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AUD > 21 - IV: Other professional services 2 > Flashcards

21 - IV: Other professional services 2 Flashcards

1
Q

Attestation stds: Definition of attestation engagement?

A

An examination, review, or agreed-upon procedures engagement performed under the attestation stds related to subject matter or an assertion that is the responsibility of another party.

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2
Q

What is SSAE? Who is the std setting body?

A

Statements on Standards for Attestation Engagement.

Auditing Standards Board.

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3
Q

What does SSAE No. 18, Attestation Stds: Clarification and Recodification include?

A

Section 105: common concepts.
200 level sections: Level of service requirements - examination, review, agreed-upon.
300 level sections: Subject matter requirements - prospective, pro forma, compliance, examination of controls at a service organization, MDandA.

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4
Q

SSAE: what does Preface discuss?

A
  • That requirements are enforceable by the Code of Professional Conduct - “Compliance with Standards Rule.”
  • Principles.
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5
Q

SSAE: Preface: What are 4 principles?

A 
PR PR.
Purpose and Premise.
Responsibilities.
Performance.
Reporting.
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6
Q

SSAE: Preface: Principle: What is the purpose?

A

to provide users of information, generally third parties, with an opinion, conclusion, or findings regarding the reliability of subject matter or an assertion about the subject matter, as measured against suitable and available criteria

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7
Q

SSAE: Preface: Principle: What is the premise?

A

Responsible party is responsible for;

  • the subject matter (includes preparation/presentation) in accordance w/ the criteria.
  • its assertion.
  • measuring, evaluating, presenting, free from material misstatement.
  • providing the practitioner w/ access.
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8
Q

SSAE: Preface: Principle: What is the responsibilities?

A

Comply w/ relevant requirements under Stds.

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9
Q

SSAE: Preface: Principle: What is the performance?

A 
Practitioners are responsible for;
Competence/capabilities.
Compliance w/ ethical requirements.
Professional skepticism.
Professional judgement - planning/performance.
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10
Q

SSAE: Preface: Principle: What is the reporting?

A

Based on evidence obtained, practitioner express;
Opinion in an examination (positive assurance).
A conclusion in a review (negative assurance).
Reports findings in an agreed-upon procedures.

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11
Q

SSAE: An unmodified attestation report usually refer to both subject matter and assertion or one of each? when a deviation is identified?

A

Both.

Only on the subject matter.

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12
Q

SSAE: Common Concepts: Is written assertion required? What must a practitioner do when it’s not provided (refused: engaging party = responsible party)?

A

Yes.
For an examination/review engagement - withdraw.
For an agreed-upon - disclose it in the report.

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13
Q

SSAE: Common Concepts: What must a practitioner do when a written assertion not provided (refused: by responsible party - is NOT engaging party)?

A

For an examination/review engagement - disclose it in the report and restrict the report to the engaging party.
For an agreed-upon - disclose it in the report.

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14
Q

SSAE: Common Concepts: are interpretive publications requirements? what do they do? What is included in “other publications”?

A

No.
Recommendations.
Journal articles.

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15
Q

SSAE: Common Concepts: what are 3 basic preconditions?

A
  1. The practitioner must be independent.
  2. The responsible party must take responsibility for the subject matter.
  3. The engagement must have specific characters.
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16
Q

SSAE: Common Concepts: what are 4 specific characters (precondition)?

A
  1. The subject matter is appropriate.
  2. The criteria - suitable and available.
  3. Obtain necessary evidence.
  4. Opinion, conclusion, findings reported in a written report.
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17
Q

SSAE: Common Concepts: what is appropriate subject matter?

A

Capable of consistent measurement/evaluation.

Can obtain the evidence to support the opinion, conclusion, or findings.

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18
Q

SSAE: Common Concepts: what does suitable and available criteria mean?

A

Must be;
Relevant to the subject matter.
Free from bias.
Permit reasonably consistent measurement.
Complete - no omission of relevant factors.

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19
Q

SSAE: Common Concepts: when there is a change in the terms of engagement, what is required?

A

Reasonable justification.

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20
Q

SSAE: Common Concepts: what is the documentation completion date required?

A

60 days after the report release date.

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21
Q

SSAE: Common Concepts: what’s the retention period required?

A

No specific length - sufficient.

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22
Q

SSAE: Examination: Definition key words?

A

Obtain reasonable assurance by sufficient appropriate evidence about measurement/evaluation of subject matter to draw conclusions - base opinion about whether the subject matter is in accordance w/ criteria or assertion is fairly stated in all material respects.

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23
Q

SSAE: Examination: Is an engagement letter required? Does it have to be obtained each time? What if the term has not changed?

A

Yes.
Yes.
may remind the engaging party, but document the communication.

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24
Q

SSAE: Examination: what are 7 matters to be included in the engagement letter?

A
  1. Scope and objective.
  2. Responsibilities of the practitioner.
  3. Responsibilities of the responsible and engaging party.
  4. AICPA attestation stds will be used.
  5. Inherent limitations.
  6. Measurement criteria used.
  7. A representations letter will be provided by the engaging party at the end.
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25
Q

SSAE: Examination: a written assertion: what if the responsible party was not present during some (or all) periods covered and does not want to provide a written assertion?

A

They are still responsible for the subject matter as whole and the practitioner should request a written assertion covering the entire period.

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26
Q

SSAE: Examination: planning: what should the practitioner do?

A

Establish overall strategy.
Develop an engagement plan.
Perform risk assessment procedures - identify RMM, design based on them, assess relevant IC.

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27
Q

SSAE: Examination: performance: Procedures?

A

Test of controls - to rely on IC.
Test of details and analytical procedures.
Evaluate estimates.
Fraud/noncompliance - based on assessment of RMM.

28
Q

SSAE: Examination: communication to the responsible party?

A

Any known/suspected fraud, noncompliance.
Any uncorrected misstatements.
Identified IC deficiencies.

29
Q

SSAE: Examination: what must the practitioner obtain to use internal auditor as direct assistance?

A

Obtain a written acknowledgment from management/responsible party to allow without interference.

30
Q

SSAE: Examination: written representations: is it required? what if responsible party is different than engaging party? What date should it have?

A

Yes.
Obtain from both.
Same date as the report.

31
Q

SSAE: Examination: written representations: When refused and engaging party = responsible party? Engaging party is not responsible party?

A

= Discuss the matters - still refuses - withdraw.
Not: Make inquires of the responsible party and seek oral responses. If satisfactory, restrict the report t the engaging party. If not provided - scope limitations - withdraw.

32
Q

SSAE: Examination: Report: what must the practitioner report on?

A

Either on the written assertion or on the subject matter.

33
Q

SSAE: Examination: Report: what’s the requirement to report on the assertion?

A

The assertion should accompany the practitioner’s report.

34
Q

SSAE: Examination: Report: is there any specific format?

A

No, but there are specified elements.

35
Q

SSAE: Examination: Report: what are required elements?

A
  1. Title must include “independent”
  2. An appropriate addressee.
  3. Identify applicable subject matter/assertion, time period.
  4. Identify criteria against which the subject matter was measured/evaluated.
  5. Identify responsible party and the practitioner’s responsibility to express an opinion.
  6. Done based on AICPA stds, those stds require planning/performing to obtain reasonable assurance, and the practitioner believes evidence obtained is sufficient and appropriate to provide reasonable basis for the opinion.
  7. Nature of an engagement.
  8. Any sig inherent limitations.
  9. Opinion.
  10. Signature of the practitioner’s firm.
  11. city/state.
  12. date.
36
Q

SSAE: Examination: Report: What are 2 circumstances the opinion is modified?

A
  • Sufficient appropriate evidence has not been obtained (re: scope).
  • Subject matter is not in accordance with the criteria in all material respects (re: presentation).
37
Q

SSAE: Examination: Report: how is a modified opinion affect the report?

A

Add a separate paragraph, explain.

38
Q

SSAE: Examination: Opinion: What must the practitioner express opinion on when adverse or qualified opinion is expressed?

A

Directly on the subject matter and not on assertion.

39
Q

SSAE: Examination: Report: when should a paragraph to restrict use added?

A
  • The criteria used are appropriately only for a limited number of parties.
  • The criteria used are available for only to specified parties.
  • When responsible party (Not the same as engaging party) refuses to provide written representations, but appropriate oral responses - restrict the report to the engaging party.
40
Q

SSAE: Examination: Report: Unmodified opinion: what situations should the practitioner mention the work of a specialist? Modified opinion?

A

Never.

May refer when it’s relevant to understanding the modification.

41
Q

SSAE: Examination: Report: what should the practitioner do when its report is included along with “other info”? What should he do if material inconsistencies exist?

A

Read the other info for material inconsistencies.

Discuss w/ responsible party.

42
Q

SSAE: Review: definition key words?

A

Obtain limited assurance by sufficient appropriate evidence about measurement/evaluation of subject matter to draw conclusions about whether any material modification should be made to the subject matter to be in accordance w/ criteria or assertion to be fairly stated.

43
Q

SSAE: Review: Is an engagement letter required? Does it have to be obtained each time? What if the term has not changed?

A

Yes.
Yes.
may remind the engaging party, but document the communication.

44
Q

SSAE: Review: what are 7 matters to be included in the engagement letter?

A
  1. Scope and objective.
  2. Responsibilities of the practitioner.
  3. Responsibilities of the responsible and engaging party.
  4. AICPA attestation stds will be used.
  5. State: review is substantially less in scope than examination and no opinion will be expressed.
  6. Measurement criteria used.
  7. A representations letter will be provided by the engaging party at the end.
45
Q

SSAE: Review: what are 2 procedures?

A

Analytical procedures and Inquiry. maybe other ones.

46
Q

SSAE: Review: written assertion: When responsible party = engaging party, refused? When responsible party different?

A

Same: Withdraw.
Not: Disclose the refusal and restrict the use of the report to the engaging party.

47
Q

SSAE: Review: written representations: is it required? what if responsible party is different than engaging party? What date should it have?

A

Yes.
Obtain from both.
Same date as the report.

48
Q

SSAE: Review: written representations: When refused and engaging party = responsible party? Engaging party is not responsible party?

A

= Discuss the matters - if still refuses, withdraw.
Not: Make inquires of the responsible party and seek oral responses. If satisfactory, restrict the report t the engaging party. If not provided - scope limitations - withdraw.

49
Q

SSAE: Review: Report: what must the practitioner report on?

A

Either on the written assertion or on the subject matter.

50
Q

SSAE: Review: Report: what’s the requirement to report on the assertion?

A

The assertion should accompany the practitioner’s report.

51
Q

SSAE: Review: Report: what are required elements?

A
  1. Title must include “independent”
  2. An appropriate addressee.
  3. Identify applicable subject matter/assertion, time period.
  4. Identify criteria against which the subject matter was measured/evaluated.
  5. Identify responsible party and the practitioner’s responsibility to express a conclusion.
  6. Done based on AICPA stds, those stds require planning/performing to obtain limited assurance whether material modifications should be made, and the review is substantially less in scope than an examination, and the practitioner believes review provides reasonable basis for the conclusion.
  7. Any sig inherent limitations.
  8. Conclusion (negative assurance).
  9. Signature of the practitioner’s firm.
  10. city/state.
  11. date.
52
Q

SSAE: Review: Report: when qualifying the conclusion, what sentence should be used? What must the practitioner consider when qualifying the conclusion?

A

“Except for the effects of…”

Consider whether a qualification is adequate to disclose the misstatement - if not, withdraw.

53
Q

SSAE: Review: Report: what must the practitioner do when the effects of material misstatements are material and pervasive?

A

Withdraw. No adverse conclusion.

54
Q

SSAE: Review: Report: what must the practitioner do when sufficient appropriate review evidence is not obtained?

A

Withdraw. No disclaimer of opinion.

55
Q

SSAE: Review: Report: when should a paragraph to restrict use added?

A
  • The criteria used are appropriately only for a limited number of parties.
  • The criteria used are available for only to specified parties.
  • When responsible party (Not the same as engaging party) refuses to provide written representations, but appropriate oral responses - restrict the report to the engaging party.
56
Q

SSAE: Agreed-Upon Procedures (AUP): definition?

A

An attestation engagement in which a practitioner performs specific procedures on subject matter or an assertion and reports the findings without providing an opinion or a conclusion on it. The (specified) parties to the engagement … agree upon and are responsible for the sufficiency of the procedures for their purposes.

57
Q

SSAE: Agreed-Upon Procedures (AUP): who is specified party?

A

The intended user(s) to whom use of the written practitioner’s report is limited.

58
Q

SSAE: Agreed-Upon Procedures (AUP): What are 12 matters of engagement letter?

A
  1. Nature.
  2. Identification of the subject matter, assertion, responsible party, criteria used.
  3. Identification of the specified parties.
  4. Acknowledgement by the specified parties of responsibility for the sufficiency of the AUP.
  5. Responsibilities of the practitioner.
  6. will be conducted according to AICPA stds.
  7. enumeration of (reference to) procedures.
    Identification of;
  8. disclaimers expected.
  9. the restricted use of the report.
  10. assistance to be provided.
  11. any external specialists.
  12. Agreement about materiality limits.
59
Q

SSAE: Agreed-Upon Procedures (AUP): written assertion: if engaging party is not responsible party and responsible party refuses to provide, what must the practitioner do?

A

The engagement letter should state no such assertion will be provided.

60
Q

SSAE: Agreed-Upon Procedures (AUP): what are examples of unacceptable words to describe actions?

A

Note, review, general review, limited review, evaluate, analyze, check, test, interpret, verify.

61
Q

SSAE: Agreed-Upon Procedures (AUP): what are examples of acceptable words to describe actions?

A

Inspect, confirm, compare, agree, trace, inquire, recalculate, observe, mathematically check.

62
Q

SSAE: Agreed-Upon Procedures (AUP): what are requirement of using external specialist?

A

Must be agreed in advance.

The report should describe such assistance.

63
Q

SSAE: Agreed-Upon Procedures (AUP): can the practitioner use internal auditors for procedures?

A

Not permitted.

64
Q

SSAE: Agreed-Upon Procedures (AUP): what are required elements in the report?

A
  1. Title must include “independent”
  2. An appropriate addressee.
  3. Identify applicable subject matter/assertion, time period.
  4. Identify specified parties.
  5. State procedures were agreed to by the specified parties.
  6. Identify the responsible party for the subject matter/assertion.
  7. State the specified users are responsible for the sufficiency of the procedures.
  8. List of procedures performed and related findings.
  9. Description of agreed-upon materiality limits if any.
  10. State AICPA attestation stds referenced and disclaim an opinion/conclusion.
  11. Description of any external specialists.
  12. Any reservations concerning procedures/findings.
  13. An alert to restrict the use of the report to the specified parties.
  14. Signature of the practitioner’s firm.
  15. Cisty, state.
  16. Date.
65
Q

SSAE: Agreed-Upon Procedures (AUP): who is nonparticipant parties?

A

An additional specified party the practitioner is requested to add as a user of the practitioner’s report subsequent to the completion of the agreed-upon procedures engagement.

66
Q

SSAE: Agreed-Upon Procedures (AUP): what must the practitioner do when agreeing to add nonparticipant parties?

A

Obtain acknowledgment that nonparticipant party agrees to the procedures and takes responsibility for the sufficiency of those procedures.

67
Q

SSAE: Agreed-Upon Procedures (AUP): what should be the date of the report when adding nonparticipant party?

A

Should not change.

AUD (24 decks)

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