Chapter 1 – The Demand for Audit and Other Assurance Services

The Demand for Audit and Other Assurance ServicesChapter 1©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1 - 1Sarbanes-Oxley ActThe Act established the Public CompanyAccounting Oversight Board.It also requires auditors to attest tomanagement reports on the effectivenessof internal control over financial reporting.©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1 - 2Learning Objective 1Describe auditing.©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1 - 3Nature of AuditingAuditing is the accumulation and evaluationof evidence about information to determineand report on the degree of correspondencebetween the information and established criteria.Auditing should be done by a competent,independent person.©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1 - 4Information and Established CriteriaTo do an audit, there must be information in averifiable form and some standards (criteria)by which the auditor can evaluate the information.©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1 - 5Accumulating Evidence and Evaluating EvidenceEvidence is any information used by the auditorto determine whether the information beingaudited is stated in accordance with theestablished criteria.©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 1 - 6Competent, Independent PersonThe auditor must ...