Auditing and Assurance Services 9th Edition by Alvin Arens,Mark Beasley,Randy Elder

Exercise 15

The accounting profession is concerned about whether companies are in compliance with various federal and state environmental laws and regulations and whether they have reported environmental liabilities in their financial statements. Environmental auditing typically refers to the process of assessing compliance with environmental laws and regulations, as well as compliance with company policies and procedures. AT Section 601, "Compliance Attestation," allows a practitioner to perform agreed-upon procedures to assist users in evaluating management's written assertions about (1) the entity's compliance with specified requirements, (2) the effectiveness of the entity's internal control over compliance, or (3) both.
Required:
a. Discuss how a practitioner would conduct an agreed-upon procedures engagement to evaluate an entity's written assertion that it was in compliance with its state's environmental laws and regulations.
b. Assume that this same entity maintained an internal control system that monitored the entity's compliance with its state's environmental laws and regulations. Discuss how a practitioner would evaluate the effectiveness of the entity's internal control over compliance.