I feel dumb for even posting this, but I finally figured out the difference between Audits and Examinations all thanks to my Yaeger videos. Previously, I tried to memorize definitions because that’s how the Gleim book is written and just gave my best guess on practice questions.
After watching my Yaeger AUD Disk 1 (on 2.00x playback using VLC Player) I heard Gary mention that historically the terms “audit” and “examination” were used interchangeably, but within the last couple of years a standard/pronouncement/statement was issued that defined the terms.
I remember always struggling with Audits vs Examinations or Audit vs Attestation because the definitions in the standards are generally vague which makes it difficult to make a distinction among the terms. Since Audits and Examinations were used interchangeably in the past, I now understand why my college Auditing course was so damn confusing. I actually remember a few instances while reading my audit textbook where the textbook author forgot to update his book and used the terms interchangeably.
So without any further mention of my college auditing course, here is a quick, more technical summary:
AUD Notes for Wiley Module 1: Engagement Planning and Assessing Risk
Audits vs Examinations
Audits and Examinations used to be used interchangeably to describe the highest level of assurance. The standards now specify that the terms are no longer the same.
- Audits = an audit is an attestation service that deal with Historical Financial Statements and provide the highest level of assurance (aka Reasonable Assurance)
- Examinations = an examination is an attestation service that deal with anything other than Historical financial statements (including non-financial data) and provide the highest level of assurance
Other related concepts:
GAAS vs Attestation Standards
Historical Financial Statements (ARC*) vs Anything Other than Historical Financial Statements (ERAup*)
Attestation Services vs Assurance Services vs Consulting Services
Attestation Services vs Non-attestation Services
Attest Function vs Assurance Function
*A-R-C = Audits-Reviews-Compilations
*E-R-Aup = Examinations-Reviews-Agreed Upon Procedures
I plan to update this later with detail on the related concepts and maybe some diagrams if I have time.
{ 0 comments }
