Auditing: An Integrated Approach / Edition 8

Auditing: An Integrated Approach / Edition 8

by Alvin A. Arens, James K. Loebbecke
     
 

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ISBN-10: 0130827355

ISBN-13: 9780130827357

Pub. Date: 10/28/1999

Publisher: Pearson Education

This innovative, easy-to-understand best-seller offers complete coverage of the entire audit process, taking the reader step-by-step through each audit cycle, then showing how each step relates to the process as a whole. Completely oriented to non-complex computerized accounting systems (rather than manual ones), this book significantly

Overview

This innovative, easy-to-understand best-seller offers complete coverage of the entire audit process, taking the reader step-by-step through each audit cycle, then showing how each step relates to the process as a whole. Completely oriented to non-complex computerized accounting systems (rather than manual ones), this book significantly integrates information technology throughout all chapters. Coverage includes assurance services, the CPA profession, audit reports, professional ethics, legal liability, evidence, planning, documentation, materiality and risk, and the impact of information technology. For practicing auditors in the market for an excellent reference.

Product Details

ISBN-13:
9780130827357
Publisher:
Pearson Education
Publication date:
10/28/1999
Edition description:
Older Edition
Pages:
791
Product dimensions:
8.73(w) x 11.14(h) x 1.47(d)

Related Subjects

Table of Contents

Preface xv
PART I The Auditing Profession
The Demand for Audit and Assurance Services
1(22)
Learning Objectives
1(15)
Assurance Services
2(5)
Economic Demand for Auditing
7(2)
Nature of Auditing
9(2)
Distinction between Auditing and Accounting
11(1)
Types of Audits
11(2)
Types of Auditors
13(1)
Certified Public Accountant
14(1)
Summary
15(1)
Essential Terms
16(1)
Review Questions
16(1)
Multiple Choice Questions from CPA Examinations
17(1)
Discussion Questions and Problems
18(3)
Assurance Services
21(2)
The CPA Profession
23(20)
Learning Objectives
23(14)
Certified Public Accounting Firms
24(1)
Activities of CPA Firms
25(1)
Structure of CPA Firms
26(2)
AICPA
28(1)
Generally Accepted Auditing Standards
29(2)
Statements on Auditing Standards
31(2)
Quality Control
33(3)
Securities and Exchange Commission
36(1)
Summary
37(1)
Essential Terms
37(1)
Review Questions
38(1)
Multiple Choice Questions from CPA Examinations
38(1)
Discussion Questions and Problems
39(2)
CPA Vision Project
41(2)
Audit Reports
43(32)
Learning Objectives
43(19)
Standard Unqualified Audit Report
44(3)
Unqualified Audit Report with Explanatory Paragraph or Modified Wording
47(3)
Departures from an Unqualified Audit Report
50(2)
Materiality
52(3)
Discussion of Conditions Requiring a Departure
55(4)
Auditor's Decision Process for Audit Reports
59(3)
Summary
62(1)
Essential Terms
62(1)
Review Questions
62(1)
Multiple Choice Questions from CPA Examinations
63(2)
Discussion Questions and Problems
65(6)
Case
71(2)
Research Annual Reports
73(2)
Professional Ethics
75(36)
Learning Objectives
75(26)
What are Ethics?
76(1)
Ethical Dilemmas
77(3)
Special Need for Ethical Conduct in Professions
80(2)
Code of Professional Conduct
82(4)
Independence
86(6)
Other Rules of Conduct
92(7)
Enforcement
99(1)
Summary
100(1)
Essential Terms
101(1)
Review Questions
101(1)
Multiple Choice Questions from CPA Examinations
102(1)
Discussion Questions and Problems
103(3)
Case
106(3)
AICPA Code of Professional Conduct---Ethics Rulings and Case
109(2)
Legal Liability
111(30)
Learning Objectives
111(19)
Changed Legal Environment
112(1)
Distinction among Business Failure, Audit Failure, and Audit Risk
113(1)
Legal Concepts Affecting Liability
114(1)
Liability to Clients
115(4)
Liability to Third Parties under Common Law
119(2)
Civil Liability under the Federal Securities Laws
121(4)
Criminal Liability
125(2)
The Profession's Response to Legal Liability
127(1)
Protecting Individual CPAs from Legal Liability
128(2)
Summary
130(1)
Essential Terms
130(1)
Review Questions
131(1)
Multiple Choice Questions from CPA Examinations
132(1)
Discussion Questions and Problems
133(4)
Cases
137(2)
SEC Enforcement
139(2)
PART II The Audit Process
Audit Responsibilities and Objectives
141(34)
Learning Objectives
141(23)
Objective of Conducting an Audit of Financial Statements
142(1)
Management's Responsibilities
143(1)
Auditor's Responsibilities
143(6)
Financial Statement Cycles
149(5)
Setting Audit Objectives
154(2)
Transaction-Related Audit Objectives
156(2)
Balance-Related Audit Objectives
158(2)
How Audit Objectives Are Met
160(3)
Summary
163(1)
Essential Terms
164(1)
Review Questions
164(1)
Multiple Choice Questions from CPA Examinations
165(2)
Discussion Questions and Problems
167(5)
Case
172(1)
Assertions and Evidence Associated with New Assurance Services
173(2)
Audit Evidence
175(42)
Learning Objectives
175(28)
Nature of Evidence
176(1)
Audit Evidence Decisions
176(2)
Persuasiveness of Evidence
178(3)
Types of Audit Evidence
181(7)
Analytical Procedures
188(2)
Five Types of Analytical Procedures
190(4)
Using Statistical Techniques and Computer Software
194(2)
Common Financial Ratios
196(1)
Short-Term Debt-Paying Ability
196(1)
Short-Term Liquidity
197(1)
Ability to Meet Long-Term Debt Obligations and Preferred Dividends
198(1)
Operating and Performance Ratios
198(2)
Illustration
200(3)
Essential Terms
203(1)
Review Questions
204(1)
Multiple Choice Questions from CPA Examinations
205(1)
Discussion Questions and Problems
206(8)
Case
214(1)
Analytical Procedures---Industry Comparisons
215(2)
Audit Planning and Documentation
217(32)
Learning Objectives
217(21)
Planning
218(1)
Preplan the Audit
219(5)
Obtain Background Information
224(2)
Obtain Information about Client's Legal Obligations
226(1)
Perform Preliminary Analytical Procedures
227(1)
Summary of the Purposes of Audit Planning
228(2)
Working Papers
230(7)
Summary of Working Papers
237(1)
Essential Terms
238(1)
Review Questions
238(2)
Multiple Choice Questions from CPA Examinations
240(1)
Discussion Questions and Problems
241(5)
Case
246(1)
Industry Research and Client Acceptance
247(2)
Materiality and Risk
249(38)
Learning Objectives
249(24)
Materiality
250(1)
Set Preliminary Judgment about Materiality
251(3)
Allocate Preliminary Judgment about Materiality to Segments (Tolerable Misstatement)
254(2)
Estimate Misstatement and Compare with Preliminary Judgment
256(1)
Risk
257(2)
Types of Risks
259(2)
Factors Affecting Acceptable Audit Risk
261(3)
Factors Affecting Inherent Risk
264(3)
Other Materiality and Risk Considerations
267(4)
Evaluating Results
271(2)
Essential Terms
273(1)
Review Questions
274(1)
Multiple Choice Questions from CPA Examinations
275(1)
Discussion Questions and Problems
276(7)
Cases
283(3)
Materiality and Tolerable Misstatement
286(1)
Internal Control and Control Risk
287(42)
Learning Objectives
287(28)
Client and Auditor Concerns
288(4)
Components of Internal Control
292(9)
Procedures to Obtain an Understanding of Internal Control
301(4)
Assess Control Risk
305(6)
Tests of Controls
311(2)
Decide Planned Detection Risk and Design Substantive Tests
313(1)
Summary
313(2)
Essential Terms
315(1)
Review Questions
316(1)
Multiple Choice Questions from CPA Examinations
317(2)
Discussion Questions and Problems
319(5)
Case
324(1)
Integrated Case Application---Pinnacle Manufacturing: Part 1
325(3)
Corporate Governance
328(1)
The Impact of Information Technology on the Audit Process
329(30)
Learning Objectives
329(17)
How Information Technologies Enhance Internal Control
330(1)
Assessing Risks of Information Technology
331(1)
Internal Controls Specific to Information Technology
332(6)
Impact of Information Technology on the Audit Process
338(5)
Issues for Different IT Environments
343(3)
Summary
346(1)
Essential Terms
346(1)
Review Questions
347(1)
Multiple Choice Questions from CPA Examinations
348(1)
Discussion Questions and Problems
349(6)
Case
355(2)
COBIT
357(2)
Overall Audit Plan and Audit Program
359(38)
Learning Objectives
359(24)
Types of Tests
360(6)
Selecting Which Types of Tests to Perform
366(4)
Evidence Mix
370(1)
Design of the Audit Program
371(8)
Summary of the Audit Process
379(4)
Essential Terms
383(1)
Review Questions
383(2)
Multiple Choice Questions from CPA Examinations
385(1)
Discussion Questions and Problems
386(5)
Cases
391(6)
PART III 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
397(40)
Learning Objectives
397(27)
Accounts and Classes of Transactions in the Sales and Collection Cycle
398(1)
Business Functions in the Cycle and Related Documents and Records
399(4)
Methodology for Designing Tests of Controls and Substantive Tests of Transactions for Sales
403(8)
Sales Returns and Allowances
411(1)
Methodology for Designing Tests of Controls and Substantive Tests of Transactions for Cash Receipts
412(2)
Audit Tests for Uncollectible Accounts
414(1)
Additional Internal Controls over Account Balances
415(1)
Effect of Results of Tests of Controls and Substantive Tests of Transactions
415(1)
Case Illustration---Hillsburg Hardware, Part I
416(8)
Summary
424(1)
Essential Terms
424(1)
Review Questions
425(1)
Multiple Choice Questions from CPA Examinations
426(2)
Discussion Questions and Problems
428(6)
Case
434(1)
Integrated Case Application---Pinnacle Manufacturing: Part II
435(1)
Electronic Funds Transfer
436(1)
Audit Sampling for Tests of Controls and Substantive Tests of Transactions
437(38)
Learning Objectives
437(28)
Representative Samples
438(1)
Statistical versus Nonstatistical Sampling and Probabilistic versus Nonprobabilistic Sample Selection
439(1)
Nonprobailistic Sample Selection Methods
440(1)
Probabilistic Sample Selection Methods
441(2)
Sampling for Exception Rates
443(1)
Application of Nonstatistical Audit Sampling
444(9)
Statistical Audit Sampling
453(1)
Sampling Distribution
453(1)
Application of Attributes Sampling
454(4)
Case Illustration---Hillsburg Hardware, Part II
458(7)
Essential Terms
465(1)
Review Questions
466(2)
Multiple Choice Questions from CPA Examinations
468(1)
Discussion Questions and Problems
469(4)
Case
473(1)
Integrated Case Application---Pinnacle Manufacturing: Part III
474(1)
Completing the Tests in the Sales and Collection Cycle: Accounts Receivable
475(38)
Learning Objectives
475(22)
Methodology for Designing Tests of Details of Balances
476(6)
Designing Tests of Details of Balances
482(6)
Confirmation of Accounts Receivable
488(5)
Case Illustration---Hillsburg Hardware, Part III
493(4)
Essential Terms
497(1)
Review Questions
498(1)
Multiple Choice Questions from CPA Examinations
499(1)
Discussion Questions and Problems
500(6)
Case
506(1)
Integrated Case Application---Pinnacle Manufacturing: Part IV
507(5)
Revenue Recognition
512(1)
Audit Sampling for Tests of Details of Balances
513(44)
Learning Objectives
513(33)
Comparisons of Audit Sampling for Tests of Details of Balances and for Tests of Controls and Substantive Tests of Transactions
514(1)
Nonstatistical Sampling
514(8)
Monetary Unit Sampling
522(11)
Variables Sampling
533(5)
Illustration Using Difference Estimation
538(7)
Formulas for Monetary Unit Sampling
545(1)
Essential Terms
546(1)
Review Questions
547(1)
Multiple Choice Questions from CPA Examinations
548(1)
Discussion Questions and Problems
549(5)
Cases
554(3)
PART IV Application of the Audit Process to Other Cycles
Audit of the Payroll and Personnel Cycle
557(24)
Learning Objectives
557(14)
Accounts and Transactions in the Payroll and Personnel Cycle
558(1)
Business Functions in the Cycle and Related Documents and Records
558(4)
Methodology for Designing Tests of Controls and Substantive Tests of Transactions
562(5)
Methodology for Designing Tests of Details of Balances
567(3)
Summary
570(1)
Essential Terms
571(1)
Review Questions
571(1)
Multiple Choice Questions from CPA Examinations
572(1)
Discussion Questions and Problems
573(6)
Case
579(2)
Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable
581(32)
Learning Objectives
581(19)
Accounts and Classes of Transactions in the Acquisition and Payment Cycle
582(1)
Business Functions in the Cycle and Related Documents and Records
583(3)
Methodology for Designing Tests of Controls and Substantive Tests of Transactions
586(6)
Methodology for Designing Tests of Details of Balances for Accounts Payable
592(7)
Summary
599(1)
Essential Terms
600(1)
Review Questions
601(1)
Multiple Choice Questions from CPA Examinations
602(1)
Discussion Questions and Problems
603(7)
Cases
610(3)
Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts
613(32)
Learning Objectives
613(21)
Types of Other Accounts in the Acquisition and Payment Cycle
614(1)
Audit of Property, Plant, and Equipment
615(7)
Audit of Prepaid Expenses
622(5)
Audit of Accrued Liabilities
627(1)
Audit of Income and Expense Accounts
628(6)
Summary
634(1)
Essential Terms
634(1)
Review Questions
634(1)
Multiple Choice Questions from CPA Examinations
635(2)
Discussion Questions and Problems
637(3)
Cases
640(5)
Audit of the Inventory and Warehousing Cycle
645(32)
Learning Objectives
645(19)
Business Functions in the Cycle and Related Documents and Records
646(3)
Parts of the Audit of Inventory
649(1)
Audit of Cost Accounting
650(3)
Analytical Procedures
653(1)
Methodology for Designing Tests of Details of Balances
653(2)
Physical Observation of Inventory
655(4)
Audit of Pricing and Compilation
659(3)
Integration of the Tests
662(1)
Summary
663(1)
Essential Terms
664(1)
Review Questions
664(1)
Multiple Choice Questions from CPA Examinations
665(2)
Discussion Questions and Problems
667(6)
Cases
673(4)
Audit of the Capital Acquisition and Repayment Cycle
677(22)
Learning Objectives
677(14)
Accounts in the Cycle
678(2)
Notes Payable
680(5)
Owners' Equity
685(6)
Summary
691(1)
Essential Terms
691(1)
Review Questions
691(1)
Multiple Choice Questions from CPA Examinations
692(1)
Discussion Questions and Problems
693(6)
Audit of Cash Balances
699(28)
Learning Objectives
699(17)
Cash in the Bank and Transaction Cycles
700(2)
Types of Cash Accounts
702(1)
Audit of the General Cash Account
703(7)
Fraud-Oriented Procedures
710(5)
Audit of the Imprest Payroll Bank Account
715(1)
Audit of Imprest Petty Cash
715(1)
Summary
716(1)
Essential Terms
716(1)
Review Questions
716(2)
Multiple Choice Questions from CPA Examinations
718(1)
Discussion Questions and Problems
719(4)
Case
723(4)
PART V Completing the Audit
Completing the Audit
727(30)
Learning Objectives
727(18)
Review for Contingent Liabilities and Commitments
728(5)
Review for Subsequent Events
733(2)
Final Evidence Accumulation
735(3)
Evaluate Results
738(3)
Issue the Audit Report
741(1)
Communicate with the Audit Committee and Management
742(1)
Subsequent Discovery of Facts
743(2)
Essential Terms
745(1)
Review Questions
745(2)
Multiple Choice Questions from CPA Examinations
747(1)
Discussion Questions and Problems
748(4)
Cases
752(3)
Subsequent Events
755(2)
PART VI Other Assurance and Nonassurance Services
Other Audit, Attestation Services, and Compilation Engagements
757(34)
Learning Objectives
757(23)
Review and Compilation Services
758(4)
Review of Interim Financial Information for Public Companies
762(1)
Other Audits or Limited Assurance Engagements
763(6)
Attestation Engagements
769(3)
Prospective Financial Statements
772(3)
Reporting on Internal Control
775(2)
Agreed-Upon Procedures Engagements
777(2)
Summary
779(1)
Essential Terms
780(1)
Review Questions
781(1)
Multiple Choice Questions from CPA Examinations
782(3)
Discussion Questions and Problems
785(6)
Internal and Governmental Financial Auditing and Operational Auditing
791(26)
Learning Objectives
791(16)
Internal Financial Auditing
792(2)
Governmental Financial Auditing
794(3)
Operational Auditing
797(10)
Summary
807(1)
Essential Terms
807(1)
Review Questions
808(1)
Multiple Choice Questions from CPA, IIA, and CMA Examinations
809(2)
Cases
811(6)
Index 817

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