Attestation Engagements and Standards - M3 Flashcards
What are the governor bodies used when performing engagements?
These are ALL Attestastion Engagements except for Preparations which is a Non-Attestation Engagement.
SSARs (Un-audited Historical Financials)
* Annual Reviews
* Compilations
* Preparations
* Pro-Forma’s (if on historical financials)
* Prospectives (if on historical financials)
SSAEs (Forward Facing Financials)
* All other engagements
* Examinations
* AUP’s
* Pro-Forma’s (if on forward facing financials)
* Prospective Financials (Projections and Forecast)
PCAOB
* Audits of financial statements - issuer
SAS
* Audits of financial statements and internal control - non-issuer
SSCS Statements on Standards for Consulting Services
* Apply to consulting services.
* The practitioner develops the findings, conclusions, and recommendations presented
(With exception of preparation and Consulting Services, all of the above mentioned services are attest engagements).
SSAEs are not Audits and they are not SSARS.
What is Attestation Engagements?
Attestation Engagements
* Has reports
* All engagements except for preparations
Non-Attestation Engagements
* No reports
* Preparation engagements
What is SSAE’s standards boards used by CPA practitioners?
In an attest service, the practitioner is engaged to issue a report on subject matter or on an assertion about the subject matter that is the
responsibility of a party other than the practitioner (in this case, management).
What is SSAR’s standards boards used by CPA practitioners?
- A CPA should refer to Statements on Standards for Accounting and Review Services (SSARS) when performing a preparation, compilation or review of historical financial statements for nonissuers.
- Pro forma Reviews of financial information Engagements.
- Historical looking engagements: Preparations and Compilations Engagements.
What is SSCS’s standards boards used by CPA practitioners?
- A CPA should refer to Statements on Standards for Consulting Services (SSCS) when performing consulting services.
- Advocacy Services Engagements
What is GAAS standards boards used by auditors?
- Auditors should refer to the applicable generally accepted auditing standards (GAAS) when performing an audit engagement.
- Audit Engagements
What is an Attestation Engagement?
- Attest engagements include those in which a practitioner is engaged to issue or does issue an examination, a review, or an agreed-upon procedures report on subject matter, or on an assertion about the subject matter, that is the responsibility of another party, as well as engagements related to prospective financial statements.
What are Prospective Financial Statements?
2 types Projections and Forecast.
SSAE’s
Financial Forecasts
- Are appropriate for general or restricted/limited use.
- reflect the expected financial results of a future period based on expected conditions and expected courses of action.
Financial Projections
- Are only appropriate for the party responsible for preparing them or for third parties with whom the responsible party is negotiating directly, and they are appropriate for only restricted/limited use.
- Reflect the financial results of a future period based on hypothetical situations “what if”.
Both Types Report must contain:
- A statement indicating that financial statement results may not be achieved.
- A statement indicating that we have no responsibility to update the report.
- Examining future financial statements
What are Pro-Forma Financial Statements?
SSAR
Are financial statements that show the effect of a hypothetical event on historical financial statements if it had occurred during the period covered by the financial statements.
What are the Agreed Upon Procedures (AUP) procedures?
SSAE
- An engagement for agreed-upon procedures provides no assurance, which means that a disclaimer of opinion is rendered on the subject matter. Specifically, the report should state that “We do not express an opinion,” which is a disclaimer of opinion.
- The procedures that the practitioner and specified parties agree upon may be as limited or as extensive as the specified parties’ desire.
- The report includes a listing of procedures performed and the related findings but does not provide any assurance on these items.
- The sufficiency of procedures is solely the responsibility of the client, not the practitioner
What type of entity uses a Compilation Report?
A Compilation may be performed via SSAR’s
A “compilation report” refers to a report related to a non-public entity.
Which reports requires restricted use?
- A report on prospective financial statements prepared based on a hypothetical assumption (i.e. what if factors, a Financial Projection) should include a paragraph restricting the use of the report.
- Reports on financial statements prepared using a special purpose framework only require a restrictive use other-matter paragraph if the financial statements are prepared using a contractual or regulatory basis (unless the regulatory basis financial statements are intended for general use).
- When the criteria used to evaluate the subject matter are appropriate for only a limited number of parties.
- When performing an assertion-based examination, the engaging party is not the responsible party, and a written assertion has not been provided
Which standards does Management and Discussion Analysis fall up under?
A CPA should refer to Statements on Standards for Attestation
Engagements (SSAE) for a review of Management and Discussion Analysis.
What are the main categories of other standards?
- A CPA should refer to Statements on Standards for Consulting
Services when performing consulting services. - A CPA should refer to Statements on Standards for Accounting
and Review Services when performing a preparation, compilation, or review of historical financial statements for nonissuers. - A CPA should also refer to SSARS for preparation and compilations
of pro forma financial reports. - A CPA should also refer to SSARS for preparation and compilations
of prospective financial information. - A CPA should refer to Statements on Auditing Standards when
performing an audit for a nonissuer. - A CPA should refer to PCAOB when performing an audit for a issuer.
What is assurance vs. no assurance vs. negative assurance?
ASSURANCE
* Issue an opinion: Financials states fairly
NO ASSURANCE
* say nothing
NEGATIVE/Limited ASSURANCE
* We use the phrase, “nothing came to our attention”
* There is no-non-compliance found
