Chapter 1

CHAPTER 17 Other Services Provided by Audit Firms37Agreed-upon procedures engagement An agreement in which a practitioner is engaged by a client to issue a report of findings based on specific procedures performed on subject matter.

Assembling An activity that involves the manual or computer processing of mathematical or clerical functions to achieve the presentation of prospective financial statements.

Assurance engagement An engagement in which a practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria.

Assurance engagement risk The risk that the practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated.

Attestation engagement An engagement in which a practitioner 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. See assurance engagement.

Attestation standards Professional standards that provide guidance about gathering evidence regarding specific assertions and communicating an opinion on the fairness of the presentation to a third party.

Bookkeeping services See compilation.

Cash basis A basis of accounting that an organization uses to record cash receipts and disbursements and modifications of the cash basis having substantial support (for example, recording depreciation on fixed assets).

Compilation engagement An engagement in which the accountant uses accounting expertise, as opposed to auditing expertise, to collect, classify, and summarize financial information; also defined as a service, the objective of which is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements in order for the statements to be in conformity with the applicable financial reporting framework.

Contractual basis A basis of accounting that the entity uses to comply with an agreement between the entity and one or more third parties other than the auditor.

Corporate social responsibility reporting The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce, their families, the local community, and society at large.

Financial forecast A forecast that includes prospective financial statements that present, to the best of the responsible partys knowledge and belief, an entitys expected financial position, results of operations, and cash flows.

Financial projection A projection that includes prospective financial statements that present, to the best of the responsible partys knowledge and belief, given one or more hypothetical assumptions, an entitys expected financial position, results of operations, and cash flows.

Forensic accounting A service that audit firms provide that involves detailed investigation of situations where fraud has already been identified or where fraud is highly suspected.

Limited assurance engagement An engagement whose objective is a reduction in assurance engagement risk to a level that is acceptable in the circumstances of the engagement, but where that risk is greater than that for a reasonable assurance engagement, as the basis for a negative form of expression of the practitioners conclusion.

Nonfinancial reporting The practice of measuring, disclosing, and being accountable to internal and external stakeholders for organizational performance toward the goal of sustainable development.

Other comprehensive bases of accounting Bases of accounting that include cash basis, tax basis, regulatory basis, or contractual basis.

Pro forma financial information Information that shows what the significant effects on historical financial information might have been had a consummated or proposed transaction (or event) occurred at an earlier date.

Prospective financial statements Financial forecasts or financial projections including the summaries of significant assumptions and accounting policies.

Reasonable assurance engagement An engagement whose objective is a reduction in assurance engagement risk to an acceptably low level in the circumstances of the engagement as the basis for a positive form of expression of the practitioners conclusion.

Regulatory basis A basis of accounting that the entity uses to comply with the requirements of financial reporting provisions of a regulatory agency to whose jurisdiction the entity is subject (for example, a basis of accounting that insurance companies use pursuant to the accounting practices prescribed or permitted by a state insurance commission).

Review engagement An engagement that enables a practitioner to state whether, on the basis of procedures which do not provide all the evidence that would be required in an audit, anything has come to the practitioners attention that causes the practitioner to believe that the financial statements are not prepared, in all material respects, in accordance with the applicable financial reporting framework.

Specified parties Individuals who will receive the practitioners agreeupon procedures report.

Special-purpose financial statements Financial statements that are prepared in accordance with a special-purpose framework.

Special-purpose framework A financial reporting framework other than GAAP that is one of the following bases of accounting: cash basis, tax basis, regulatory basis, or contractual basis.

Sustainability Actions taken at the corporate level to ensure economic, environmental, and social responsibility.

Sustainability reporting Voluntary corporate disclosures about sustainability initiatives, plans, and associated outcomes.

Tax basis A basis of accounting that the entity uses to file its income tax return for the period covered by the financial statements.

Triple bottom-line reporting Reporting on financial, environmental, and social performance.