Auditing: The art and Scienc eof Assurance Engagements

Description

Cover Title Page Copyright Page Contents Preface Acknowledgments Part 1: The Auditing Profession 1. The Demand for Audit and Other Assurance Services Learning Objectives Nature and Relevance of Auditing Distinction Between Auditing and Accounting Economic Demand for Auditing Causes of Information Risk Reducing Information Risk Common Types of Audits Types of Auditors Assurance and Nonassurance Services Offered by Public Accounting Firms Summary Review Questions Multiple Choice Questions Discussion Questions and Problems Professional Judgment Problems and Cases 2. The Public Accounting Profession and Audit Quality Learning Objectives An Overview of the Canadian Public Accounting Industry Organizations Affecting the Canadian Public Accounting Profession An Overview of CPA Canada Assurance Standards Purpose of the Financial Statement Audit The Drivers of Audit Quality Quality Control Summary Review Questions Multiple Choice Questions Discussion Questions and Problems Professional Judgment Problems and Cases 3. Professional Ethics and Legal Liability Learning Objectives Professional Ethics and Public Accountants A Framework for Ethical Reasoning Ethical Blind Spots Professional Guidance on Ethical Conduct The Independence Standard for Assurance Engagements Enforcement of the Code of Professional Conduct The Expectations Gap and Auditor Litigation Major Sources of Auditor Liability The Profession’s Response to Legal Liability Summary Review Questions Multiple Choice Questions Discussion Questions and Problems Professional Judgment Problems and Cases Part 2: The Audit Process and Risk Assessment 4. Audit Responsibilities and Objectives Learning Objectives The Objective of Conducting an Audit of Financial Statements Management’s Responsibilities Responsibilities of Those Charged With Governance Auditor’s Responsibilities A Framework for Professional Judgment Professional Skepticism Financial Statement Cycles Setting Audit Objectives Management Assertions and Audit Objectives Linking Assertions With Audit Objectives The Audit Process: How Audit Objectives Are Met Summary Review Questions Multiple Choice Questions Discussion Questions and Problems Professional Judgment Problems and Cases 5. Audit Evidence Learning Objectives Nature of Audit Evidence Audit Evidence Decisions Persuasiveness of Evidence Specific Types of Audit Procedures Design Analytical Procedures Documentation Preparation of Working Papers Effect of Technology on Audit Evidence and Audit Documentation Professional Skepticism, Evidence, and Documentation Appendix 5A: Common Financial Ratios Summary Review Questions Multiple Choice Questions and Task-Based Simulations Discussion Questions and Problems Professional Judgment Problems and Cases 6. Client Acceptance, Planning, and Materiality Learning Objectives The Importance of Audit Planning Client Acceptance and Continuance Understand the Nature of Client’s Business and Environment Perform Preliminary Analytical Review Develop Overall Audit Strategy Materiality Determine Overall Materiality Determine Performance Materiality Determine Specific Materiality Applying Materiality—Evaluating Results and Completing the Audit Summary Review Questions Multiple Choice Questions and Task-Based Simulations Discussion Questions and Problems Professional Judgment Problems and Cases 7. Assessing the Risk of Material Misstatement Learning Objectives Audit Risk Risk Assessment Procedures Identification of Significant Risks Considering Fraud Risk Conditions for Fraud Responding to Risks of Material Misstatements Due to Fraud The Audit Risk Model Assessing Acceptable Audit Risk Assessing Inherent Risk Relationship of Risks to Evidence and Factors Influencing Risks Summary Review Questions Multiple Choice Questions and Task-Based Simulations Discussion Questions and Problems Professional Judgment Problems and Cases 8. Internal Control and COSO Framework Learning Objectives Internal Control Objectives The Responsibilities of Management and the Auditor COSO Components of Internal Control Understanding Controls of Small Businesses Summary Review Questions Multiple Choice Questions and Task-Based Simulations Discussion Questions and Problems Professional Judgment Problems and Cases 9. Assessing Control Risk and Designing Tests of Controls Learning Objectives Obtain and Document Understanding of Internal Control Assess Control Risk Tests of Controls Understanding and Assessing Controls of Outsourced Systems Evaluate Results, Decide on Planned Detection Risk, and Design Substantive Tests Impact of IT Environment on Control Risk Assessment and Testing Auditor Reporting on Internal Control Reporting on Internal Controls for Some Public Companies Summary Review Questions Multiple Choice Questions and Task-Based Simulations Discussion Questions and Problems Professional Judgment Problems and Cases 10. Develop Risk Response: Audit Strategy and Audit Program Learning Objectives Audit Strategy Types of Tests Selecting Which Types of Tests to Perform Evidence Mix and Audit Strategy Design of the Audit Programs Summary of Audit Process Summary Review Questions Multiple Choice Questions and Task-Based Simulations Discussion Questions and Problems Professional Judgment Problems and Cases 11. Audit Sampling Concepts Learning Objectives What Is Audit Sampling? Representative Sampling and Its Risks Statistical versus Nonstatistical Sampling Sample Selection Methods The Audit Sampling Process for Tests of Controls and Substantive Tests of Details Using Sampling for Tests of Controls Nonstatistical Sampling Approach to Testing Controls Using Sampling for Substantive Tests of Details Nonstatistical Sampling for Substantive Tests of Details Statistical Sampling for Substantive Tests of Details Adequate Documentation and Professional Judgment Summary Review Questions Multiple Choice Questions and Task-Based Simulations Discussion Questions and Problems Professional Judgment Problems and Cases Part 3: Application of the Audit Process 12. Audit of the Revenue Cycle Learning Objectives Overview of the Revenue Cycle Business Functions in the Cycle, and Related Documents and Records An Overview of the Audit Process for the Revenue Cycle Identify Significant Risks and Assess Risk of Material Misstatement Identify Key Controls and Assess Effectiveness of Controls Determine Audit Approach (Strategy) for Revenue Cycle Design and Perform Substantive Analytical Procedures Substantive Tests of Details for Revenue Substantive Tests for Accounts Receivable Substantive Tests of Details for Accounts Receivable: External Confirmations Design and Perform Fraud-Related Substantive Procedures Summary Review Questions Multiple Choice Questions and Task-Based Simulations Discussion Questions and Problems Professional Judgment Problems and Cases 13. Audit of the Acquisition and Payment Cycle Learning Objectives An Overview of the Acquisition and Payment Cycle The Four Business Functions and Their Documents and Records Identify Significant Risks and Assess Risk of Material Misstatement Understand Internal Control and Assess Control Risk Determine Audit Approach (Strategy) for Acquisition and Payment Cycle Design and Perform Tests of Controls for Acquisition and Payment Cycle Design and Perform Substantive Analytical Procedures for Accounts Payable and Related Accounts Design and Perform Tests of Details of Accounts Payable and Accrued Liabilities Reliability of Audit Evidence Examining Other Accounts and Related Party Transactions Summary Review Questions Multiple Choice Questions and Task-Based Simulations Discussion Questions and Problems Professional Judgment Problems and Cases 14. Audit of the Inventory and Distribution Cycle Learning Objectives Overview of the Inventory and Distribution Cycle Inventory Cycle Business Functions, Documents, and Records Identify Significant Risks Understanding and Assessing Control Risk Key Controls Develop an Audit Approach (Strategy) for Inventory Design and Perform Tests of Controls Perform Substantive Analytical Procedures Substantive Tests of Details for Inventory Balances Designing Fraud Substantive Procedures for Inventory Summary Review Questions Multiple Choice Questions and Task-Based Simulations Discussion Questions and Problems Professional Judgment Problems and Cases 15. Audit of the Human Resources and Payroll Cycle Learning Objectives An Overview of the Human Resources and Payroll Cycle Functions in the Cycle, and Related Documents and Records The Audit Process for Human Resource and Payroll Cycle Identify Significant Risks and Assess Risk of Material Misstatement Understanding Internal Control and Assessing Control Risk Develop an Audit Approach for Human Resources and Payroll Design and Perform Tests of Controls Design and Perform Substantive Analytical Procedures Design and Perform Substantive Tests Summary Review Questions Multiple Choice Questions and Task-Based Simulations Discussion Questions and Problems Professional Judgment Problems and Cases 16. Audit of the Capital Acquisition and Repayment Cycle Learning Objectives An Overview of the Capital Acquisition and Repayment Cycle Notes Payable Understanding Internal Control and Assessing Control Risk Develop Audit Approach (Strategy) for Notes Payable and Related Accounts Audit of Owners’ Equity Summary Review Questions Multiple Choice Questions and Task-Based Simulations Discussion Questions and Problems Professional Judgment Problems and Cases 17. Audit of Cash Balances Learning Objectives Types of Cash Accounts The Relationship Between Cash in the Bank and Transaction Cycles Identify Significant Risks and Assess Risk of Material Misstatement in Cash Understand Internal Control and Assess Control Risk Design and Perform Substantive Tests for Cash Fraud-Oriented Procedures Summary Review Questions Multiple Choice Questions and Task-Based Simulations Discussion Questions and Problems Professional Judgment Problems and Cases Part 4: Completing the Audit, Reporting, and Other Assurance Engagements 18. Completing the Audit Learning Objectives Complete Final Evidence Gathering Accumulate Final Evidence Evaluate Results Communicate With the Audit Committee and Management Summary Review Questions Multiple Choice Questions Discussion Questions and Problems Professional Judgment Problems and Cases 19. Audit Reports on Financial Statements Learning Objectives The Audit Opinion and the Auditors’ Reporting Responsibilities The Unmodified Audit Opinion Elements of the Auditor’s Report Reporting Material Uncertainty for Going Concern Identify and Disclose Key Audit Matters Determine Whether Emphasis of Matter or Other Matter Paragraphs are Necessary Decide Whether Modifications to the Audit Opinion Are Necessary Qualified Audit Opinions Adverse Audit Opinion Disclaimer of Opinion How the Audit Report Adds Value Summary Review Questions Multiple Choice Questions Discussion Questions and Problems Professional Judgment Problems and Cases 20. Other Assurance and Nonassurance Services Learning Objectives Overview of Other Canadian Standards Reviews and Compilations of Financial Statements The Review Engagement Process Compilation Engagements Review of Interim Financial Statements Assurance Engagements for Nonfinancial Information Assurance Over Compliance With Agreements and Regulations Related Service Engagements Specified Procedures Engagements Reports on Supplemental Matters Arising From an Audit or Review Engagement The Future of Assurance Services Summary Review Questions Multiple Choice Questions Discussion Questions and Problems Professional Judgment Problems and Cases Appendix: Hillsburg Hardware Limited Index Back Cover