Chapter 1 Problems:1-15(Objectives1-15A and 15B). The list below indicates various audit, attestation, and other engagements involving auditors. A report on the effectiveness of internal control over financial reporting as required by Section 404 of the Sarbanes–Oxley Act. An auditor’s report on whether the financial statements are fairly presented in accordance with International Financial Reporting Standards. An engagement to help a company structure a merger transaction to minimize the taxes of the combined entities. A report stating whether the company has complied with restrictive covenants related to officer compensation and payment of dividends contained in a bank loan agreement. A report on the effectiveness of internal controls at a company that provides payroll processing for other companies. An examination report stating whether a company’s statement of greenhouse gas emissions is presented in conformity with standards issued by the World Business Council for Sustainable Development and the World Resources Institute. Evaluating the voting process and certifying the outcome forRolling Stone Magazine’s “Greatest Singer of All Time” poll. A report indicating whether a governmental entity has complied with certain government regulations. A review report that provides limited assurance about whether financial statements are fairly stated in accordance with U.S. GAAP. A report about management’s assertion on the effectiveness of controls over the availability, reliability, integrity, and maintainability of its accounting information system. An evaluation of the effectiveness of key measures used to assess an entity’s success in achieving specific targets linked to an entity’s strategic plan and vision. Required:A.
Explain the relationships among audit services, attestation services, and other assurance and nonassurance services provided by CPAs.B. For each of the services listed above, indicate the type of service from the list that follows.An audit of historical financial statements.An attestation service other than an audit service.An assurance or nonassurance service that is not an attestation service.1-21(Objectives1-3,1-5). Dave Czarnecki is the managing partner of Czarnecki and Hogan, a medium-sized local CPA firm located outside of Chicago. Over lunch, he is surprised when his friend James Foley asks him, “Doesn’t it bother you that your clients don’t look forward to seeing their auditors each year?” Dave responds, “Well, auditing is only one of several services we provide. Most of our work for clients does not involve financial statement audits, and our audit clients seem to like interacting with us.”Required:a. Identify ways in which a financial statement audit adds value for clients.b. List other services other than audits that Czarnecki and Hogan likely provides.c. Assume Czarnecki and Hogan has hired you as a consultant to identify ways in which they can expand their practice. Identify at least one additional service that you believe the firm should provide and explain why you believe this represents a growth opportunity for CPA firms.1-22(Objectives1-5) There are many types of information that require assurance. Individually or in groups, identify the following types of assurance services. Identify three or more assurance services that are likely to be provided only by public accounting firms. Identify three or more assurance services that are likely to be provided by assurance providers other than public accounting firms. Identify three or more assurance services that may be provided by public accounting firms or other assurance providers