Auditing II: Acc 462 Due: May 4th, 2011 AT Section 101: Attest Engagements

Priyam Bajaj

This section applies to engagements in which a certified public accountant in the practice of public accounting is engaged to issue or does issue an examination, a review, or an agreed-upon procedures report on subject matter, or an assertion about the subject matter that is the responsibility of another party. This section establishes a framework for attest engagements performed by practitioners and for the ongoing development of related standards. For certain subject matter, specific attestation standards have been developed to provide additional requirements for engagement performance and reporting. When a practitioner undertakes an attest engagement for the benefit of a government body or agency and agrees to follow specified government standards, guides, procedures, statutes, rules, and regulations, the practitioner is obliged to follow those governmental requirements as well as the applicable attestation standards. The first general standard is the practitioner must have adequate technical training and proficiency to perform the attestation engagement. The second general standard is the practitioner must have adequate knowledge of the subject matter. The third general standard is the practitioner must have reason to believe that the subject matter is capable of evaluation against criteria that are suitable and available to users. Criteria are the standards or benchmarks used to measure and present the subject matter and against which the practitioner evaluates the subject matter. Suitable criteria must have each of the following attributes: ObjectivityCriteria should be free from bias; MeasurabilityCriteria should permit reasonably consistent measurements, qualitative or quantitative, of subject matter; Completeness Criteria should be sufficiently complete so that those relevant factors that would alter a conclusion about subject matter are not omitted; RelevanceCriteria should be relevant to the subject matter. The fourth general standard is the practitioner must maintain independence in mental attitude in all matters relating to the engagement. The fifth general standard is the practitioner must exercise due professional care in the planning and performance of the engagement and the preparation of the report. The first standard of fieldwork is the practitioner must adequately plan the work and must properly supervise any assistants. The second standard of fieldwork is the practitioner must obtain sufficient evidence to provide a reasonable basis for the conclusion that is expressed in the report. During an attest engagement, the responsible party makes many representations to the practitioner, both oral and written, in response to specific inquiries or through the presentation of subject matter or an assertion. Such representations from the responsible party are part of the evidential matter the practitioner obtains. The first standard of reporting is the practitioner must identify the subject matter or the assertion being reported on and state the character of the engagement in the report. The second standard of reporting is the practitioner must state the practitioner's conclusion about the subject matter or the assertion in relation to the criteria against which the subject matter was evaluated in the report. The third standard of reporting is the practitioner must state all of the practitioner's significant reservations about the engagement, the subject matter, and, if applicable, the assertion related thereto in the report. The fourth standard of reporting is the practitioner must state in the report that the report is intended solely for the information and use of the specified parties under the following circumstances: When the criteria used to evaluate the subject matter are determined by the practitioner to be appropriate only for a limited number of parties who either participated in their establishment or can be presumed to have an adequate understanding of the criteria; when the criteria used to evaluate the subject matter are available only to specified parties; when reporting on subject matter and a written assertion has not been provided by the responsible party; when the report is on an attestation engagement to apply agreed-upon procedures to the subject matter. In a review report, the practitioner's conclusion should state whether any information came to the practitioner's attention on the basis of the work performed that indicates that (a) the subject matter is not based on (or inconformity with) the criteria or (b) the assertion is not presented (or fairly stated) in all material respects based on the criteria.