What's the difference between assurance, attestation, and auditing services???

CPA Exam Forum AUD AUD Review What's the difference between assurance, attestation, and auditing services???

This topic contains 7 replies, has 0 voices, and was last updated by  bobkorz 4 years, 11 months ago.

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  • #162071

    Another74CPA
    Member

    Can you guys give me some examples for each service?

    I know this is a stupid for all the people that passed 🙂

    #304226

    KasiaS
    Member

    Attest is an engagement that requires independence. This includes audits, reviews, compilations, attestation and assurance services.

    Attestation is an engagement where a written report is issued on something other than historical financial statements. Examples are: agreed upon procedures, attest to the MD&A, reporting on internal controls for nonissuers, prospective F/S, and Pro Forma F/S.

    Finally, assurance services is defined as independent professional services that improve the quiality of information for decision makers. Examples include: risk assessment, performance measurement, ElderCare (or PrimePlus), WebTrust, SysTrust, e-commerce.

    #304227

    cah2c
    Member

    I had to laugh when I read the title of your post because I really struggled with this one too. And I just took AUD on Monday. So, I may not be laughing when I get my scores, we’ll see…

    I disagree a bit with the previous poster. My understanding is that:

    *Assurance services are a broad category of services designed to improve the quality of decision making by improving confidence in the information on which decisions are made.

    *Attestation services are a subcategory of assurance services. They require independence and result in a report. They include examinations, reviews, and agreed upon procedures. Compilations are NOT included because they don’t require independence.

    *Audits are are subcategory of attestation services. They are examinations of historical financial statements.

    #304228

    Yvonne570
    Member

    Historical financial reporting = auditing (SAS – private – PCAOB – public)/

    review/compilation (SSARS – private – PCAOB – public)

    Interim financial reporting (SAS – private/PCAOB – Public)

    Non-historical financial reporting – other services = attestation (SSAE – private and PCAOB – public)

    #304229

    KasiaS
    Member

    cah2c, effective July 1 of this year, compilations require independence; however, the accountant may do a compilation if there is a lack of independence if they state this fact in the compilation report, or if no report, in the engagement letter. This came straight from my AUD review materials.

    #304230

    Another74CPA
    Member

    Thanks!!!!! You guys made my day 🙂

    @cah2c i think you are right. I’m guessing Compilations are a subcategory of Assurance services?

    #304231

    cah2c
    Member

    Another74CPA- Yes, I believe they are a type.

    #304232

    bobkorz
    Participant

    Compilations are just the accountant taking the accounting data provided by management and creating financial statements. In other words, you’re compiling financial statements. In the report, accountant says this is responsibility of management, no assurance is done, no opinions.

    There is no assurance or any kind of opinion stated.

    One possible exception to the above is if one of the numbers really jumps out and slaps you in the face. “$50,000 for petty cash for a small firm?????” Then I think you have to put something in the report that the number appears to be out of line.

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