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| The Auditing Profession | |
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| Auditing, Attestation, and Assurance | |
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| Overview | |
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| Auditing, Attestation, and Assurance | |
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| Auditing and Management Assertions | |
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| Emphasis on Risk-Based Audits | |
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| Why Independent Auditing Is Necessary | |
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| Independent Auditing versus Internal Auditing | |
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| Audits by Government Organizations | |
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| How Auditing Differs from Accounting | |
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| Requirements for an Effective Audit | |
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| Evaluation of Evidence | |
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| Communication of the Auditor's Findings | |
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| The Audit Process: An Overview | |
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| Other Services Performed by CPA Firms | |
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| Key Terms | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA Exams | |
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| Essay Questions and Problems | |
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| Defining Professional Responsibility: Quality Standards and Ethics | |
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| Overview | |
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| Standards Governing the Quality of Professional Accounting Services | |
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| Ethics and the Code of Professional Conduct | |
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| Codification of Professional Standards | |
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| Key Terms | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA Exams | |
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| Internet Activities | |
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| Essay Questions and Problems | |
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| Discussion Cases | |
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| Maintaining Professional Responsibility: Regulation and Legal Liability | |
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| Overview | |
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| Introduction | |
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| Self-Regulation and Quality Maintenance | |
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| Self-Regulation and the Expectations Gap | |
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| External Regulation | |
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| Auditor Liability: The Courts | |
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| Appendix | |
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| Key Terms | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA Exams | |
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| Internet Activities | |
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| Essay Questions and Problems | |
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| Discussion Case | |
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| Planning the Audit | |
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| Audit Evidence and Audit Programs | |
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| Overview | |
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| Introduction | |
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| Audit Objectives | |
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| Characteristics of Audit Evidence | |
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| Audit Evidence and Related Auditing Procedures | |
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| Audit Planning and Audit Programs | |
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| Audit Workpapers | |
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| Initial versus Recurring Audits | |
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| Key Terms | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA Exams | |
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| Internet Activities | |
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| Essay Questions and Problems | |
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| Discussion Case | |
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| Audit Planning: Assessment of Inherent Risk and Materiality | |
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| Overview | |
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| Introduction | |
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| Audit Risk Defined | |
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| Components of Audit Risk | |
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| Quantifying Audit Risk | |
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| Materiality and Its Impact on Audit Evidence | |
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| Relationship Among Audit Risk, Audit Evidence, and Materiality | |
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| Analysis of Inherent Risk | |
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| Classifying the Warning Signs | |
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| Risk Analysis Matrix | |
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| Incorporating Inherent Risk Assessment into the Audit | |
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| Key Terms | |
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| Computer Audit Practice Case | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA Exams | |
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| Internet Activities | |
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| Essay Questions and Problems | |
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| Discussion Cases | |
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| Internal Control: Concepts | |
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| Overview | |
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| Internal Control System Defined | |
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| Components of Internal Control | |
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| Another Look at Financial Controls | |
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| Inherent Limitations of Internal Control Systems | |
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| Internal Control for a Small Business | |
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| Key Terms | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA and CIA Exams | |
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| Essay Questions and Problems | |
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| Audit Planning: Assessment of Control Risk | |
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| Overview | |
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| Auditor's Assessment of Control Risk | |
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| Auditor's Approach to Assessing Control Risk | |
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| Design of Substantive Audit Programs | |
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| Summary of Audit Risk Assessment | |
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| Communication of Reportable Conditions | |
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| Appendix | |
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| Key Terms | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA and CIA Exams | |
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| Internet Activities | |
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| Essay Questions and Problems | |
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| Discussion Cases | |
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| Internal Control and Computer-Based Information Systems (CBIS) | |
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| Overview | |
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| Audit Approaches | |
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| Types of CBIS | |
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| Kinds of CBIS Controls | |
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| Techniques for Testing CBIS Controls | |
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| CBIS and Audit Risk Implications | |
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| Expert Systems as a Means of Managing Audit Risk | |
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| Key Terms | |
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| Computer Audit Practice Case | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA and CIA Exams | |
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| Essay Questions and Problems | |
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| Conducting the Audit | |
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| Statistical Sampling for Testing Control Procedures | |
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| Overview | |
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| Sampling Applications in Auditing | |
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| How Sampling Can Assist in Testing of Controls | |
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| Statistical versus Nonstatistical Sampling | |
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| Statistical Sampling and Audit Judgment | |
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| Statistical Sampling for Testing of Controls | |
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| Statistical Sampling and Audit Risk Implications | |
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| Extended Example | |
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| Key Terms | |
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| Computer Audit Practice Case | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA and CIA Exams | |
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| Essay Questions and Problems | |
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| Statistical Sampling for Substantive Testing | |
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| Overview | |
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| Introduction | |
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| Approaches to Variables Sampling | |
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| Mean per Unit (MPU) | |
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| Difference Estimation | |
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| Probability-Proportional-to-Size Sampling (PPS) | |
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| Computer-Assisted Sampling | |
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| Key Terms | |
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| Computer Audit Practice Case | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA Exams | |
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| Internet Activities | |
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| Essay Questions and Problems | |
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| Substantive Audit Testing: Revenue Cycle | |
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| Overview | |
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| Substantive Testing versus Tests of Controls | |
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| Review of the Audit Process | |
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| Overview of Substantive Testing | |
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| Use of Computers in Performing Substantive Audit Tests | |
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| Auditing the Revenue Cycle | |
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| Audit Risk Analysis and the Revenue Cycle: Some Warning Signs | |
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| Appendix | |
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| Key Terms | |
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| Computer Audit Practice Case | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA Exams | |
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| Essay Questions and Problems | |
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| Discussion Cases | |
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| Substantive Audit Testing: Expenditure Cycle | |
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| Overview | |
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| Purchases, Production, and Inventories | |
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| Plant Assets | |
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| Intangible Assets | |
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| Current Liabilities | |
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| Audit Risk Analysis and the Expenditure Cycle | |
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| Appendix | |
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| Key Terms | |
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| Computer Audit Practice Case | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA Exams | |
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| Essay Questions and Problems | |
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| Discussion Cases | |
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| Substantive Audit Testing: Financing and Investing Cycle and Completing the Audit | |
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| Overview | |
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| Introduction | |
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| Investing Transactions | |
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| Borrowing Transactions | |
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| Stockholders' Equity Transactions | |
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| Audit Risk Analysis and the Financing and Investing Cycle | |
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| Completing the Audit | |
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| Appendix | |
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| Key Terms | |
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| Computer Audit Practice Case | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA Exams | |
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| Essay Questions and Problems | |
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| Discussion Cases | |
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| Reporting the Results of the Audit | |
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| Audit Reports | |
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| Overview | |
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| Nature of the Audit Report | |
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| Components of the Audit Report | |
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| Kinds of Audit Opinions | |
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| Divided Responsibility | |
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| Explanatory Paragraph: Unqualified Opinion | |
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| Audited Statements Prepared on a Basis Other than GAAP | |
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| Other Topics Affecting Audit Reports | |
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| Key Terms | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA Exams | |
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| Internet Activities | |
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| Essay Questions and Problems | |
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| Discussion Case | |
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| Other Attestation and Assurance Services | |
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| Other Assurance Services | |
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| Overview | |
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| Changing Nature of the Assurance Function | |
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| Other Assurance Services Covered by the Auditing Standards | |
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| Services Covered by the Accounting and Review Standards | |
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| Assurance Services Covered by the Attestation Standards | |
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| Summary Table | |
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| New Types of Assurance Services and the Future of the Assurance Function | |
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| Key Terms | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA Exams | |
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| Essay Questions and Problems | |
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| Operational and Governmental Compliance Auditing | |
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| Overview | |
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| Introduction | |
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| Operational Auditing | |
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| Governmental Compliance Auditing | |
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| Appendix | |
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| Key Terms | |
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| Review Questions | |
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| Multiple Choice Questions from Past CPA and CIA Exams | |
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| Essay Questions and Problems | |
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| Biltrite Bicycles, Inc.: A Computerized Audit Practice Case | |
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| Description of the Practice Case | |
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| Assessment of Inherent Risk | |
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| Assessment of Control Risk | |
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| Control Testing--Sales Processing | |
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| PPS Sampling--Factory Equipment Additions | |
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| Dallas Dollar Bank Reconciliation | |
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| Analysis of Interbank Transfers | |
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| Accounts Receivable Aging Analysis | |
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| Sales and Purchases Cutoff Tests | |
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| Search for Unrecorded Liabilities | |
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| Estimated Liability for Product Warranty | |
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| Plant Asset Additions and Disposals | |
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| Analysis of Marketable Securities | |
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| Mortgage Note Payable and Note Payable to Bank Two | |
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| Working Trial Balance | |
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| Audit Report | |