William Messier Jr, Steven Glover, Douglas Prawitt - Auditing & Assurance Services_ A Systematic Approach-McGraw-Hill Education (2016)

12 Part 1 Introduction to Assurance and Financial Statement Auditing
We hope the analogy of house inspectors and auditors as assurance providers has helped
you understand the basic intuition behind the necessary characteristics of auditors and auditing
and why auditing is in demand, even when it is not required by law. We will refer back to
this analogy occasionally throughout the book to remind you of this basic intuition. As you
study this book, we encourage you to keep in mind how the concepts you are learning relate
to important characteristics of auditors and home inspectors and the services they offer. Keep
the big picture in mind!
Auditing, Attest, and Assurance Services Defined
LO 1-3
Accounting professionals can provide assurance about the reliability and relevance of information
given by one party to another. The broadest category of such services is simply called
assurance services. Attest services are a subset of assurance services, and auditing is a type of
attest service. Many times these terms are used interchangeably because they are related, and
at a general level, they encompass the same process: the evaluation of evidence to determine
whether information has been recorded and presented in accordance with a predetermined set
of criteria, together with the issuance of a report that indicates the degree of correspondence.
Figure 1–2 illustrates the concept that attest services are a subset of the broader category
of assurance services, and, in turn, auditing services are a specialized type of attest service.
We’ll discuss each category in turn, from narrowest to broadest.
LO 1-4
Auditing
Consider the following formal definition of auditing:
Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions
about economic actions and events to ascertain the degree of correspondence between those
assertions and established criteria and communicating the results to interested users. 5
Let’s discuss this definition in plain English. The phrase “systematic process” implies
that there should be a well-planned and thorough approach for conducting an audit. This
approach involves “objectively obtaining and evaluating evidence.” In other words, the auditor
must objectively search for and evaluate the relevance and validity of evidence. The type,
quantity, and reliability of evidence will vary between audits, but the process of obtaining and
evaluating evidence makes up most of the auditor’s activities on any audit.
As our analogy between house inspection and auditing illustrates, the evidence gathered
by the auditor must relate to “assertions about economic actions and events.” The auditor
compares the evidence gathered to management’s financial statement assertions in order
to assess “the degree of correspondence between those assertions and established criteria.”
FIGURE 1–2
The Relationship among Auditing, Attest, and Assurance Services
Auditing Attest Assurance
5 American Accounting Association, Committee on Basic Auditing Concepts, “A Statement of Basic Auditing
Concepts” (Sarasota, FL: AAA, 1973).