In the normal course of performing their responsibilities, auditors often conduct audits or reviews of the items listed below. Requirements a. For the 12 examples, state the most likely type of auditor (CPA, GAO, IRS, or internal to perform each. b. In each example, state the type of audit (financial statement audit, operational audit, or compliance audit). (450) coa) ca Start with example 1. through 5. and (a) identify the most likely type of auditor (CPA, GAO, IRS, or internal) to perform each, and (b) identify the type of audit (financial statement audit, operational audit, or compliance audit). Most likely type of auditor Type of audit The computer operations of a large corporation to evaluate whether the internal controls are likely to prevent misstatements in 1. accounting and operating data. Financial statements for use by stockholders when there is an 2. Internal audit staff. A bond indenture agreement to make sure a company is following 3. all requirements of the contract. 115 Internal controls at a casino to ensure the casino is in compliance 4. with federal and state regulations. 118) Computer operations of a corporation to evaluate whether the 5. computer center is being operated as efficiently as possible. Complete the table to (a) identify the most likely type of auditor (CPA, GAO, IRS, or internal) to perform each, and (b) identify the type of audit (financial statement audit, operational audit, or compliance audit) for examples 6. through 9. Most likely type of auditor Type of audit 6. Annual statements for the use of management Operations of the IRS to determine whether the internal revenue agents 7. are using their time efficiently in conducting audits. 163) Statements for bankers and other creditors when the client is too small 8. to have an audit staff. [16 Financial statements of a branch of the federal government to make sure that the statements present fairly the actual disbursements made during 9. a period of time. KB Complete the table to (a) identify the most likely type of auditor (CPA, GAO, IRS, or internal) to perform each, and (b) identify the type of audit (financial statement audit, operational audit, or compliance audit) for examples 10. through 12. Most likely type of auditor Type of audit Disbursements of a branch of the federal government for a special research project to determine whether the expenditures were consistent 10. with the legislative bill that authorized the project. 109 Federal income tax returns of an officer of a private corporation to determine whether he or she has included all taxable income in his or 11. her return. 162 Federal income tax returns of a corporation to determine whether the tax 12. laws have been followed. What are the similarities and differences among the three main types of audits. Begin by identifying the three main types of audits in the table. Then select an X in the box for each item that describes the purpose and nature of each type of audit. (If an input field is not used in the table or an item does not apply, leave the input field empty. Abbreviations used: CPA = Certified Public Accountant, GAO Auditors = Government Accountability Office Auditor, IRS Auditors = Internal Revenue Service Auditors.) Three main types of audits are Purpose: To determine whether the client is following specific procedures set by a higher authority To determine whether the overall financial statements are presented in accordance with specified criteria (usually GAAP) (8) To evaluate whether operating procedures are efficient and effective (10 Users of audit report: Different groups for different purposes-many outside entities (13) 15) Management of organization (16) 1618 Authority that established rules, regulations, and procedures, either internal or external (19) ( Nature: Highly nonstandard; often subjective (23) 24 Highly standardized (25 (26 291 Not standardized, but specific and usually objective 29 (30 Frequency of audits performed by: CPAS 1130 (52 23 GAO auditors les IRS auditors LEN 138 (129 Internal auditors 21 21 22 The list below indicates various audit, attestation, and other engagements involving auditors. Read the requirements! Requirement a. Explain the relationships among audit services, attestation services, and other assurance and nonassurance services provided by CPA's. (1)- Services are a form of attestation service, and attestation services are a form of (2) service. In a diagram (3) services are located within the attestation service area, and attestation services are located within the (4) Service area. Requirement b. For each of the services listed indicate the type of service. Service Type of service A report on the effectiveness of internal control over financial 1. reporting as required by Section 404 of the Sarbanes-Oxley Act. (5) An examination report on whether a company's statement of greenhouse gas emissions is presented in conformity with standards issued by the World Business Council for Sustainable 2. Development and the World Resources Institute. (6) An auditor's report on whether the financial statements are fairly presented in accordance with International Financial Reporting 3. Standards. (7) An engagement to help a company structure a merger transaction to 4. minimize the taxes of the combined entities. (8) A report stating whether the company has complied with restrictive covenants related to officer compensation and payment of 5. dividends contained in a bank loan agreement. (9) A report on the effectiveness of internal controls at a company that 6. provides payroll processing for other companies. (10) A review report that provides limited assurance about whether 7. financial statements are fairly stated in accordance with U.S. GAAP. (11) An evaluation of the voting process and certification of the outcome 8. for Rolling Stone Magazine's "Greatest Singer of All Time" poll. (12) A report indicating whether a governmental entity has complied with 9. certain government regulations. A report about management's assertion on the effectiveness of controls over the availability, reliability, integrity, and maintainability 10. of its accounting information system. (14) An evaluation of the effectiveness of key measures used to assess an entity's success in achieving specific targets linked to an entity's 11. strategic plan and vision. (15) (13) 1: Requirements 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. (1) An audit of historical financial statements (2) An attestation service other than an audit Service (3) An assurance or nonassurance service that is not an attestation service