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Competent, Independent Person The auditor must be qualified to understand the criteria used and must be competent to know the types and amount of evidence to accumulate to reach the proper conclusion after the evidence has been examined. The competence of the individual performing the audit is of little value if he or she is biased in the accumulation and evaluation of evidence. ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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Audit Report The final stage in the auditing process is preparing the Audit Report, which is the communication of the auditor’s findings to users.


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Audit of a Tax Return Example Information Competent, independent person Internal Revenue agent

Federal tax returns filed by taxpayer Report on results Determines correspondence

Accumulates and evaluates evidence

Established criteria

Examines cancelled checks and other supporting records

Internal Revenue Code and all interpretations


Report on tax deficiencies

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Learning Objective 2 Distinguish between auditing and accounting.


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Distinguish Between Auditing and Accounting 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. ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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Learning Objective 3 Explain the importance of auditing in reducing information risk.


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Economic Demand for Auditing Information risk reflects the possibility that the information upon which the business risk decision was made was inaccurate. Auditing can have a significant effect on information risk.


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Learning Objective 4 List the causes of information risk, and explain how this risk may be reduced.


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Causes of Information Risk  Remoteness of information  Biases and motives of the provider  Voluminous data  Complex exchange transactions


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Reducing Information Risk  User verifies information  User shares information risk with management  Audited financial statements are provided


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Learning Objective 5 Describe assurance services and distinguish audit services from other assurance and nonassurance services provided by CPAs.


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Assurance Services An assurance service is an independent professional service that improves the quality of information for decision makers. Assurance services can be performed by CPAs or by a variety of other professionals.


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Assurance Services (Konrath, 2002:4) Yang dikelola adalah: • Reliabilitas (keandalan) dari sistem informasi • Cukup tidaknya sistem manajemen resiko • Efektifitas dari sistem pengukuran kinerja • Cukup tidaknya keamanan atas transaksi komersial


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Attestation Services An attestation service is a type of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party. An attestation memberikan opini atas reliabilitas dari pernyataan seseorang


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Attestation Services 1. Audit of historical financial statements 2. Attestation of internal control over financial reporting 3. Review of historical financial statements 4. Attestation services on information technology 5. Other attestation services ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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Attestation Services (Konrath, 2002:4) 1. Assersion on Internal Control 2. Assersion on Compliance to the Contract Points Agreement 3. Assersion on Compliance to the Acts and Roles


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Relationships Among Auditors, Client, and External Users Client or audit committee hires auditor

Auditor

Client


Auditor issues report relied upon by users

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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. ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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AICPA Assurance Services The AICPA formed the Special Committee on Assurance Services (SCAS).


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Attestation Services on Information Technology WebTrust is an attestation service, and the WebTrust seal is a symbolic representation of the CPA’s report on management’s assertions about its disclosure of electronic commerce practices.


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Attestation Services on Information Technology SysTrust is an attest-type engagement to evaluate and test system reliability in areas such as security and data integrity.


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Principles for WebTrust and SysTrust Services 1. Online privacy 2. Security 3. Processing integrity 4. Availability 5. Confidentiality 6. Certification authorities (WebTrust only)


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Nonassurance Services Provided by CPAs 1. Accounting and bookkeeping services 2. Tax services 3. Management consulting services


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Other Assurance Services Examples Controls over and risks related to investments, including policies related to derivatives…

assessing the processes in a company’s investment practices to identify risks and to determine the effectiveness of those processes. ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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Other Assurance Services Examples Mystery shopping…

performing anonymous shopping to assess sales personnel dealing with customers and procedures they follow. ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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Other Assurance Services Examples Assess risks of accumulation, distribution, and storage of digital information…

assessing security risks and related controls over data and other information stored electronically, including the adequacy of backup and off-site storage. ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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Other Assurance Services Examples Fraud and illegal acts risk assessment…

developing fraud risk profiles and assessing the adequacy of company systems and policies in preventing and detecting fraud and illegal acts. ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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Other Assurance Services Examples  Compliance with trading policies and procedures  Compliance with entertainment royalty agreements  ISO 900 certification  Environmental audit


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Assurance, Attestation, and Nonassurance Services ASSURANCE SERVICES

ATTESTATION SERVICES Audits

Reviews

Internal Control over Financial Reporting Other Attestation Services (e.g., WebTrust, SysTrust)

Certain Management Consulting

Other Assurance Services


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Assurance, Attestation, and Nonassurance Services NONASSURANCE SERVICES Other Management Consulting Certain Management Consulting

Accounting and Bookkeeping

Tax Services


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Learning Objective 6 Differentiate the three main types of audits.


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Types of Audits  Operational  Compliance  Financial Statement


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Audit Manajemen (Agus Soekrisno, 2012:12) Audit Prosedur yang dilakukan mencakup:  Analytical Review Procedures, yaitu membanding kan LK periode berjalan dengan Masa Lalu, Budget dg realisasinya serta Analisis Rasio.  Evaluasi atas Management Control System, yaitu Tujuannya utk mengetahui SPM dan SPI memadai  Pengujian Ketaatan (Compliance Test), yaitu Menilai Efektivitas dari SPM dan SPI ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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4 Tahapan Audit Manajemen (Agus Soekrisno, 2012:12) 4 Tahapan Audit Manajemen yang mencakup:  Preliminary Survey  Review and Testing Management Control System  Detailed Examination  Report Developement Audit Manajemen dilakukan oleh:  Internal Auditor  KAP  Management Consultant ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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3 Type Audit Manajemen (Agus Soekrisno, 2012:12) 3 Type Audit Manajemen yang mencakup:  Functional Audits  Organizational Audits  Special Assignment


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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 Company standards for efficiency and Criteria effectiveness in payroll department Available Evidence

Error reports, payroll records, and payroll processing costs


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Auditing (Agus Soekrisno, 2012:4) Auditing Suatu pemeriksanaan yang dilakukan Secara kritis & sistematis, oleh pihak yang independen Terhadap LK yang telah disusun oleh Manajemen, beserta catatan” pembukuan & bukti” pendukungnya, dg tujuan utk memberikan pendapat mengenai kewajaran Laporan Keuangan tersebut


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Auditing (Agus Soekrisno, 2012:4) Laporan Keuangan yg wajib diperiksa:  Statement of Financial Posisition  Statement of Comprehensive Income  Statement of Changes Equity Cash Flow Statement


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Auditing & Asersi Manajemen (Agus Soekrisno, 2012:4) Asersi adalah Representasi manajemen mengenai Kewajaran Laporan Keuangan Klasifikasi asersi Laporan Keuangan terdiri dari:  Existence atau Occurance  Completeness  Rights and Obligations  Valuation/ Allocation  Presentation and Disclosure ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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Auditing & Asersi Manajemen (Agus Soekrisno, 2012:4) Tugas Auditor - Asersi adalah untuk menentukan apakah representasi (asersi) tersebut betul-betul wajar, Maksudnya untuk meyakinkan apakah “tingkat keterkaitan antara asersi dan kriteria yang ditetapkan” Kriteria: GAAP, SFAS, APBO, ARB Indonesia: ETAP, PSAK &/ IFRS ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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Tahapan – tahapan Audit (Agus Soekrisno, 2012:4)  KAP dihubungi oleh Klien  KAP bertemu klien membicarakan alasan audit, Pernah diaudit?, jenis usaha, data akuntansi manual/komputerisasi?, sistem enyimbapan bukti  KAP mengajukan audit Proposal  KAP melakukan Audit Field Work  KAP membuat Audit Report ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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Jenis-jenis Audit (Agus Soekrisno, 2012:4)  General Audit Suatu Pemeriksaan umum atas LK yg dilakukan KAP Independen dg tujuan utk bisa memberikan pendapat atas kewajaran atas LK secara keseluruhan. (Sesuai dg Standard Professional Akuntan Publik/ ISA/ Panduan Audit Entitas Bisnis dan memperhatikan Kode Etik Profesi Akuntan Publik)

 Special Audit Suatu Pemeriksaan terbatas yang dimintakan oleh Auditee yg dilakukan oleh Auditor Independen dan tidak perlu memberikan Pendapat atas Kewajaran LK. Semisal cek atas Piutang apa terjadi fraud? Berapa besar? Bgm modus?


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Audit Kepatuhan/ Compliance Audit (Agus Soekrisno, 2012:11) Pemeriksaan untuk mengetahui apakah perusahaan sudah mentaati peraturanperaturan dan kebijakan yang berlaku baik yang ditetapkan leh internal perusahaan maupun external perusahaan


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Compliance Audit Example

Determine whether bank requirements for loan continuation have been met

Information

Company records

Established Loan agreement provisions Criteria Available Evidence

Financial statements and calculations by the auditor


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Audit Internal (Agus Soekrisno, 2012:12) Pemeriksaan yang dilakukan oleh bagian internal perusahaan baik untuk LK ataupun Catatan Akuntansi Perusahaan, maupun ketaatan terhadap kebijakan manajemen yang telah ditentukan


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Computer Audit(Agus Soekrisno, 2012:12) Pemeriksaan oleh KAP thd pemrosesan data akuntansi yang menggunakan Electronic Data Processing (EDP), ada 2 metode: • Audit Around the Computer (pemeriksaan thd input & output saja) • Audit Through the Computer (pemeriksanaan thd sistem EDP nya) ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder

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Audit of Historical Financial Statements Example

Annual audit of Boeing’s financial statements

Information

Boeing's financial statements

Established Generally accepted accounting Criteria principles Available Evidence

Documents, records, and outside sources of evidence


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Learning Objective 7

Identify the primary types of auditors.


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Types of Auditors  Independent certified public accounting firms  Governmental general accounting office auditors  Internal Revenue agents  Internal auditors


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Learning Objective 8

Describe the requirements for becoming a CPA.


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Three Requirements for Becoming a CPA  Educational requirement  Uniform CPA examination requirement  Experience requirement


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CPA Examination Sections  Auditing and Attestation  Financial Accounting and Reporting  Regulation  Business Environments and Concepts


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End of Chapter 1


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The Demand for Audit and Other Assurance Services

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