Chapter bj01 bj- bjAuditing bjand bjAssurance
bjServices
,Chapter bj01 bj- bjAuditing bjand bjAssurance
bjServices
CHAPTER bjbj01
Auditing bjbjand bjbjAssurance bjbjServices
LEARNING bjbjOBJECTIVES
Review Multiple Exercises,
bjbjCheckpoints bjbjChoice bjbjProblems,
bjbjand
bjbjSimulations
1. bjbjDefine bjbjinformation bjbjrisk bjbjand 1, bjbj2, bjbj3 29, bjbj31, bjbj38 65*
bjbjexplain bjbjhow bjbjthe bjbjfinancial
bjbjstatement bjbjauditing bjbjprocess
bjbjhelps bjbjto bjbjreduce bjbjthis bjbjrisk,
bjbjthereby bjbjreducing bjbjthe bjbjcost
bjbjof bjbjcapital bjbjfor bjbja bjbjcompany.
2. Define bjbjand bjbjcontrast bjbjassurance, 4, bjbj5, bjbj6, 23, bjbj25, bjbj28, 60, bjbj65*
bjbjattestation, bjbj7, bjbj8 bjbj44,
and bjbjfinancial bjbjstatement bjbjauditing 50
bjbjservices.
3. Describe bjbjand bjbjdefine bjbjthe 9, bjbj10, bjbj11 36, bjbj39, bjbj40, 62, bjbj63, bjbj67,
bjbjassertions bjbjthat bjbjmanagement bjbj41, bjbj45, bjbj68, bjbj69
bjbjmakes bjbjabout bjbjthe bjbjrecognition, 46, bjbj47, bjbj48,
bjbjmeasurement, bjbjpresentation, bjbjand bjbj49, bjbj52,
bjbjdisclosure bjbjof bjbjthe bjbjfinancial 53, bjbj54, bjbj55,
bjbjstatements bjbjand bjbjexplain bjbjwhy bjbj57, bjbj58,
bjbjauditors bjbjuse bjbjthem bjbjas bjbja 59
bjbjfocal bjbjpoint bjbjof bjbjthe bjbjaudit.
4. Define bjbjprofessional bjbjskepticism bjbjand 12 24, bjbj37 61
bjbjexplain bjbjits bjbjkey bjbjcharacteristics.
5. Describe bjbjthe bjbjorganization bjbjof 13, bjbj14 30, bjbj42, bjbj56 72
bjbjpublic bjbjaccounting bjbjfirms bjbjand
bjbjidentify bjbjthe bjbjvarious bjbjservices
bjbjthat bjbjthey bjbjoffer.
6. Describe bjbjthe bjbjaudits bjbjand 15, bjbj16, 26, bjbj27, bjbj32, 64, bjbj66
bjbjauditors bjbjin bjbjgovernmental, bjbj17, bjbj18 bjbj34, bjbj35
bjbjinternal, bjbjand bjbjoperational
bjbjauditing.
7. List bjbjand bjbjexplain bjbjthe 19, bjbj20, 33, bjbj43, bjbj51 70, bjbj71
bjbjrequirements bjbjfor bjbjbecoming bjbja bjbj21, bjbj22
bjbjcertified bjbjpublic bjbjaccountant
bjbj(CPA) bjbjand bjbjother bjbjcertifications
bjbjavailable bjbjto bjbjan bjbjaccounting
bjbjprofessional.
(*) bjbjItem bjbjrelates bjbjto bjbjmultiple bjbjlearning bjbjobjectives
,Chapter bj01 bj- bjAuditing bjand bjAssurance
bjServices
SOLUTIONS bjbjFOR bjbjREVIEW bjbjCHECKPOINTS
1.1 Business bjbjrisk bjbjis bjbjthe bjbjrisk bjbjthat bjbjan bjbjentity bjbjwill bjbjfail bjbjto bjbjmeet
bjbjits bjbjbusiness bjbjobjectives. bjbjWhen bjbjassessing bjbjbusiness bjbjrisk, bjbja
bjbjprofessional bjbjmust bjbjconsider bjbjall bjbjpossible bjbjthreats bjbjto bjbjan bjbjentity‘s bjbjgoals
bjbjand bjbjobjectives. bjbjSome bjbjillustrative bjbjexamples bjbjinclude bjbjthe bjbjrisk bjbjthat: bjbj1)
bjbjits bjbjexisting bjbjcustomers bjbjwill bjbjstart bjbjbuying bjbjproducts bjbjor bjbjservices bjbjfrom
bjbjits bjbjprimary bjbjcompetitors; bjbj2) bjbjits bjbjproduct bjbjlines bjbjwill bjbjbecome bjbjobsolete;
bjbj3) bjbjits bjbjtaxes bjbjwill bjbjincrease; bjbj4) bjbjkey bjbjgovernment bjbjcontracts bjbjwill bjbjbe
bjbjlost; bjbj5) bjbjkey bjbjemployees bjbjwill bjbjleave bjbjthe bjbjentity; bjbjand bjbjmany bjbjother
bjbjexamples bjbjexist.
1.2 To bjbjhelp bjbjminimize bjbjbusiness bjbjrisk bjbjand bjbjtake bjbjadvantage bjbjof bjbjother
bjbjopportunities bjbjpresented bjbjin bjbjtoday‘s bjbjcompetitive bjbjbusiness bjbjenvironment,
bjbjdecision bjbjmakers bjbjsuch bjbjas bjbjchief bjbjexecutive bjbjofficers bjbj(CEOs) bjbjdemand
bjbjtimely, bjbjrelevant, bjbjand bjbjreliable bjbjinformation. bjbjThere bjbjare bjbjat bjbjleast bjbjfour
bjbjenvironmental bjbjconditions bjbjthat bjbjincrease bjbjdemand bjbjfor bjbjreliable bjbjinformation.
bjbjFirst, bjbjcomplexity bjbjwhich bjbjimplies bjbjthat bjbjevents bjbjand bjbjtransactions bjbjin
bjbjtoday‘s bjbjglobal bjbjbusiness bjbjenvironment bjbjcan bjbjbe bjbjcomplicated. bjbjMost
bjbjinvestors bjbjdo bjbjnot bjbjhave bjbjthe bjbjlevel bjbjof bjbjexpertise bjbjneeded bjbjto bjbjproperly
bjbjaccount bjbjfor bjbjcomplex bjbjtransactions. bjbjSecond bjbjis bjbjremoteness bjbjwhich bjbjimplies
bjbjthat bjbjdecision bjbjmakers bjbjare bjbjoften bjbjseparated bjbjfrom bjbjcurrent bjbjand bjbjpotential
bjbjbusiness bjbjrelationships bjbjdue bjbjto bjbjdistance bjbjand bjbjtime. bjbjFor bjbjexample, bjbjinvestors
bjbjmay bjbjnot bjbjbe bjbjable bjbjto bjbjvisit bjbjdistant bjbjlocations bjbjto bjbjcheck bjbjup bjbjon
bjbjtheir bjbjinvestments. bjbjThird bjbjis bjbjtime-sensitivity bjbjwhich bjbjimplies bjbjthat bjbjin
bjbjtoday‘s bjbjeconomic bjbjenvironment, bjbjinvestors bjbjand bjbjother bjbjusers bjbjof bjbjfinancial
bjbjstatements bjbjneed bjbjto bjbjmake bjbjdecisions bjbjmore bjbjrapidly bjbjthan bjbjever bjbjbefore.
bjbjAs bjbja bjbjresult, bjbjthe bjbjability bjbjto bjbjpromptly bjbjobtain bjbjhigh-quality bjbjinformation
bjbjis bjbjessential. bjbjFourth bjbjis bjbja bjbjconsequence bjbjwhich bjbjimplies bjbjthat bjbjdecisions
bjbjmay bjbjvery bjbjwell bjbjinvolve bjbjsignificant bjbjinvestments. b j b j As bjbja bjbjresult, bjbjthe
bjbjconsequences bjbjcan bjbjbe bjbjsevere bjbjif bjbjinformation bjbjcannot bjbjbe bjbjobtained
1.3 Of bjbjall bjbjthe bjbjdifferent bjbjrisks bjbjdiscussed bjbjin bjbjthe bjbjchapter bjbjup bjbjto bjbjthis
bjbjpoint, bjbjinformation bjbjrisk bjbjis bjbjthe bjbjone bjbjthat bjbjis bjbjmost bjbjlikely bjbjto
bjbjcreate bjbjthe bjbjdemand bjbjfor bjbjindependent bjbjand bjbjobjective bjbjassurance bjbjservices
bjbjis bjbjinformation bjbjrisk bjbjor bjbjthe bjbjprobability bjbjthat bjbjthe bjbjinformation bjbjcirculated
bjbjby bjbjan bjbjentity bjbjwill bjbjbe bjbjfalse bjbjor bjbjmisleading. bjbjBecause bjbjthe bjbjprimary
bjbjsource bjbjof bjbjinformation bjbjfor bjbjinvestors bjbjand bjbjcreditors bjbjis bjbjthe bjbjcompany
bjbjitself, bjbjan bjbjincentive bjbjexists bjbjfor bjbjthat bjbjcompany‘s bjbjmanagement bjbjto bjbjmake
bjbjtheir bjbjbusiness bjbjor bjbjservice bjbjappear bjbjto bjbjbe bjbjbetter bjbjthan bjbjit bjbjactually
bjbjmay bjbjbe, bjbjto bjbjput bjbjtheir bjbjbest bjbjfoot bjbjforward. bjbjAs bjbja bjbjresult, bjbjpreparers
bjbjand bjbjissuers bjbjof bjbjfinancial bjbjinformation bjbj(directors, bjbjmanagers, bjbjaccountants,
bjbjand bjbjother bjbjpeople bjbjemployed bjbjin bjbja bjbjbusiness) bjbjmight bjbjbenefit bjbjby
bjbjgiving bjbjfalse, bjbjmisleading, bjbjor bjbjoverly bjbjoptimistic bjbjinformation. bjbjThis bjbjpotential
bjbjconflict bjbjof bjbjinterest bjbjbetween bjbjinformation bjbjproviders bjbjand bjbjusers bjbjwhich
bjbjprovides bjbjthe bjbjunderlying bjbjbasis bjbjfor bjbjthe bjbjdemand bjbjfor bjbjreliable
bjbjinformation.
1.4 The bjbjfour bjbjmajor bjbjelements bjbjof bjbjthe bjbjbroad bjbjdefinition bjbjof bjbjassurance bjbjservices bjbjare
Independence. b j b j CPAs bjbjwant bjbjto bjbjpreserve bjbjtheir bjbjreputation bjbjand bjbjcompetitive
bjbjadvantage bjbjby bjbjalways bjbjpreserving bjbjintegrity bjbjand bjbjobjectivity bjbjwhen
bjbjperforming bjbjassurance bjbjservices.
Professional bjbjservices. bjbjVirtually bjbjall bjbjwork bjbjperformed bjbjby bjbjCPAs bjbjis bjbjdefined
bjbjas bjbj―professional bjbjservices‖ bjbjas bjbjlong bjbjas bjbjit bjbjinvolves bjbjsome bjbjelement
bjbjof bjbjjudgment bjbjbased bjbjon bjbjeducation bjbjand bjbjexperience.
Improving bjbjthe bjbjquality bjbjof bjbjinformation bjbjor bjbjits bjbjcontext. bjbjThe bjbjemphasis bjbjis
bjbjon bjbj―information,‖ bjbjCPAs‘ bjbjtraditional bjbjarea bjbjof bjbjexpertise. bjbjCPAs bjbjcan
bjbjenhance bjbjquality bjbjby bjbjassuring bjbjusers bjbjabout bjbjthe bjbjreliability bjbjand bjbjrelevance
, Chapter bj01 bj- bjAuditing bjand bjAssurance
bjServices
bjbjof bjbjinformation, bjbjand bjbjthese bjbjtwo bjbjfeatures bjbjare bjbjclosely bjbjrelated bjbjto bjbjthe
bjbjfamiliar bjbjcredibility-lending bjbjproducts bjbjof bjbjattestation bjbjand bjbjaudit bjbjservices.
bjbj―Context‖ bjbjis bjbjrelevance bjbjin bjbja bjbjdifferent bjbjlight. bjbjFor bjbjassurance bjbjservices,
bjbjimproving bjbjthe bjbjcontext bjbjof bjbjinformation bjbjrefers bjbjto bjbjimproving bjbjits bjbjusefulness
bjbjwhen bjbjtargeted bjbjto bjbjparticular bjbjdecision bjbjmakers bjbjin bjbjthe bjbjsurroundings bjbjof
bjbjparticular bjbjdecision bjbjproblems.
For bjbjdecision bjbjmakers. bjbjAs bjbjthe bjbj―consumers‖ bjbjof bjbjassurance bjbjservices, bjbjdecision
bjbjmakers bjbjare bjbjthe bjbjbeneficiaries bjbjof bjbjthe bjbjassurance bjbjservices. bjbjDecision bjbjmakers
bjbjmay bjbjor bjbjmay bjbjnot bjbjbe bjbjthe bjbj―client‖ bjbjthat bjbjpays bjbjthe bjbjfee bjbjand bjbjmay bjbjor
bjbjmay bjbjnot bjbjbe bjbjone bjbjof bjbjthe bjbjparties bjbjto bjbjan bjbjassertion bjbjor bjbjother
bjbjinformation, bjbjbut bjbjthey bjbjpersonify bjbjthe bjbjconsumer bjbjfocus bjbjof bjbjnew bjbjand
bjbjdifferent bjbjprofessional bjbjwork.
1.5 An bjbjassurance bjbjservices bjbjengagement bjbjis bjbjany bjbjassignment bjbjthat bjbjimproves bjbjthe
bjbjquality bjbjof bjbjinformation, bjbjor bjbjits bjbjcontext, bjbjfor bjbjdecision bjbjmakers. bjbjBecause
bjbjinformation bjbj(e.g., bjbjfinancial bjbjstatements) bjbjare bjbjprepared bjbjby bjbjmanagers bjbjof
bjbjan bjbjentity bjbjwho bjbjhave bjbjauthority bjbjand bjbjresponsibility bjbjfor bjbjfinancial bjbjsuccess
bjbjor bjbjfailure, bjbjan bjbjoutsider bjbjmay bjbjbe bjbjskeptical bjbjthat bjbjthe bjbjinformation bjbjtruly
bjbjis bjbjobjective, bjbjfree bjbjfrom bjbjbias, bjbjfully bjbjinformative, bjbjand bjbjfree bjbjfrom
bjbjmaterial bjbjerror, bjbjintentional bjbjor bjbjinadvertent. b j b j The bjbjservices bjbjof bjbjan
bjbjindependent bjbjauditor bjbjhelps bjbjresolve bjbjthose bjbjdoubts bjbjbecause bjbjthe
bjServices
,Chapter bj01 bj- bjAuditing bjand bjAssurance
bjServices
CHAPTER bjbj01
Auditing bjbjand bjbjAssurance bjbjServices
LEARNING bjbjOBJECTIVES
Review Multiple Exercises,
bjbjCheckpoints bjbjChoice bjbjProblems,
bjbjand
bjbjSimulations
1. bjbjDefine bjbjinformation bjbjrisk bjbjand 1, bjbj2, bjbj3 29, bjbj31, bjbj38 65*
bjbjexplain bjbjhow bjbjthe bjbjfinancial
bjbjstatement bjbjauditing bjbjprocess
bjbjhelps bjbjto bjbjreduce bjbjthis bjbjrisk,
bjbjthereby bjbjreducing bjbjthe bjbjcost
bjbjof bjbjcapital bjbjfor bjbja bjbjcompany.
2. Define bjbjand bjbjcontrast bjbjassurance, 4, bjbj5, bjbj6, 23, bjbj25, bjbj28, 60, bjbj65*
bjbjattestation, bjbj7, bjbj8 bjbj44,
and bjbjfinancial bjbjstatement bjbjauditing 50
bjbjservices.
3. Describe bjbjand bjbjdefine bjbjthe 9, bjbj10, bjbj11 36, bjbj39, bjbj40, 62, bjbj63, bjbj67,
bjbjassertions bjbjthat bjbjmanagement bjbj41, bjbj45, bjbj68, bjbj69
bjbjmakes bjbjabout bjbjthe bjbjrecognition, 46, bjbj47, bjbj48,
bjbjmeasurement, bjbjpresentation, bjbjand bjbj49, bjbj52,
bjbjdisclosure bjbjof bjbjthe bjbjfinancial 53, bjbj54, bjbj55,
bjbjstatements bjbjand bjbjexplain bjbjwhy bjbj57, bjbj58,
bjbjauditors bjbjuse bjbjthem bjbjas bjbja 59
bjbjfocal bjbjpoint bjbjof bjbjthe bjbjaudit.
4. Define bjbjprofessional bjbjskepticism bjbjand 12 24, bjbj37 61
bjbjexplain bjbjits bjbjkey bjbjcharacteristics.
5. Describe bjbjthe bjbjorganization bjbjof 13, bjbj14 30, bjbj42, bjbj56 72
bjbjpublic bjbjaccounting bjbjfirms bjbjand
bjbjidentify bjbjthe bjbjvarious bjbjservices
bjbjthat bjbjthey bjbjoffer.
6. Describe bjbjthe bjbjaudits bjbjand 15, bjbj16, 26, bjbj27, bjbj32, 64, bjbj66
bjbjauditors bjbjin bjbjgovernmental, bjbj17, bjbj18 bjbj34, bjbj35
bjbjinternal, bjbjand bjbjoperational
bjbjauditing.
7. List bjbjand bjbjexplain bjbjthe 19, bjbj20, 33, bjbj43, bjbj51 70, bjbj71
bjbjrequirements bjbjfor bjbjbecoming bjbja bjbj21, bjbj22
bjbjcertified bjbjpublic bjbjaccountant
bjbj(CPA) bjbjand bjbjother bjbjcertifications
bjbjavailable bjbjto bjbjan bjbjaccounting
bjbjprofessional.
(*) bjbjItem bjbjrelates bjbjto bjbjmultiple bjbjlearning bjbjobjectives
,Chapter bj01 bj- bjAuditing bjand bjAssurance
bjServices
SOLUTIONS bjbjFOR bjbjREVIEW bjbjCHECKPOINTS
1.1 Business bjbjrisk bjbjis bjbjthe bjbjrisk bjbjthat bjbjan bjbjentity bjbjwill bjbjfail bjbjto bjbjmeet
bjbjits bjbjbusiness bjbjobjectives. bjbjWhen bjbjassessing bjbjbusiness bjbjrisk, bjbja
bjbjprofessional bjbjmust bjbjconsider bjbjall bjbjpossible bjbjthreats bjbjto bjbjan bjbjentity‘s bjbjgoals
bjbjand bjbjobjectives. bjbjSome bjbjillustrative bjbjexamples bjbjinclude bjbjthe bjbjrisk bjbjthat: bjbj1)
bjbjits bjbjexisting bjbjcustomers bjbjwill bjbjstart bjbjbuying bjbjproducts bjbjor bjbjservices bjbjfrom
bjbjits bjbjprimary bjbjcompetitors; bjbj2) bjbjits bjbjproduct bjbjlines bjbjwill bjbjbecome bjbjobsolete;
bjbj3) bjbjits bjbjtaxes bjbjwill bjbjincrease; bjbj4) bjbjkey bjbjgovernment bjbjcontracts bjbjwill bjbjbe
bjbjlost; bjbj5) bjbjkey bjbjemployees bjbjwill bjbjleave bjbjthe bjbjentity; bjbjand bjbjmany bjbjother
bjbjexamples bjbjexist.
1.2 To bjbjhelp bjbjminimize bjbjbusiness bjbjrisk bjbjand bjbjtake bjbjadvantage bjbjof bjbjother
bjbjopportunities bjbjpresented bjbjin bjbjtoday‘s bjbjcompetitive bjbjbusiness bjbjenvironment,
bjbjdecision bjbjmakers bjbjsuch bjbjas bjbjchief bjbjexecutive bjbjofficers bjbj(CEOs) bjbjdemand
bjbjtimely, bjbjrelevant, bjbjand bjbjreliable bjbjinformation. bjbjThere bjbjare bjbjat bjbjleast bjbjfour
bjbjenvironmental bjbjconditions bjbjthat bjbjincrease bjbjdemand bjbjfor bjbjreliable bjbjinformation.
bjbjFirst, bjbjcomplexity bjbjwhich bjbjimplies bjbjthat bjbjevents bjbjand bjbjtransactions bjbjin
bjbjtoday‘s bjbjglobal bjbjbusiness bjbjenvironment bjbjcan bjbjbe bjbjcomplicated. bjbjMost
bjbjinvestors bjbjdo bjbjnot bjbjhave bjbjthe bjbjlevel bjbjof bjbjexpertise bjbjneeded bjbjto bjbjproperly
bjbjaccount bjbjfor bjbjcomplex bjbjtransactions. bjbjSecond bjbjis bjbjremoteness bjbjwhich bjbjimplies
bjbjthat bjbjdecision bjbjmakers bjbjare bjbjoften bjbjseparated bjbjfrom bjbjcurrent bjbjand bjbjpotential
bjbjbusiness bjbjrelationships bjbjdue bjbjto bjbjdistance bjbjand bjbjtime. bjbjFor bjbjexample, bjbjinvestors
bjbjmay bjbjnot bjbjbe bjbjable bjbjto bjbjvisit bjbjdistant bjbjlocations bjbjto bjbjcheck bjbjup bjbjon
bjbjtheir bjbjinvestments. bjbjThird bjbjis bjbjtime-sensitivity bjbjwhich bjbjimplies bjbjthat bjbjin
bjbjtoday‘s bjbjeconomic bjbjenvironment, bjbjinvestors bjbjand bjbjother bjbjusers bjbjof bjbjfinancial
bjbjstatements bjbjneed bjbjto bjbjmake bjbjdecisions bjbjmore bjbjrapidly bjbjthan bjbjever bjbjbefore.
bjbjAs bjbja bjbjresult, bjbjthe bjbjability bjbjto bjbjpromptly bjbjobtain bjbjhigh-quality bjbjinformation
bjbjis bjbjessential. bjbjFourth bjbjis bjbja bjbjconsequence bjbjwhich bjbjimplies bjbjthat bjbjdecisions
bjbjmay bjbjvery bjbjwell bjbjinvolve bjbjsignificant bjbjinvestments. b j b j As bjbja bjbjresult, bjbjthe
bjbjconsequences bjbjcan bjbjbe bjbjsevere bjbjif bjbjinformation bjbjcannot bjbjbe bjbjobtained
1.3 Of bjbjall bjbjthe bjbjdifferent bjbjrisks bjbjdiscussed bjbjin bjbjthe bjbjchapter bjbjup bjbjto bjbjthis
bjbjpoint, bjbjinformation bjbjrisk bjbjis bjbjthe bjbjone bjbjthat bjbjis bjbjmost bjbjlikely bjbjto
bjbjcreate bjbjthe bjbjdemand bjbjfor bjbjindependent bjbjand bjbjobjective bjbjassurance bjbjservices
bjbjis bjbjinformation bjbjrisk bjbjor bjbjthe bjbjprobability bjbjthat bjbjthe bjbjinformation bjbjcirculated
bjbjby bjbjan bjbjentity bjbjwill bjbjbe bjbjfalse bjbjor bjbjmisleading. bjbjBecause bjbjthe bjbjprimary
bjbjsource bjbjof bjbjinformation bjbjfor bjbjinvestors bjbjand bjbjcreditors bjbjis bjbjthe bjbjcompany
bjbjitself, bjbjan bjbjincentive bjbjexists bjbjfor bjbjthat bjbjcompany‘s bjbjmanagement bjbjto bjbjmake
bjbjtheir bjbjbusiness bjbjor bjbjservice bjbjappear bjbjto bjbjbe bjbjbetter bjbjthan bjbjit bjbjactually
bjbjmay bjbjbe, bjbjto bjbjput bjbjtheir bjbjbest bjbjfoot bjbjforward. bjbjAs bjbja bjbjresult, bjbjpreparers
bjbjand bjbjissuers bjbjof bjbjfinancial bjbjinformation bjbj(directors, bjbjmanagers, bjbjaccountants,
bjbjand bjbjother bjbjpeople bjbjemployed bjbjin bjbja bjbjbusiness) bjbjmight bjbjbenefit bjbjby
bjbjgiving bjbjfalse, bjbjmisleading, bjbjor bjbjoverly bjbjoptimistic bjbjinformation. bjbjThis bjbjpotential
bjbjconflict bjbjof bjbjinterest bjbjbetween bjbjinformation bjbjproviders bjbjand bjbjusers bjbjwhich
bjbjprovides bjbjthe bjbjunderlying bjbjbasis bjbjfor bjbjthe bjbjdemand bjbjfor bjbjreliable
bjbjinformation.
1.4 The bjbjfour bjbjmajor bjbjelements bjbjof bjbjthe bjbjbroad bjbjdefinition bjbjof bjbjassurance bjbjservices bjbjare
Independence. b j b j CPAs bjbjwant bjbjto bjbjpreserve bjbjtheir bjbjreputation bjbjand bjbjcompetitive
bjbjadvantage bjbjby bjbjalways bjbjpreserving bjbjintegrity bjbjand bjbjobjectivity bjbjwhen
bjbjperforming bjbjassurance bjbjservices.
Professional bjbjservices. bjbjVirtually bjbjall bjbjwork bjbjperformed bjbjby bjbjCPAs bjbjis bjbjdefined
bjbjas bjbj―professional bjbjservices‖ bjbjas bjbjlong bjbjas bjbjit bjbjinvolves bjbjsome bjbjelement
bjbjof bjbjjudgment bjbjbased bjbjon bjbjeducation bjbjand bjbjexperience.
Improving bjbjthe bjbjquality bjbjof bjbjinformation bjbjor bjbjits bjbjcontext. bjbjThe bjbjemphasis bjbjis
bjbjon bjbj―information,‖ bjbjCPAs‘ bjbjtraditional bjbjarea bjbjof bjbjexpertise. bjbjCPAs bjbjcan
bjbjenhance bjbjquality bjbjby bjbjassuring bjbjusers bjbjabout bjbjthe bjbjreliability bjbjand bjbjrelevance
, Chapter bj01 bj- bjAuditing bjand bjAssurance
bjServices
bjbjof bjbjinformation, bjbjand bjbjthese bjbjtwo bjbjfeatures bjbjare bjbjclosely bjbjrelated bjbjto bjbjthe
bjbjfamiliar bjbjcredibility-lending bjbjproducts bjbjof bjbjattestation bjbjand bjbjaudit bjbjservices.
bjbj―Context‖ bjbjis bjbjrelevance bjbjin bjbja bjbjdifferent bjbjlight. bjbjFor bjbjassurance bjbjservices,
bjbjimproving bjbjthe bjbjcontext bjbjof bjbjinformation bjbjrefers bjbjto bjbjimproving bjbjits bjbjusefulness
bjbjwhen bjbjtargeted bjbjto bjbjparticular bjbjdecision bjbjmakers bjbjin bjbjthe bjbjsurroundings bjbjof
bjbjparticular bjbjdecision bjbjproblems.
For bjbjdecision bjbjmakers. bjbjAs bjbjthe bjbj―consumers‖ bjbjof bjbjassurance bjbjservices, bjbjdecision
bjbjmakers bjbjare bjbjthe bjbjbeneficiaries bjbjof bjbjthe bjbjassurance bjbjservices. bjbjDecision bjbjmakers
bjbjmay bjbjor bjbjmay bjbjnot bjbjbe bjbjthe bjbj―client‖ bjbjthat bjbjpays bjbjthe bjbjfee bjbjand bjbjmay bjbjor
bjbjmay bjbjnot bjbjbe bjbjone bjbjof bjbjthe bjbjparties bjbjto bjbjan bjbjassertion bjbjor bjbjother
bjbjinformation, bjbjbut bjbjthey bjbjpersonify bjbjthe bjbjconsumer bjbjfocus bjbjof bjbjnew bjbjand
bjbjdifferent bjbjprofessional bjbjwork.
1.5 An bjbjassurance bjbjservices bjbjengagement bjbjis bjbjany bjbjassignment bjbjthat bjbjimproves bjbjthe
bjbjquality bjbjof bjbjinformation, bjbjor bjbjits bjbjcontext, bjbjfor bjbjdecision bjbjmakers. bjbjBecause
bjbjinformation bjbj(e.g., bjbjfinancial bjbjstatements) bjbjare bjbjprepared bjbjby bjbjmanagers bjbjof
bjbjan bjbjentity bjbjwho bjbjhave bjbjauthority bjbjand bjbjresponsibility bjbjfor bjbjfinancial bjbjsuccess
bjbjor bjbjfailure, bjbjan bjbjoutsider bjbjmay bjbjbe bjbjskeptical bjbjthat bjbjthe bjbjinformation bjbjtruly
bjbjis bjbjobjective, bjbjfree bjbjfrom bjbjbias, bjbjfully bjbjinformative, bjbjand bjbjfree bjbjfrom
bjbjmaterial bjbjerror, bjbjintentional bjbjor bjbjinadvertent. b j b j The bjbjservices bjbjof bjbjan
bjbjindependent bjbjauditor bjbjhelps bjbjresolve bjbjthose bjbjdoubts bjbjbecause bjbjthe
