1. Discuss the difference between the attest function and advisory services.
An attest function by the independent auditors, the CPA’s. They ensure that the
financial statements are prepared in compliance with applicable laws and standards. The
stakeholders rely on attested financial statements and make appropriate decisions while
investing in a company. Meanwhile, advisory services provide advice related to accounting
and financial transactions by public accounting firms. Sometimes, the company determines
a critical area in need of investigation then hires advisory services which will primarily
focus on that area. Moreover, attest function require written assertions and written report.
On the other hand, advisory services offer recommendations on IT governance and consult
how the client can enhance operational effectiveness and efficiency. Also, unlike
attestation, which is mandatory once a year, advisory services are not compulsory.
Advisory services are engaged to provide a report on a specific area as per the terms with
the organization.
2. What is the relationship between tests of controls and substantive tests?
A test of controls is an audit procedure to test the effectiveness of a control used
by an organization to prevent or detect material misstatements. Depending on the findings
of this test, auditors may decide to rely on an organization's system of controls as part of
their auditing operations. Meanwhile, substantive testing is an audit procedure that aid
auditors in detecting error or fraud in the financial statements and supporting
documentation. These tests are necessary as evidence to support the argument that an
entity's financial records are complete, valid, and accurate. Moreover, there is a link
between these two procedures. If the auditor determines that the company's internal control
is reliable during a test of controls, fewer substantial procedures will be done. If the auditor
thinks that the internal control is unreliable, more substantive tests will be performed.
References:
Bragg, S. (2022, January 29). Substantive testing definition. AccountingTools. https://www.accountingtools.com/articles/what-issubstantivetesting.html#:%7E:text=Substantive%20testing%20is%20an%20audit,complete%2C%20valid%2C%20and%20accurat
e.
Bragg, S. (2022b, February 12). Tests of controls definition. AccountingTools. https://www.accountingtools.com/articles/what-aretests-ofcontrols.html#:%7E:text=What%20are%20Tests%20of%20Controls,part%20of%20their%20auditing%20activities.