Essentials of Auditing and Assurance Services: An Integrated Approach,9780130463036

Essentials of Auditing and Assurance Services: An Integrated Approach

by ; ;
Edition: 1st
ISBN13: 9780130463036
ISBN10: 0130463035
Format: Hardcover
Pub. Date: 2003-01-01
Publisher(s): Pearson College Div
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Summary

Offers complete coverage of the entire audit process, taking learners step by step through each audit cycle, then showing how each step relates to the process as a whole. For individuals and firms in need of information on the latest audit technology, current audit practices, and the latest auditing research.

Table of Contents

Preface xiii
PART 1 The Auditing Profession
Assurance Services and the CPA Profession
3(30)
Learning Objectives
3(22)
Assurance Services
4(4)
Economic Demand for Auditing
8(2)
Nature of Auditing
10(3)
Types of Audits
13(1)
Types of Auditors
14(2)
E-Commerce and CPA Firm Operations
16(1)
Certified Public Accountant
16(1)
American Institute of Certified Public Accountants (AICPA)
17(1)
Generally Accepted Auditing Standards
18(2)
Statements on Auditing Standards
20(1)
Quality Control
21(2)
Securities and Exchange Commission
23(1)
Summary
24(1)
Essential Terms
25(1)
Review Ovations
26(2)
Multiple Choice Questions from CPA Examinations
28(1)
Discussion Questions and Problems
28(3)
Internet Problem 1-1: Assurance Services
31(1)
Internet Problem 1-2: CPA Vision Project
31(2)
Audit Reports
33(28)
Learning Objectives
33(17)
Standard Unqualified Audit Report
34(3)
Unqualified Audit Report with Explanatory Paragraph or Modified Wording
37(4)
Departures from an Unqualified Audit Report
41(1)
Materiality
42(3)
Discussion of Conditions Requiring a Departure
45(3)
Auditor's Decision Process for Audit Reports
48(2)
Impact of E-Commerce on Audit Reporting
50(1)
Summary
50(1)
Essential Terms
50(1)
Review Questions
51(1)
Multiple Choke Questions from CPA Examinations
52(1)
Discussion Questions and Problems
53(6)
Internet Problem 2-1: Research Annual Reports
59(2)
Professional Ethics
61(32)
Learning Objectives
61(25)
What Are Ethics?
62(1)
Ethical Dilemmas
63(3)
Special Need for Ethical Conduct in Professions
66(2)
Code of professional Conduct
68(3)
Independence
71(2)
Independence Rule of Conduct and Interpretations
73(4)
Other Rules of Conduct
77(7)
Enforcement
84(2)
Summary
86(1)
Essential Terms
86(1)
Review Questions
86(1)
Multiple Choke Questions from CPA Examinations
87(1)
Discussion Questions and Problems
88(2)
Cases
90(1)
Internet Problem 3-1: AICPA Code of Professional Conduct Ethics Rulings and Case
91(2)
Legal Liability
93(22)
Learning Objectives
93(14)
Changed Legal Environment
94(1)
Distinction Among Business Failure, Audit Failure, and Audit Risk
95(1)
Legal Concepts Affecting Liability
96(2)
Liability to Clients
98(1)
Liability to Third Parties Under Common Law
99(2)
Civil Liability Under the Federal Securities Laws
101(3)
Criminal Liability
104(1)
The Profession's Response to Legal Liability
105(1)
Protecting Individual CPAs from Legal Liability
106(1)
Summary
107(1)
Essential Terms
107(1)
Review Questions
108(1)
Multiple Choke Questions from CPA Examinations
109(1)
Discussion Questions and Problems
110(3)
Case
113(1)
Internet Problem 4-1: SEC Enforcement
113(2)
PART 2 The Audit Process
Audit Responsibilities and Objectives
115(28)
Learning Objectives
115(20)
Objective of Conducting an Audit of Financial Statements
116(1)
Management's Responsibilities
117(1)
Auditor's Responsibilities
118(3)
Financial Statement Cycles
121(5)
Setting Audit Objectives
126(2)
Transaction-Related Audit Objectives
128(2)
Balance-Related Audit Objectives
130(2)
How Audit Objectives Are Met
132(2)
Summary
134(1)
Essential Terms
135(1)
Review Questions
135(1)
Multiple Choice Questions from CPA Examinations
136(7)
Discussion Questions and Problems
137(4)
Internet Problem 5-1: Assertions and Evidence Associated with New Assurance Services
141(2)
Audit Evidence
143(26)
Learning Objectives
143(17)
Nature of Evidence
144(1)
Audit Evidence Decisions
145(1)
Persuasiveness of Evidence
146(3)
Types of Audit Evidence
149(8)
Audit Documentation
157(3)
Summary of Audit Documentation
160(1)
Essential Terms
160(1)
Review Questions
161(1)
Multiple Choice Questions from CPA Examinations
162(1)
Discussion Questions and Problems
163(23)
Case
186
Internet Problem 6-1: Electronic Evidence
167(2)
Audit Planning and Analytical Procedures
169(36)
Learning Objectives
169(24)
Planning
170(1)
Accept Client and Perform Initial Audit Planning
170(6)
Understand the Client's Business and Industry
176(4)
Assess Client Business Risk
180(1)
Perform Preliminary Analytical Procedures
181(1)
Summary of the Purposes of Audit Planning
182(1)
Analytical Procedures
182(2)
Five Types of Analytical Procedures
184(5)
Common Financial Ratios
189(4)
Summary of Analytical Procedures
193(1)
Essential terms
193(1)
Review Questions
194(1)
Multiple Choice Questions from CPA Examinations
195(1)
Discussion Questions and Problems
196(5)
Cases
201(1)
Internet Problem 7-1: Industry Research and Client Acceptance
202(1)
Internet Problem 7-2: Obtain Client Background Information
203(2)
Materiality and Risk
205(36)
Learning Objectives
205(25)
Materiality
206(1)
Set Preliminary Judgment about Materiality
207(3)
Allocate Preliminary Judgment about Materiality to Segments (Tolerable Misstatement)
210(2)
Estimate Misstatement and Compare with Preliminary Judgment
212(1)
Risk
213(2)
Types of Risks
215(2)
Assessing Acceptable Audit Risk
217(2)
Assessing Inherent Risk
219(2)
Assessing Risks of Fraud
221(3)
Relationship of Risks to Evidence and Factors Influencing Risks
224(4)
Evaluating Results
228(2)
Essential Terms
230(1)
Review Questions
231(1)
Multiple Choice Questions from CPA Examinations
232(1)
Discussion Questions and Problems
233(5)
Case
238(1)
Internet Problem 8-1: Materiality and Tolerable Misstatement
239(2)
Internal Control and Control Risk
241(36)
Learning Objectives
241(25)
Client and Auditor Concerns
242(3)
Effect of Information Technology on Internal Control
245(1)
Components of Internal Control
246(8)
Procedures to Obtain an Understanding of Internal Control
254(3)
Assess Control Risk
257(7)
Tests of Controls
264(2)
Decide Planned Detection Risk and Design Substantive Tests
266(1)
Summary
266(1)
Essential Terms
266(2)
Review Questions
268(1)
Multiple Choice Questions from CPA Examinations
269(1)
Discussion Questions and Problems
270(4)
Case
274(1)
Integrated Case Application-Pinnacle Manufacturing: Part I
274(2)
Internet Problem 9-1: Corporate Governance
276(1)
Overall Audit Plan and Audit Program
277(30)
Learning Objectives
277(22)
Types of Tests
278(4)
Selecting Which Types of Tests to Perform
282(3)
Impact of Information Technology on Audit Testing
285(1)
Evidence Mix
285(1)
Design of the Audit Program
286(9)
Summary of Key Evidence-Related Terms
295(1)
Summary of the Audit Process
296(3)
Essential Terms
299(1)
Review Questions
299(1)
Multiple Choice Questions from CPA Examinations
300(1)
Discussion Questions and Problems
301(4)
Internet Problem 10-1: Assessing Effects of Evidence Mix
305(2)
PART 3 Application of the Audit Process to the Sales and Collection Cycle
Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions
307(30)
Learning Objectives
307(21)
Accounts and Classes of Transactions in the Sales and Collection Cycle
308(1)
Business Functions in the Cycle and Related Documents and Records
309(1)
Methodology for Designing Tests of Controls and Substantive Tests of Transactions for Sales
310(10)
Sales Returns and Allowances
320(1)
Methodology for Designing Tests of Controls and Substantive Tests of Transactions for Cash Receipts
321(4)
Audit Tests for Uncollectible Accounts
325(1)
Additional Internal Controls Over Account Balances
326(1)
Update the Evidence Planning Worksheet
326(1)
Effect of Results of Tests of Controls and Substantive Tests of Transactions
326(2)
Summary
328(1)
Essential Terms
328(1)
Review Questions
329(1)
Multiple Choice Questions from CPA Examinations
330(1)
Discussion Questions and Problems
331(4)
Case
335(1)
Integrated Case Application-Pinnacle Manufacturing Part II
336(1)
Internet Problem 11-1: Electronic Signatures
336(1)
Completing the Tests in the Sales and Collection Cycle: Accounts Receivable
337(36)
Learning Objectives
337(21)
Methodology for Designing Tests of Details of Balances
338(7)
Designing Tests of Details of Balances
345(5)
Confirmation of Accounts Receivable
350(5)
Developing Tests of Details Audit Program
355(3)
Essential Terms
358(1)
Review Questions
359(1)
Multiple Choice Questions from CPA Examinations
360(1)
Discussion Questions and Problems
361(4)
Integrated Case Application-Pinnacle Manufacturing: Part III
365(6)
Internet Problem 12-1: Revenue Recognition
371(2)
Audit Sampling
373(42)
Learning Objectives
373(31)
Representative Samples
374(1)
Statistical Versus Nonstatistical Sampling and Probabilistic Versus Nonprobabilistic Sample Selection
375(1)
Nonprobabilistic Sample Selection Methods
376(1)
Probabilistic Sample Selection Methods
377(2)
Audit Sampling for Tests of Controls and Substantive Tests of Transactions
379(1)
Application of Audit Sampling in Tests of Controls and Substantive Tests of Transactions
380(14)
Audit Sampling for Tests of Details of Balances
394(1)
Application of Audit Sampling for Tests of Details of Balances
395(9)
Essential Terms
404(1)
Review Questions
405(1)
Multiple Choice Questions from CPA Examinations
406(1)
Discussion Questions and Problems
407(5)
Case
412(1)
Integrated Case Application-Pinnacle Manufacturing Part IV
412(1)
Internet Problem 13-1: Sampling for U.S. Census
413(2)
PART 4 Application of the Audit Process to Other Cycles
Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable
415(24)
Learning Objectives
415(15)
Accounts and Classes of Transactions in the Acquisition and Payment Cycle
416(1)
Business Functions in the Cycle and Related Documents and Records
417(1)
How E-Commerce Affects the Acquisition and Payment Cycle
418(1)
Methodology for Designing Tests of Controls and Substantive Tests of Transactions
418(4)
Methodology for Designing Tests of Details of Balances for Accounts Payable
422(8)
Summary
430(1)
Essential Terms
430(1)
Review Questions
430(1)
Multiple Choice Questions from CPA Examinations
431(1)
Discussion Questions and Problems
432(5)
Internet Problem 14-1: Managing the Accounts Payable Function
437(2)
Completing Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts
439(20)
Learning Objectives
439(13)
Types of Other Accounts in the Acquisition and Payment Cycle
440(1)
Audit of property, Plant, and Equipment
440(6)
Audit of prepaid Expenses
446(2)
Audit of Accrued Liabilities
448(1)
Audit of Income and Expense Accounts
449(3)
Summary
452(1)
Essential Terms
452(1)
Review Questions
452(1)
Multiple Choice Questions and CPA Examinations
453(1)
Discussion Questions and Problems
454(2)
Case
456(1)
Internet Problem 15-1: Managing Fixed Assets
457(2)
Audit of the Inventory and Warehousing Cycle
459(26)
Learning Objectives
459(16)
Business Functions in the Cycle and Related Documents and Records
460(2)
How E-Commerce Affects Inventory Management
462(1)
Parts of the Audit of Inventory
462(2)
Audit of Cost Accounting
464(2)
Analytical Procedures
466(1)
Methodology for Designing Tests of Details of Balances
467(1)
Physical Observation of Inventory
467(3)
Audit of pricing and Compilation
470(3)
Integration of the Tests
473(2)
Summary
475(1)
Essential Terms
475(1)
Review Questions
476(1)
Multiple Choice Questions from CPA Examinations
477(1)
Discussion Questions and Problems
478(4)
Case
482(1)
Internet Problem 16-1: Using Inventory Count Specialists
483(2)
Audit of Cash Balances
485(20)
Learning Objectives
485(13)
Cash in the Bank and Transaction Cycles
486(1)
Types of Cash Accounts
487(1)
Audit of the General Cash Account
488(6)
Fraud-Oriented Procedures
494(3)
Audit of the Imprest Payroll Bank Account
497(1)
Audit of Imprest Petty Cash
497(1)
Summary
498(1)
Essential Terms
498(1)
Review Questions
499(1)
Multiple Choice Questions from CPA Examinations
500(1)
Discussion Questions and Problems
500(3)
Internet Problem 17-1: Electronic Money
503(2)
PART 5 Completing the Audit
Completing the Audit
505(28)
Learning Objectives
505(18)
Review for Contingent Liabilities and Commitments
506(4)
Review for Subsequent Events
510(3)
Final Evidence Accumulation
513(3)
Evaluate Results
516(4)
Issue the Audit Report
520(1)
Communicate with the Audit Committee and Management
521(1)
Subsequent Discovery of Facts
522(1)
Essential Terms
523(1)
Review Questions
524(1)
Multiple Choice Questions from CPA Examinations
525(2)
Discussion Questions and Problems
527(3)
Case
530(1)
Internet Problem 18-1: Subsequent Events
531(2)
Index 533

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