审计学-一种整合的方法
审计学：一种整合方法(14)学习笔记
所有者权益审计目标股本和相关股利的内控是否充分；所有者权益交易是否均正确记录，复核六项与交易相关的审计目标；所有者权益账户余额是否均已适当的记录，复核八个与余额相关的审计目标内部控制交易的恰当授权：由董事会批准。
如：股票发行、股票回购、股利宣告。
正确的记录和职责分离：记录实际的股票持有着，以确保向其方法股利；股利支付支票由不股本审计所有发生的股本交易均已记录（完整）：如果聘请了证券登记代理商、股票会议记录，特别是接近报表日的会议记录；审查股票登记簿；所有记录的都确实发生且记录准确（发生、准确）：对所有的交易进行验证金收入日记账，确认会计记录是否正确；根据公司章程确定的股票面值的规定，确认股本溢股本记录准确:向股票过户代理机构函证确认资产负债表日发行在外的股份数；或审查股票记录股本已恰当地表达与披露股利审计：重点：交易审计；而非余额审计；如果有应付股利，则例外。
1、存在性审查董事会会议记录来确定每股股利和股利宣告的授权；关注已2、准确性每股股利与流通在外的股数的乘积计算已宣告鼓励的金额；如果如果自己制作股利并发放，通过重新计算和审阅现金支出记录来验证股利金额从股利支付中选取一个样本，将支票上的收款人姓名追查至股东记录，以确信收款人具有股计目标票回购、股利宣告。
其方法股利；股利支付支票由不负责股本记录的雇员填写；并对股东姓名和支票金额独立核对。
外的股份数；或审查股票记录和股权登记证明登记簿中所有流通在外的股票的会计记录；然后乘以面值来验证股本账户中记录授权；关注已宣告还未发放的股利；的金额；如果通过代理人发放，追查股利至向代理人支付现金的分录，同时进行函证；录来验证股利金额股东记录，以确信收款人具有股东资格；、股票过户代理机构，则向其函证股本交易是否发生、发生的交易记录是否准确；复核董事会；行验证：验证董事会会议记录，相关业务是否得到授权？向股票过户代理机构函证；追查至现的股票面值的规定，确认股本溢价金额是否正确。
审计学一种整合的方法
statements and internal control
from the auditor’s responsibility
for verifying the financial
statements and effectiveness
of internal control.
PPT文档演模板
审计学一种整合的方法
审计学一种整合的方法
Transaction Flow Example
•Transactions •Sales
•Cash •receipts
•Journals •Sales •journal
•Cash receipts •journal
•Ledgers, •Trial Balance, •and Financial
➢ Material versus immaterial misstatements ➢ Reasonable assurance ➢ Errors versus fraud ➢ Professional skepticism ➢ Fraud resulting from fraudulent financial reporting versus misappropriation of assets
•Sales and •collection
•cycle
•Acquisition •and payment
•cycle
•Payroll and •personnel
•cycle
•Inventory and •warehousing
•cycle
PPT文档演模板
审计学一种整合的方法
Learning Objective 5
•Payroll •journal
审计学：一种整合方法_第12版_英文版Cha(1)
Accumulating Evidence and Evaluating Evidence
Evidence is any information used by the auditor to determine whether the information being audited is stated in accordance with the established criteria.
Determines correspondence
Report on results
Report on tax deficiencies
Established criteria
Internal Revenue Code and all
interpretations
Learning Objective 2
Auditing is determining whether recorded information properly reflects the economic events that occurred during the accounting period.
Learning Objective 3
The final stage in the auditing process is preparing the Audit Report, which is the communication of the auditor’s findings to users.
Audit of a Tax Return Example
Learning Objective 1
Describe auditing.
Nature of Auditing
内部审计-审计学一种整合的方法 精品
Completeness Completeness
Valuation and allocation
Accuracy and valuation
Classification and understandability
Rights and obligations
Learning Objective 7
Sales returns and allowances
Charge-off of
$ 3,323 uncollectible accounts
Ending balance $ 20,197
Learning Objective 6
Distinguish among the three categories of management assertions about financial information.
Financial Statements Cycles
Audits are performed by dividing the financial statements into smaller segments or components.
Transaction Flow Example
Transactions Sales
Management’s Responsibilities
Management is responsible for the financial statements and for internal control.
The Sarbanes-Oxley Act increases management’s responsibility for the financial statements.
阿伦斯 审计学：一种整合方法 课后习题答案
Chapter 1The Demand for Audit and Other Assurance Services Review Questions1-1The relationship among audit services, attestation services, and assurance services is reflected in Figure 1-3 on page 13 of the text. An assurance service is an independent professional service to improve the quality of information for decision makers. An attestation service is a form of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party. Audit services are a form of attestation service in which the auditor expresses a written conclusion about the degree of correspondence between information and established criteria.The most common form of audit service is an audit of historical financial statements, in which the auditor expresses a conclusion as to whether the financial statements are presented in conformity with generally accepted accounting principles. An example of an attestation service is a report on the effe ctiveness of an entity’s internal control over financial reporting. There are many possible forms of assurance services, including services related to business performance measurement, health care performance, and information system reliability.1-2 An independent audit is a means of satisfying the need for reliable information on the part of decision makers. Factors of a complex society which contribute to this need are:1.Remoteness of informationa.Owners (stockholders) divorced from managementb.Directors not involved in day-to-day operations ordecisionsc.Dispersion of the business among numerous geographiclocations and complex corporate structures2.Biases and motives of providerrmation will be biased in favor of the providerwhen his or her goals are inconsistent with thedecision maker's goals.3.Voluminous dataa.Possibly millions of transactions processed daily viasophisticated computerized systemsb.Multiple product linesc.Multiple transaction locationsplex exchange transactionsa.New and changing business relationships lead toinnovative accounting and reporting problemsb.Potential impact of transactions not quantifiable,leading to increased disclosures1-3 1. Risk-free interest rate This is approximately the rate the bank could earn by investing in U.S. treasury notes for thesame length of time as the business loan.2.Business risk for the customer This risk reflects thepossibility that the business will not be able to repay itsloan because of economic or business conditions such as arecession, poor management decisions, or unexpectedcompetition in the industry.rmation risk This risk reflects the possibility thatthe information upon which the business risk decision wasmade was inaccurate. A likely cause of the information riskis the possibility of inaccurate financial statements.Auditing has no effect on either the risk-free interest rate or business risk. However, auditing can significantly reduce information risk.1-4The four primary causes of information risk are remoteness of information, biases and motives of the provider, voluminous data, and the existence of complex exchange transactions.The three main ways to reduce information risk are:er verifies the information.er shares the information risk with management.3.Audited financial statements are provided.The advantages and disadvantages of each are as follows:1-5 To do an audit, there must be information in a verifiable form and some standards (criteria) by which the auditor can evaluate the information. Examples of established criteria include generally accepted accounting principles and the Internal Revenue Code. Determining the degree of correspondence between information and established criteria is determining whether a given set of information is in accordance with the established criteria. The information for Jones Company's tax return is the federal tax returns filed by the company. The established criteria are found in the Internal Revenue Code and all interpretations. For the audit of Jones Company's financial statements the information is the financial statements being audited and the established criteria are generally accepted accounting principles.1-6The primary evidence the internal revenue agent will use in the audit of the Jones Company's tax return include all available documentation and other information available in Jones' office or from other sources. For example, when the internal revenue agent audits taxable income, a major source of information will be bank statements, the cash receipts journal and deposit slips. The internal revenue agent is likely to emphasize unrecorded receipts and revenues. For expenses, major sources of evidence are likely to be cancelled checks, vendors' invoices and other supporting documentation.1-7This apparent paradox arises from the distinction between the function of auditing and the function of accounting. The accounting function is the recording, classifying and summarizing of economic events to provide relevant information to decision makers. The rules of accounting are the criteria used by the auditor for evaluating the presentation of economic events for financial statements and he or she must therefore have an understanding of generally accepted accounting principles (GAAP), as well as auditing standards. The accountant need not, and frequently does not, understand what auditors do, unless he or she is involved in doing audits, or has been trained as an auditor.1-81-9Five examples of specific operational audits that could be conducted by an internal auditor in a manufacturing company are:1.Examine employee time cards and personnel records todetermine if sufficient information is available to maximizethe effective use of personnel.2.Review the processing of sales invoices to determine if itcould be done more efficiently.3.Review the acquisitions of goods, including costs, todetermine if they are being purchased at the lowest possiblecost considering the quality needed.4.Review and evaluate the efficiency of the manufacturingprocess.5.Review the processing of cash receipts to determine if theyare deposited as quickly as possible.1-10 When using a strategic systems auditing approach in an audit of historical financial statements, an auditor must have a thorough understanding of the client and its environment. This knowledge should include the client’s regulatory and operating environment, business strategies and processes, and measurement indicators. The strategic systems approach is also useful in other assurance or consulting engagements. For example, an auditor who is performing an assurance service on information technology would need to understand the client’s business strategies and processes related to information technology, including such things as purchases and sales via the Internet. Similarly, a practitioner performing a consulting engagement to evaluate the efficiency and effectiveness of a cli ent’s manufacturing process would likely start with an analysis of various measurement indicators, including ratio analysis and benchmarking against key competitors.1-11 The major differences in the scope of audit responsibilities are:1.CPAs perform audits in accordance with auditing standards ofpublished financial statements prepared in accordance withgenerally accepted accounting principles.2.GAO auditors perform compliance or operational audits inorder to assure the Congress of the expenditure of publicfunds in accordance with its directives and the law.3.IRS agents perform compliance audits to enforce the federaltax laws as defined by Congress, interpreted by the courts,and regulated by the IRS.4.Internal auditors perform compliance or operational auditsin order to assure management or the board of directors thatcontrols and policies are properly and consistentlydeveloped, applied and evaluated.1-12 The four parts of the Uniform CPA Examination are: Auditing and Attestation, Financial Accounting and Reporting, Regulation, and Business Environment and Concepts.1-13 It is important for CPAs to be knowledgeable about e-commerce technologies because more of their clients are rapidly expanding their use of e-commerce. Examples of commonly used e-commerce technologiesinclude purchases and sales of goods through the Internet, automatic inventory reordering via direct connection to inventory suppliers, and online banking. CPAs who perform audits or provide other assurance services about information generated with these technologies need a basic knowledge and understanding of information technology and e-commerce in order to identify and respond to risks in the financial and other information generated by these technologies.Multiple Choice Questions From CPA Examinations1-14 a. (3) b. (2) c. (2) d. (3)1-15 a. (2) b. (3) c. (4) d. (3)Discussion Questions And Problems1-16 a. The relationship among audit services, attestation services and assurance services is reflected in Figure 1-3 on page 13of the text. Audit services are a form of attestationservice, and attestation services are a form of assuranceservice. In a diagram, audit services are located within theattestation service area, and attestation services arelocated within the assurance service area.b. 1. (1) Audit of historical financial statements2.(2) An attestation service other than an auditservice; or(3) An assurance service that is not an attestationservice (WebTrust developed from the AICPASpecial Committee on Assurance Services, but theservice meets the criteria for an attestationservice.)3.(2) An attestation service other than an auditservice4.(2) An attestation service other than an auditservice5.(2) An attestation service other than an auditservice6.(2) An attestation service that is not an auditservice (Review services are a form ofattestation, but are performed according toStatements on Standards for Accounting andReview Services.)7.(2) An attestation service other than an auditservice8.(2) An attestation service other than an auditservice9.(3) An assurance service that is not an attestationservice1-17 a. The interest rate for the loan that requires a review report is lower than the loan that did not require a review becauseof lower information risk. A review report provides moderateassurance to financial statement users, which lowersinformation risk. An audit report provides further assuranceand lower information risk. As a result of reducedinformation risk, the interest rate is lowest for the loanwith the audit report.b.Given these circumstances, Vial-tek should select the loanfrom City First Bank that requires an annual audit. In thissituation, the additional cost of the audit is less than thereduction in interest due to lower information risk. Thefollowing is the calculation of total costs for each loan:1-17 (continued)c. Vial-tek may desire to have an audit because of the manyother positive benefits that an audit provides. The auditwill provide Vial-tek’s management with assurance aboutannual financial information used for decision-makingpurposes. The audit may detect errors or fraud, and providemanagement with information about the effectiveness ofcontrols. In addition, the audit may result inrecommendations to management that will improve efficiencyor effectiveness.d. Under a strategic systems audit approach, the auditor musthave a thorough understanding of the client and itsenvironment, including the client’s e-commerce technologies,industry, regulatory and operating environment, suppliers,customers, creditors, and business strategies and processes.This thorough analysis helps the auditor identify risksassociated with the client’s strategies that may affectwhether the financial statements are fairly stated. Whenapplying the strategic systems audit approach, the auditoroften discovers ways to help the client improve businessoperations, thereby providing added value to the auditfunction.1-18 a. The services provided by Consumers Union are very similar to assurance services provided by CPA firms. The servicesprovided by Consumers Union and assurance services providedby CPA firms are designed to improve the quality ofinformation for decision makers. CPAs are valued for theirindependence, and the reports provided by Consumers Unionare valued because Consumers Union is independent of theproducts tested.b.The concepts of information risk for the buyer of anautomobile and for the user of financial statements areessentially the same. They are both concerned with theproblem of unreliable information being provided. In thecase of the auditor, the user is concerned about unreliableinformation being provided in the financial statements. Thebuyer of an automobile is likely to be concerned about themanufacturer or dealer providing unreliable information.c.The four causes of information risk are essentially the samefor a buyer of an automobile and a user of financialstatements:(1)Remoteness of information It is difficult for a userto obtain much information about either an automobilemanufacturer or the automobile itself withoutincurring considerable cost. The automobile buyer doeshave the advantage of possibly knowing other users who are satisfied or dissatisfied with a similar automobile.(2)Biases and motives of provider There is a conflictbetween the automobile buyer and the manufacturer. The buyer wants to buy a high quality product at minimum cost whereas the seller wants to maximize the selling price and quantity sold.(3)Voluminous data There is a large amount of availableinformation about automobiles that users might like to have in order to evaluate an automobile. Either that information is not available or too costly to obtain.1-18 (continued)(4)Complex exchange transactions The acquisition of anautomobile is expensive and certainly a complexdecision because of all the components that go intomaking a good automobile and choosing between a largenumber of alternatives.d.The three ways users of financial statements and buyers ofautomobiles reduce information risk are also similar:(1)User verifies information him or herself That can beobtained by driving different automobiles, examiningthe specifications of the automobiles, talking toother users and doing research in various magazines.(2)User shares information risk with management Themanufacturer of a product has a responsibility to meetits warranties and to provide a reasonable product.The buyer of an automobile can return the automobilefor correction of defects. In some cases a refund maybe obtained.(3)Examine the information prepared by Consumer ReportsThis is similar to an audit in the sense thatindependent information is provided by an independentparty. The information provided by Consumer Reports iscomparable to that provided by a CPA firm that auditedfinancial statements.1-19 a. The following parts of the definition of auditing are related to the narrative:(1)Virms is being asked to issue a report aboutqualitative and quantitative information for trucks.The trucks are therefore the information with whichthe auditor is concerned.(2)There are four established criteria which must beevaluated and reported by Virms: existence of thetrucks on the night of June 30, 2005, ownership ofeach truck by Regional Delivery Service, physicalcondition of each truck and fair market value of eachtruck.(3)Susan Virms will accumulate and evaluate four types ofevidence:(a)Count the trucks to determine their existence.(b)Use registrations documents held by Oatley forcomparison to the serial number on each truck todetermine ownership.(c)Examine the trucks to determine each truck'sphysical condition.(d)Examine the blue book to determine the fairmarket value of each truck.(4)Susan Virms, CPA, appears qualified, as a competent,independent person. She is a CPA, and she spends most of her time auditing used automobile and truck dealerships and has extensive specialized knowledge about used trucks that is consistent with the nature of the engagement.1-19(continued)(5)The report results are to include:(a)which of the 35 trucks are parked in Regional'sparking lot the night of June 30.(b)whether all of the trucks are owned by RegionalDelivery Service.(c)the condition of each truck, using establishedguidelines.(d)fair market value of each truck using thecurrent blue book for trucks.b.The only parts of the audit that will be difficult for Virmsare:(1)Evaluating the condition, using the guidelines of poor,good, and excellent. It is highly subjective to do so.If she uses a different criterion than the "bluebook," the fair market value will not be meaningful.Her experience will be essential in using thisguideline.(2)Determining the fair market value, unless it isclearly defined in the blue book for each condition.1-20 a. The major advantages and disadvantages of a career as an IRS agent, CPA, GAO auditor, or an internal auditor are:1-20 (continued)EMPLOYMENT ADVANTAGES DISADVANTAGESINTERNAL AUDITOR 1.Extensive exposure to allsegments of theenterprise with whichemployed.2.Constant exposure to oneindustry presentingopportunity for expertisein that industry.3.Likely to have exposureto compliance, financialand operational auditing.1.Little exposure totaxation and the auditthereof.2.Experience is limited toone enterprise, usuallywithin one or a limitednumber of industries.(b)Other auditing careers that are available are:Auditors within many of the branches of the federalgovernment ., Atomic Energy Commission)Auditors for many state and local government units .,state insurance or bank auditors)1-21 The most likely type of auditor and the type of audit for each of the examples are:EXAMPLE TYPE OF AUDITOR TYPE OF AUDIT1.2.3.4.5.6.7.8.9.10.11.12.IRSGAOInternal auditor or CPACPA or Internal auditorGAOCPAGAOIRSCPAInternal auditor or CPAInternal auditor or CPAGAOComplianceOperationalOperationalFinancial statementsOperationalFinancial statementsFinancial statementsComplianceFinancial statementsComplianceFinancial statementsCompliance1-22 a. The conglomerate should either engage the management advisory services division of a CPA firm or its own internalauditors to conduct the operational audit.b.The auditors will encounter problems in establishingcriteria for evaluating the actual quantitative events andin setting the scope to include all operations in whichsignificant inefficiencies might exist. In writing thereport, the auditors must choose proper wording to statethat no financial audit was performed, that the procedureswere limited in scope and that the results reported do notnecessarily include all the inefficiencies that might exist.1-23 a. The CPA firm for the Internet company described in this problem could address these customer concerns by performinga WebTrust attestation engagement. The WebTrust assuranceservice was created by the profession to respond to thegrowing need for assurance resulting from the growth ofbusiness transacted over the Internet.b.The appropriate WebTrust principle for each of the customerconcerns noted in the problem is as follows:1.Accuracy of product descriptions and adherence tostated return policies: (3) Processing Integrity.2.Credit card and other personal information: (1) OnlinePrivacy and (2) Security.3.Selling information to other companies: (1) OnlinePrivacy and (2) Security.4.System failure: (4) Availability.Internet Problem Solution: Assurance Services1-1 This problem requires students to work with the AICPA assurance services Web site.1.Considering the assurance needs of customers and thecapabilities of CPAs, the Special Committee on AssuranceServices developed business plans for six assurance services.Chapter 1 of the textbook discussed several of theseservices. Go to the service description for the assuranceservice that most interests you (any one of the six). Whatare the major aspects or sections of the associated businessplan ., does the plan address market potential, competition,etc.?)Answer: Each business plan provides background information,describes the service, assesses market potential, discussesissues such as competition and why CPAs should offer theservice, identifies practice tools available and steps thatCPAs must take to begin offering the services.2.The Special Committee's report on Assurance Servicesdiscusses competencies needed by assurance providers todayand in the coming decade. Briefly describe the 5 generalcompetencies needed in the next decade (Hint: See the“About Assurance Services” link. Then follow the“Assurance Services and Academia” link.)Answer:The Committee identified the following five majorimperatives regarding future competencies, each of whichimplies increasing emphasis on the competencies noted:1-1 (continued)Customer focus.Assurance service providers need tounderstand user decision processes and how informationshould enter into those processes. Increased emphasis isneeded on: understanding user needs, communication skills,relationship management, responsiveness and timeliness.Migration to higher value-added information activities. Toprovide more value to client/decision makers and others,assurance service providers need to focus less on activitiesinvolved in the conversion of business events intoinformation ., collecting, classifying, and summarizingactivities) and more on activities involved in thetransformation of information into knowledge ., analyzing,interpreting, and evaluating activities) that effectivelydrives decision processes. This will require: analyticalskills, business advisory skills, business knowledge, modelbuilding (including sensitivity analysis), understanding theclient’s business processes, measurement theory(development of operational definitions of concepts, designof appropriate measurement techniques, etc.).Information technology (IT).Assurance services deal ininformation. Hence, the profound changes occurring ininformation technology will shape virtually all aspects ofassurance services. As information specialists, assuranceservice providers need to embrace information technology inall of its complex dimensions. Embracing IT meansunderstanding how it is transforming all aspects of business.It also means learning how to effectively use newdevelopments in hardware, software, communications, memory,encryption, etc., in everything assurance service providersdo as information specialists, not only in dealing withclients, but also in dealing with each other as individuals,teams, firms, state societies, and national professionalorganizations.Pace of change and complexity. Assurance services will takeplace in an environment of rapid change and increasingcomplexity. Assurance service providers need to investheavily in life-long learning in order to maintain up-to-date knowledge and skills. They will require: intellectualcapability, learning and rejuvenation.Competition.Growth in new assurance services will dependless on franchise/regulation and more on market forces.Assurance service providers need to develop their marketingskills —the ability to see clients’ latent informationand assurance needs and rapidly design and deploy cost-effective services to meet those needs —in order toeffectively compete for market-driven assurance services.Required skills include: marketing and selling,understanding customer needs, designing and deployingeffective solutions.1-1 (continued)(Note: Internet problems address current issues using Internet sources. Because Internet sites are subject to change, Internet problems and solutions are subject to change. Current information on Internet problems is available at。
审计学-一种整合的方法
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-3
Steps to Develop Audit Objectives
1. Understand objectives and responsibilities for the audit.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-5
Learning Objective 2
Distinguish management’s
responsibility for the financial
6-4Βιβλιοθήκη Steps to Develop Audit Objectives
4. Know general audit objectives for classes of transactions and accounts.
5. Know specific audit objectives for classes of transactions and accounts.
statements and internal control
from the auditor’s responsibility
for verifying the financial
statements and effectiveness
of internal control.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
审计学 一种整合方法 Auditingand Assurance Services An integrated approach Test Bank chapter 9
Auditing and Assurance Services, 15e (Arens)Chapter 9 Materiality and RiskLearning Objective 9-11) If it is probable that the judgment of a reasonable person will be changed or influenced by the omission or misstatement of information, then that information is, by definition of FASB Statement No. 2:A) material.B) insignificant.C) significant.D) relevant.Answer: ATerms: FASB Statement No. 2; Probable judgment of a reasonable personDiff: EasyObjective: LO 9-1AACSB: Reflective thinking skills2) The scope paragraph of the standard unqualified auditor's report states that "… the standards require that we plan and perform the audit to obtain ________ assurance about whether the financial statements are free of material misstatement." What type of assurance is given?A) ImmediateB) LimitedC) ReasonableD) AbsoluteAnswer: CTerms: Type of assurance providedDiff: EasyObjective: LO 9-1AACSB: Reflective thinking skills3) Auditors are responsible for determining whether financial statements are materially misstated, so upon discovering a material misstatement they must bring it to the attention of:A) regulators.B) the audit firm's managing partner.C) the client shareholders.D) the client.Answer: DTerms: Discovery of a material misstatement must bring it to the attentionDiff: EasyObjective: LO 9-1AACSB: Reflective thinking skills4) Determining materiality requires professional judgment.Answer: TRUETerms: MaterialityDiff: EasyObjective: LO 9-1AACSB: Reflective thinking skillsLearning Objective 9-21) Audit standards require the auditor to consider materiality early in the audit. Which statement(s) regarding preliminary materiality are true?I. Preliminary materiality may change during the engagement.II. Preliminary materiality is the maximum amount by which the auditor believes the financials could be misstated and still not affect the decisions of reasonable users.A) I onlyB) II onlyC) both I and IID) neither are trueAnswer: CTerms: Preliminary materiality assessmentDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills2) Why do auditors establish a preliminary judgment about materiality?A) To determine the appropriate level of staff to assign to the auditB) So that the client can know what records to make available to the auditorC) To help plan the appropriate evidence to accumulateD) To finalize the control risk assessmentAnswer: CTerms: Purpose to establish preliminary judgment about materialityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills3) If an auditor establishes a relatively high level for materiality, then the auditor will:A) accumulate more evidence than if a lower level had been set.B) accumulate less evidence than if a lower level had been set.C) accumulate approximately the same evidence as would be the case were materiality lower.D) accumulate an undetermined amount of evidence.Answer: BTerms: High level for materialityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills4) The preliminary judgment about materiality and the amount of audit evidence accumulated are________ related.A) directlyB) indirectlyC) notD) inverselyAnswer: DTerms: Preliminary judgment about materiality and amount of evidence accumulatedDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills5) Which of the following is the primary basis used to decide materiality for a for-profit entity?A) Net salesB) Net assetsC) Net income before taxD) All of the aboveAnswer: CTerms: Primary basis to decide materiality for a for-profit entityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills6) Auditing standards ________ that the basis used to determine the preliminary judgment about materiality be documented in the audit files.A) permitB) do not allowC) requireD) strongly encourageAnswer: CTerms: Auditing standards; Preliminary judgment about materiality documentedDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills7) Amounts involving fraud are usually considered ________ important than unintentional errors of equal dollar amounts.A) lessB) no lessC) no moreD) moreAnswer: DTerms: Amounts involving fraudDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills8) Qualitative factors can affect an auditor's assessment of materiality. Which of the following statements is true?I. Misstatements that are otherwise immaterial may be material if they affect earnings trends.II. Misstatements that are otherwise minor may be material if there are possible consequences arising from contractual obligations.A) I onlyB) II onlyC) I and IID) neither I nor IIAnswer: CTerms: Qualitative factors can affect auditor's assessment of materialityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills9) The five steps in applying materiality are listed below in random order.1. Estimate the combined misstatement.2. Estimate the total misstatement in the segment.3. Set materiality for the financial statements as a whole.4. Determine performance materiality.5. Compare combined estimate with preliminary judgment about materiality.The first three steps in correct sequence would be:A) 1, 2, 5B) 3, 4, 2C) 2, 1, 5D) 3, 2, 4Answer: BTerms: Five steps in applying materialityDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills10) Which of the following statements is not correct?A) Materiality is a relative rather than an absolute concept.B) The most important base used as the criterion for deciding materiality is total assets.C) Qualitative factors as well as quantitative factors affect materiality.D) Given equal dollar amounts, frauds are usually considered more important than errors. Answer: BTerms: MaterialityDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills11) Certain types of misstatements are likely to be more important than other types to users, even if the dollar amounts are the same. Which of the following demonstrates this?Answer: ATerms: Certain types of misstatements are likely more important than other typesDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills12) When setting a preliminary judgment about materiality:A) more evidence is required for a low dollar amount than for a high dollar amount.B) less evidence is required for a low dollar amount than for a high dollar amount.C) the same amount of evidence is required for either low or high dollar amounts.D) there is no relationship between it and the dollar amount of evidence needed.Answer: ATerms: Setting preliminary judgment about materialityDiff: ChallengingObjective: LO 9-2AACSB: Reflective thinking skills13) Lewis Corporation has a few large accounts receivable that total one million dollars whereasClark Corporation has many small accounts receivable that total one million dollars. Misstatement in any one account is more significant for Lewis corporation because of the concept of:A) materiality.B) audit risk.C) reasonable assurance.D) comparative analysis.Answer: ATerms: MisstatementsDiff: ChallengingObjective: LO 9-2AACSB: Reflective thinking skills14) Audit standards require the auditor to consider the combined amount of misstatement early in the audit. This is known as preliminary materiality judgment. List and discuss the three main factors that affect an auditor's preliminary judgment about materiality.Answer: The three main factors that affect an auditor's judgment about materiality are:•Materiality is a relative rather than an absolute concept. A misstatement of a given size might be material for a small company, whereas the same dollar misstatement could be immaterial for a larger one. •Benchmarks are needed for evaluating materiality. Because materiality is relative, it is necessary to have benchmarks for establishing whether misstatements are material. Net income before taxes is normally the most commonly used benchmark, but other possible benchmarks include current assets, total assets, current liabilities, and owners' equity.•Qualitative factors also affect materiality. Certain types of misstatements are likely to be more important to users than others, even if the dollar amounts are the same, such as misstatements involving frauds. Terms: Factors that affect auditor's preliminary judgmentDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills15) Due to qualitative factors, certain types of misstatements are likely to be more important to users than others, even if the dollar amounts are the same. Identify two qualitative factors that might significantly affect an auditor's materiality judgment, and give an example of each.Answer: Qualitative factors that affect an auditor's materiality judgment include:•Amounts involving fraud. Amounts involving fraud are usually considered more important than unintentional errors of equal dollar amounts because fraud reflects on the honesty and reliability of the management or other personnel involved. For example, an intentional misstatement of inventory would be more important to users than a clerical error in inventory of the same amount.•Misstatements affecting contractual obligations. Misstatements that are otherwise minor may be material if there are possible consequences arising from contractual obligations. For example, if a misstatement causes a required minimum account balance to exceed the minimum, when the correct balance is less than the minimum, this misstatement likely would be important to users.•Amounts affecting a trend in earnings. Amounts that are otherwise immaterial may be material if they affect a trend in earnings. An example is if reported income has increased 3 percent annually for the past five years but income for the current year has declined 1 percent, that change may be material. Similarly, a misstatement that would cause a loss to be reported as a profit may be of concern.Terms: Qualitative factors that affect auditor's materiality judgmentDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills16) The auditor's preliminary judgment about materiality is the maximum amount by which the auditor believes the financial statements could be misstated and still not affect the decisions of reasonable users. Answer: TRUETerms: Preliminary judgments about materialityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills17) Preliminary judgments about materiality are often changed during the course of the engagement. Answer: TRUETerms: Preliminary judgments about materialityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills18) Net assets are the most often used base for deciding materiality.Answer: FALSETerms: Base for deciding materialityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills19) The lower the dollar amount of the preliminary judgment the more audit evidence is required. Answer: TRUETerms: Amount of preliminary judgment and audit evidence requiredDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills20) Amounts involving fraud are not usually considered qualitative factors affecting the preliminary materiality judgment.Answer: FALSETerms: Qualitative factors affecting preliminary materiality judgment; FraudDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills21) CPA firms can establish policy guidelines to help their auditors determine materiality.Answer: TRUETerms: Difficulty in applying concept of materialityDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills22) Statements on Auditing Standards provide detailed, objective guidance on how auditors are to establish a preliminary materiality level, thus eliminating the need for subjective auditor judgment in this task.Answer: FALSETerms: Statements on Auditing Standards; Objective guidance on establishing preliminary materiality levelDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills23) If the preliminary judgment of materiality increases, the amount of audit evidence required will decrease.Answer: TRUETerms: Preliminary judgment of materiality and audit evidenceDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills24) Net income before tax is the normal base used to determine materiality in a not-for-profit company. Answer: FALSETerms: Base used to determine materialityDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skillsLearning Objective 9-31) When auditors allocate the preliminary judgment about materiality to account balances, the materiality allocated to any given account balance is referred to as:A) the materiality range.B) the error range.C) tolerable materiality.D) performance materiality.Answer: DTerms: Allocate preliminary judgment about materiality to account balancesDiff: EasyObjective: LO 9-3AACSB: Reflective thinking skills2) Auditors generally allocate the preliminary judgment about materiality to the:A) balance sheet only.B) income statement only.C) income statement and balance sheet.D) statement of cash flows.Answer: ATerms: Preliminary materiality allocationDiff: EasyObjective: LO 9-3AACSB: Reflective thinking skills3) Which of the following is an incorrect statement regarding the allocation of the preliminary judgment about materiality to balance sheet accounts?A) Auditors expect certain accounts to have more misstatements than others.B) The allocation has virtually no effect on audit costs because the auditor must collect sufficient appropriate audit evidence.C) Auditors expect to identify overstatements as well as understatements in the accounts.D) Relative audit costs affect the allocation.Answer: BTerms: Allocation of preliminary judgment about materialityDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills4) Which of the following statements is true concerning the allocation of preliminary materiality?A) It is necessary to allocate preliminary materiality to financial statements as a whole rather than by segments.B) Preliminary materiality should be allocated to income statement accounts only.C) Preliminary materiality is required by the SEC.D) The PCAOB term used when preliminary materiality is allocated to segments is tolerable misstatement.Answer: DTerms: Allocation of preliminary materialityDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills5) Which of the following statements is false?A) Either an overstatement of an asset account or an understatement of a liability account would have the same effect on the income statement.B) A misclassification in the balance sheet will have no effect on operating income.C) Either an overstatement of an asset account or an overstatement of a liability account would have the same effect on the income statement.D) Either an understatement of an asset account or an overstatement of a liability account would have the same effect on the income statement.Answer: CTerms: Effects of misstatementsDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills6) Which of the following are major difficulties auditors face when allocating materiality to balance sheet accounts?Answer: ATerms: Major difficulties auditors face when allocating materiality to balance sheet accountsDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills7) When allocating performance materiality:A) it is easy to predict in advance which accounts are mot likely to be misstated.B) only overstatements need to be considered.C) professional judgment is critical.D) the sum of all the performance materiality levels cannot exceed the preliminary judgment about materiality.Answer: CTerms: Major difficulties auditors face when allocating materiality to balance sheet accountsDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills8) When allocating materiality, most practitioners choose to allocate to:A) the income statement accounts because they are more important.B) the balance sheet accounts because most audits focus on the balance sheet.C) both balance sheet and income statement accounts because there could be errors on either.D) all of the financial statements because it is required by GAAS.Answer: BTerms: Allocating materialityDiff: ChallengingObjective: LO 9-3AACSB: Reflective thinking skills9) Which of the following is a correct statement regarding performance materiality?A) Determining performance materiality is necessary because auditors accumulate evidence by segments.B) The level of performance materiality does not affect the amount of evidence needed.C) Performance materiality cannot vary for different classes of transactions.D) Performance materiality is required for public companies, but not for private companies.Answer: ATerms: Tolerable misstatementsDiff: ChallengingObjective: LO 9-3AACSB: Reflective thinking skills10) Explain why it is necessary to allocate the preliminary judgment about materiality to individual accounts (segments) in the financial statements. Also explain why allocating to balance sheet accounts is more common than allocating to income statement accounts.Answer: Allocating the preliminary judgment about materiality to individual accounts (segments) is necessary because evidence is accumulated for accounts (segments) rather than for the financial statements as a whole. Allocating to accounts (segments) establishes a tolerable misstatement amount for each account, which helps the auditor decide the appropriate audit evidence to accumulate for each account. Most practitioners allocate materiality to balance sheet accounts rather than income statement accounts because most income statement misstatements have an equal effect on the balance sheet due to the nature of double-entry accounting. Because there are fewer balance sheet accounts than income statement accounts in most audits, and because most audit procedures focus on balance sheet accounts, materiality should be allocated only to balance sheet accounts.Terms: Allocation of the preliminary judgment about materialityDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills11) Auditor's allocate the preliminary judgment about materiality to financial statement segments rather than by financial statements as a whole. What is the term for the auditor's allocation of preliminary misstatement to account balances? What are three difficulties auditor's face when allocating materiality to balance sheet accounts?Answer: Performance materiality is the term for the auditor's allocation of the preliminary judgment of materiality to any given account balance. The three difficulties auditors face when allocating the preliminary materiality to account balances are:1. Auditors expect certain accounts to have more misstatement than others.2. Both overstatements and understatements must be considered.3. Audit costs can affect the allocation.Terms: Allocation of preliminary misstatement to account balances and difficulties that auditors face allocating preliminary materiality judgment to account balancesDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills12) Most practitioners allocate the preliminary judgment about materiality to both the balance sheet and income statement accounts.Answer: FALSETerms: Allocate preliminary judgment about materiality to balance sheet accountsDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills13) The primary purpose of allocating the preliminary judgment about materiality to financial statement accounts is to help the auditor decide the appropriate evidence to accumulate.Answer: TRUETerms: Primary purpose of allocating the preliminary judgment about materialityDiff: EasyObjective: LO 9-3AACSB: Reflective thinking skills14) Both overstatements and understatements must be considered when allocating materiality to balance sheet accounts.Answer: TRUETerms: Allocating materiality; Consideration of overstatements and understatementsDiff: EasyObjective: LO 9-3AACSB: Reflective thinking skills15) If an auditor assigns a tolerable misstatement of $1,000 to accounts payable, he or she would need to obtain more audit evidence for that account than if $100,000 had been assigned.Answer: TRUETerms: Tolerable misstatements and audit evidenceDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills16) To maximize audit efficiency, the auditor should allocate less tolerable misstatement to accounts that can be verified by using low-cost audit procedures, such as analytical procedures, than to accounts that are more costly to audit.Answer: TRUETerms: Maximize audit efficiency, allocate less tolerable misstatementsDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skillsLearning Objective 9-41) Auditors are ________ to document the known and likely misstatements in the financial statements under audit.A) permittedB) requiredC) not allowedD) strongly encouragedAnswer: BTerms: Known and likely misstatements in the financial statementsDiff: EasyObjective: LO 9-4AACSB: Reflective thinking skills2) ________ misstatements are those where the auditor can determine the amount of the misstatement in the account.A) PotentialB) LikelyC) KnownD) ProjectedAnswer: CTerms: Misstatements where auditor can determine the amountDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skills3) Likely misstatements can result from:Answer: ATerms: Likely misstatements result fromDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skills4) When evaluating the audit findings, the auditor should be satisfied that the:A) amount of known misstatement is documented in the management representation letter.B) estimate of the total known and likely misstatements is less than a material amount.C) estimate of the total likely misstatement includes sample error.D) amount of known misstatement is acknowledged and recorded by the client. Answer: BTerms: Evaluating audit findings and materialityDiff: ChallengingObjective: LO 9-4AACSB: Reflective thinking skills5) Discuss each of the five steps in applying materiality in an audit, and identify the audit phase(s) in which each step is performed. List these steps in the order in which they occur.Answer: Step 1. Set preliminary judgment about materiality. This is the combined amount of misstatements in the financial statements that would be considered material. This decision is made in the planning stage of the audit.Step 2. Allocate preliminary judgment about materiality to segments. In this step, the auditor normally allocates the preliminary judgment about materiality to the balance sheet accounts. The amount of materiality allocated to an account is referred to as that account's performance materiality. This allocation is performed in the audit planning stage.Step 3. Estimate total misstatement in segment. In this step, the auditor projects the sample results to the population. An allowance for sampling risk is also calculated. This would be performed after the substantive tests for each account are completed.Step 4. Estimate the combined misstatement. In this step, the projected errors for each account are added, along with total sampling error, to calculate the combined misstatement. This would be performed after all substantive tests have been completed.Step 5. Compare combined estimated misstatement with preliminary or revised judgment about materiality. If the combined estimated misstatement is less than or equal to the judgment about materiality, then the auditor concludes the financial statements are fairly presented. This would be performed after all substantive tests have been completed, in the final review stage of the audit.Terms: Five steps in applying materiality in auditDiff: ChallengingObjective: LO 9-2, LO 9-3, and LO 9-4AACSB: Reflective thinking skills6) The preliminary judgment on materiality is compared to the total estimated misstatement amount to determine if an account balance is materially misstated.Answer: TRUETerms: Preliminary judgment on materiality; Estimated total misstatementsDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skills7) Total estimated misstatements include known misstatements and projected misstatements plus a sampling error.Answer: TRUETerms: Total estimated misstatements and sampling errorDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skills8) If the total misstatement of an account is known, a sampling error still needs to be determined. Answer: FALSETerms: Total estimated misstatements and sampling errorDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skills9) Sampling error represents the minimum misstatement amount that exists in all accounts subjected to sampling.Answer: FALSETerms: Total estimated misstatements and sampling errorDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skills10) If the auditor approaches the audit of the accounts in s sequential manner, the findings of the audit of accounts audited earlier can be used to revise the performance materiality established for accounts audited later.Answer: TRUETerms: Total estimated misstatements and sampling errorDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skillsLearning Objective 9-51) Which of the following audit risk components may be assessed in non-quantitative terms?Answer: ATerms: Audit risk components assessed in non-quantitative termsDiff: EasyObjective: LO 9-5AACSB: Reflective thinking skills2) Based on audit evidence gathered and evaluated, an auditor decides to increase the assessed level of control risk from that originally planned. To achieve an overall audit risk level that is substantially the same as the planned audit risk level, the auditor would:A) increase materiality levels.B) decrease detection risk.C) decrease substantive testing.D) increase inherent risk.Answer: BTerms: Control risk and planned audit risk modelDiff: ChallengingObjective: LO 9-5AACSB: Reflective thinking skills3) When dealing with audit risk:A) auditors accept some level of risk in performing the audit function.B) most risks that auditors encounter are relatively easy to measure.C) the audit risk model is only used for classes of transactions.D) most audit firms prefer to use a quantitative assessment for risk.Answer: ATerms: Audit riskDiff: ModerateObjective: LO 9-2 and LO 9-5AACSB: Reflective thinking skills4) Why do auditors use the audit risk model when planning an audit?Answer: The audit risk model is used primarily for planning purposes in deciding how much evidence to accumulate in each cycle. The auditor sets an acceptable level of audit risk, (AAR) assesses inherent risk (IR) and control risk (CR), and then uses the following audit risk model to determine an appropriate level of planned detection risk (PDR):PDR =Terms: Audit risk modelDiff: EasyObjective: LO 9-5AACSB: Reflective thinking skills5) The most important element of the audit risk model is control risk.Answer: FALSETerms: Audit risk model and control riskDiff: EasyObjective: LO 9-5AACSB: Reflective thinking skills。
审计学：一种整合方法-阿伦斯-英文版-第12版RRChapter10课件
Existing sales transactions are recorded
Sales for goods shipped are correctly billed
审计学：一种整合方法-阿伦斯-英文版-第12版 RRChapter10
审计学：一种整合方法-阿伦斯-英文版-第12版 RRChapter10
Internal Control Objectives
1. Reliability of financial reporting 2. Efficiency and effectiveness of operations 3. Compliance with laws and regulations
➢ Auditor responsibilities for testing internal control
审计学：一种整合方法-阿伦斯-英文版-第12版 RRChapter10
Sales Transaction-related Audit Objectives
Transaction-related Audit Objective – General form
审计学：一种整合方法-阿伦斯-英文版-第12版 RRChapter10
Five Components of Internal Control
Risk assessment
审计学：一种整合方法-阿伦斯-英文版-第12版 RRChapter10
Learning Objective 2
• Contrast management’s • responsibilities for maintaining • and reporting on internal controls • with the auditor’s responsibilities • for understanding, testing, and • reporting on internal controls.
审计学-一种整合的方法
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
1. Reliability of financial reporting 2. Efficiency and effectiveness of operations
3. Compliance with laws and regulations
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
Learning Objective 3
Explain the five components of the COSO internal control framework.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
10 - 5
Management and Auditor Responsibilities Related to Internal Control
Management’s Section 404 reporting responsibilities Design of internal control Operating effectiveness of controls
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
阿伦斯 审计学：一种整合方法 课后习题答案ch01
Chapter 1The Demand for Audit and Other Assurance Services Review Questions1-1The relationship among audit services, attestation services, and assurance services is reflected in Figure 1-3 on page 13 of the text. An assurance service is an independent professional service to improve the quality of information for decision makers. An attestation service is a form of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party. Audit services are a form of attestation service in which the auditor expresses a written conclusion about the degree of correspondence between information and established criteria.The most common form of audit service is an audit of historical financial statements, in which the auditor expresses a conclusion as to whether the financial statements are presented in conformity with generally accepted accounting principles. An example of an attestation service is a report on the effe ctiveness of an entity’s internal control over financial reporting. There are many possible forms of assurance services, including services related to business performance measurement, health care performance, and information system reliability. 1-2 An independent audit is a means of satisfying the need for reliable information on the part of decision makers. Factors of a complex society which contribute to this need are:1.Remoteness of informationa.Owners (stockholders) divorced from managementb.Directors not involved in day-to-day operations ordecisionsc.Dispersion of the business among numerous geographiclocations and complex corporate structures2.Biases and motives of providerrmation will be biased in favor of the providerwhen his or her goals are inconsistent with thedecision maker's goals.3.Voluminous dataa.Possibly millions of transactions processed daily viasophisticated computerized systemsb.Multiple product linesc.Multiple transaction locationsplex exchange transactionsa.New and changing business relationships lead toinnovative accounting and reporting problemsb.Potential impact of transactions not quantifiable,leading to increased disclosures1-3 1. Risk-free interest rate This is approximately the rate the bank could earn by investing in U.S. treasury notes for thesame length of time as the business loan.2.Business risk for the customer This risk reflects thepossibility that the business will not be able to repay itsloan because of economic or business conditions such as arecession, poor management decisions, or unexpectedcompetition in the industry.rmation risk This risk reflects the possibility thatthe information upon which the business risk decision wasmade was inaccurate. A likely cause of the information riskis the possibility of inaccurate financial statements.Auditing has no effect on either the risk-free interest rate or business risk. However, auditing can significantly reduce information risk.1-4The four primary causes of information risk are remoteness of information, biases and motives of the provider, voluminous data, and the existence of complex exchange transactions.The three main ways to reduce information risk are:er verifies the information.er shares the information risk with management.3.Audited financial statements are provided.The advantages and disadvantages of each are as follows:1-5 To do an audit, there must be information in a verifiable form and some standards (criteria) by which the auditor can evaluate the information. Examples of established criteria include generally accepted accounting principles and the Internal Revenue Code. Determining the degree of correspondence between information and established criteria is determining whether a given set of information is in accordance with the established criteria. The information for Jones Company's tax return is the federal tax returns filed by the company. The established criteria are found in the Internal Revenue Code and all interpretations. For the audit of Jones Company's financial statements the information is the financial statements being audited and the established criteria are generally accepted accounting principles.1-6The primary evidence the internal revenue agent will use in the audit of the Jones Company's tax return include all available documentation and other information available in Jones' office or from other sources. For example, when the internal revenue agent audits taxable income, a major source of information will be bank statements, the cash receipts journal and deposit slips. The internal revenue agent is likely to emphasize unrecorded receipts and revenues. For expenses, major sources of evidence are likely to be cancelled checks, vendors' invoices and other supporting documentation.1-7This apparent paradox arises from the distinction between the function of auditing and the function of accounting. The accounting function is the recording, classifying and summarizing of economic events to provide relevant information to decision makers. The rules of accounting are the criteria used by the auditor for evaluating the presentation of economic events for financial statements and he or shemust therefore have an understanding of generally accepted accounting principles (GAAP), as well as auditing standards. The accountant need not, and frequently does not, understand what auditors do, unless he or she is involved in doing audits, or has been trained as an auditor.1-81-9Five examples of specific operational audits that could be conducted by an internal auditor in a manufacturing company are:1.Examine employee time cards and personnel records todetermine if sufficient information is available to maximizethe effective use of personnel.2.Review the processing of sales invoices to determine if itcould be done more efficiently.3.Review the acquisitions of goods, including costs, todetermine if they are being purchased at the lowest possiblecost considering the quality needed.4.Review and evaluate the efficiency of the manufacturingprocess.5.Review the processing of cash receipts to determine if theyare deposited as quickly as possible.1-10 When using a strategic systems auditing approach in an audit of historical financial statements, an auditor must have a thorough understanding of the client and its environment. This knowledge should include the client’s regulatory and operating environment, business strategies and processes, and measurement indicators. The strategicsystems approach is also useful in other assurance or consulting engagements. For example, an auditor who is performing an assurance service on information technology would need to understand the client’s business strategies and processes related to information technology, including such things as purchases and sales via the Internet. Similarly, a practitioner performing a consulting engagement to evaluate the efficiency and effectiveness of a cli ent’s manufacturing process would likely start with an analysis of various measurement indicators, including ratio analysis and benchmarking against key competitors.1-11 The major differences in the scope of audit responsibilities are:1.CPAs perform audits in accordance with auditing standards ofpublished financial statements prepared in accordance withgenerally accepted accounting principles.2.GAO auditors perform compliance or operational audits inorder to assure the Congress of the expenditure of publicfunds in accordance with its directives and the law.3.IRS agents perform compliance audits to enforce the federaltax laws as defined by Congress, interpreted by the courts,and regulated by the IRS.4.Internal auditors perform compliance or operational auditsin order to assure management or the board of directors thatcontrols and policies are properly and consistentlydeveloped, applied and evaluated.1-12 The four parts of the Uniform CPA Examination are: Auditing and Attestation, Financial Accounting and Reporting, Regulation, and Business Environment and Concepts.1-13 It is important for CPAs to be knowledgeable about e-commerce technologies because more of their clients are rapidly expanding their use of e-commerce. Examples of commonly used e-commerce technologies include purchases and sales of goods through the Internet, automatic inventory reordering via direct connection to inventory suppliers, and online banking. CPAs who perform audits or provide other assurance services about information generated with these technologies need a basic knowledge and understanding of information technology and e-commerce in order to identify and respond to risks in the financial and other information generated by these technologies.Multiple Choice Questions From CPA Examinations1-14 a. (3) b. (2) c. (2) d. (3)1-15 a. (2) b. (3) c. (4) d. (3)Discussion Questions And Problems1-16 a. The relationship among audit services, attestation services and assurance services is reflected in Figure 1-3 on page 13of the text. Audit services are a form of attestationservice, and attestation services are a form of assuranceservice. In a diagram, audit services are located within theattestation service area, and attestation services arelocated within the assurance service area.b. 1. (1) Audit of historical financial statements2.(2) An attestation service other than an auditservice; or(3) An assurance service that is not an attestationservice (WebTrust developed from the AICPASpecial Committee on Assurance Services, but theservice meets the criteria for an attestationservice.)3.(2) An attestation service other than an auditservice4.(2) An attestation service other than an auditservice5.(2) An attestation service other than an auditservice6.(2) An attestation service that is not an auditservice (Review services are a form ofattestation, but are performed according toStatements on Standards for Accounting andReview Services.)7.(2) An attestation service other than an auditservice8.(2) An attestation service other than an auditservice9.(3) An assurance service that is not an attestationservice1-17 a. The interest rate for the loan that requires a review report is lower than the loan that did not require a review becauseof lower information risk. A review report provides moderateassurance to financial statement users, which lowersinformation risk. An audit report provides further assuranceand lower information risk. As a result of reduced information risk, the interest rate is lowest for the loan with the audit report.b.Given these circumstances, Vial-tek should select the loanfrom City First Bank that requires an annual audit. In this situation, the additional cost of the audit is less than the reduction in interest due to lower information risk. The following is the calculation of total costs for each loan:1-17 (continued)c. Vial-tek may desire to have an audit because of the manyother positive benefits that an audit provides. The auditwill provide Vial-tek’s management with assurance aboutannual financial information used for decision-makingpurposes. The audit may detect errors or fraud, and providemanagement with information about the effectiveness ofcontrols. In addition, the audit may result inrecommendations to management that will improve efficiencyor effectiveness.d. Under a strategic systems audit approach, the auditor musthave a thorough understanding of the client and itsenvironment, including the client’s e-commerce technologies,industry, regulatory and operating environment, suppliers,customers, creditors, and business strategies and processes.This thorough analysis helps the auditor identify risksassociated with the client’s strategies that may affectwhether the financial statements are fairly stated. Whenapplying the strategic systems audit approach, the auditoroften discovers ways to help the client improve businessoperations, thereby providing added value to the auditfunction.1-18 a. The services provided by Consumers Union are very similar to assurance services provided by CPA firms. The servicesprovided by Consumers Union and assurance services providedby CPA firms are designed to improve the quality ofinformation for decision makers. CPAs are valued for theirindependence, and the reports provided by Consumers Union are valued because Consumers Union is independent of the products tested.b.The concepts of information risk for the buyer of anautomobile and for the user of financial statements are essentially the same. They are both concerned with the problem of unreliable information being provided. In the case of the auditor, the user is concerned about unreliable information being provided in the financial statements. The buyer of an automobile is likely to be concerned about the manufacturer or dealer providing unreliable information.c.The four causes of information risk are essentially the samefor a buyer of an automobile and a user of financial statements:(1)Remoteness of information It is difficult for a userto obtain much information about either an automobilemanufacturer or the automobile itself withoutincurring considerable cost. The automobile buyer doeshave the advantage of possibly knowing other users whoare satisfied or dissatisfied with a similarautomobile.(2)Biases and motives of provider There is a conflictbetween the automobile buyer and the manufacturer. Thebuyer wants to buy a high quality product at minimumcost whereas the seller wants to maximize the sellingprice and quantity sold.(3)Voluminous data There is a large amount of availableinformation about automobiles that users might like tohave in order to evaluate an automobile. Either that information is not available or too costly to obtain.1-18 (continued)(4)Complex exchange transactions The acquisition of anautomobile is expensive and certainly a complexdecision because of all the components that go intomaking a good automobile and choosing between a largenumber of alternatives.d.The three ways users of financial statements and buyers ofautomobiles reduce information risk are also similar:(1)User verifies information him or herself That can beobtained by driving different automobiles, examiningthe specifications of the automobiles, talking toother users and doing research in various magazines.(2)User shares information risk with management Themanufacturer of a product has a responsibility to meetits warranties and to provide a reasonable product.The buyer of an automobile can return the automobilefor correction of defects. In some cases a refund maybe obtained.(3)Examine the information prepared by Consumer ReportsThis is similar to an audit in the sense thatindependent information is provided by an independentparty. The information provided by Consumer Reports iscomparable to that provided by a CPA firm that auditedfinancial statements.1-19 a. The following parts of the definition of auditing are related to the narrative:(1)Virms is being asked to issue a report aboutqualitative and quantitative information for trucks.The trucks are therefore the information with which the auditor is concerned.(2)There are four established criteria which must beevaluated and reported by Virms: existence of the trucks on the night of June 30, 2005, ownership of each truck by Regional Delivery Service, physical condition of each truck and fair market value of each truck.(3)Susan Virms will accumulate and evaluate four types ofevidence:(a)Count the trucks to determine their existence.(b)Use registrations documents held by Oatley forcomparison to the serial number on each truck todetermine ownership.(c)Examine the trucks to determine each truck'sphysical condition.(d)Examine the blue book to determine the fairmarket value of each truck.(4)Susan Virms, CPA, appears qualified, as a competent,independent person. She is a CPA, and she spends most of her time auditing used automobile and truck dealerships and has extensive specialized knowledge about used trucks that is consistent with the nature of the engagement.1-19(continued)(5)The report results are to include:(a)which of the 35 trucks are parked in Regional'sparking lot the night of June 30.(b)whether all of the trucks are owned by RegionalDelivery Service.(c)the condition of each truck, using establishedguidelines.(d)fair market value of each truck using thecurrent blue book for trucks.b.The only parts of the audit that will be difficult for Virmsare:(1)Evaluating the condition, using the guidelines of poor,good, and excellent. It is highly subjective to do so.If she uses a different criterion than the "bluebook," the fair market value will not be meaningful.Her experience will be essential in using thisguideline.(2)Determining the fair market value, unless it isclearly defined in the blue book for each condition.1-20 a. The major advantages and disadvantages of a career as an IRS agent, CPA, GAO auditor, or an internal auditor are:1-20 (continued)EMPLOYMENT ADVANTAGES DISADVANTAGESINTERNAL AUDITOR 1.Extensive exposure to allsegments of theenterprise with whichemployed.2.Constant exposure to oneindustry presentingopportunity for expertisein that industry.3.Likely to have exposureto compliance, financialand operational auditing.1.Little exposure totaxation and the auditthereof.2.Experience is limited toone enterprise, usuallywithin one or a limitednumber of industries.(b)Other auditing careers that are available are:Auditors within many of the branches of the federalgovernment ., Atomic Energy Commission)Auditors for many state and local government units .,state insurance or bank auditors)1-21 The most likely type of auditor and the type of audit for each of the examples are:1-22 a. The conglomerate should either engage the management advisory services division of a CPA firm or its own internalauditors to conduct the operational audit.b.The auditors will encounter problems in establishingcriteria for evaluating the actual quantitative events andin setting the scope to include all operations in whichsignificant inefficiencies might exist. In writing thereport, the auditors must choose proper wording to state that no financial audit was performed, that the procedures were limited in scope and that the results reported do not necessarily include all the inefficiencies that might exist.1-23 a. The CPA firm for the Internet company described in this problem could address these customer concerns by performinga WebTrust attestation engagement. The WebTrust assuranceservice was created by the profession to respond to thegrowing need for assurance resulting from the growth ofbusiness transacted over the Internet.b.The appropriate WebTrust principle for each of the customerconcerns noted in the problem is as follows:1.Accuracy of product descriptions and adherence tostated return policies: (3) Processing Integrity.2.Credit card and other personal information: (1) OnlinePrivacy and (2) Security.3.Selling information to other companies: (1) OnlinePrivacy and (2) Security.4.System failure: (4) Availability.Internet Problem Solution: Assurance Services1-1 This problem requires students to work with the AICPA assurance services Web site.1.Considering the assurance needs of customers and thecapabilities of CPAs, the Special Committee on AssuranceServices developed business plans for six assurance services.Chapter 1 of the textbook discussed several of theseservices. Go to the service description for the assuranceservice that most interests you (any one of the six). Whatare the major aspects or sections of the associated businessplan ., does the plan address market potential, competition,etc.)Answer: Each business plan provides background information,describes the service, assesses market potential, discussesissues such as competition and why CPAs should offer theservice, identifies practice tools available and steps thatCPAs must take to begin offering the services.2.The Special Committee's report on Assurance Servicesdiscusses competencies needed by assurance providers todayand in the coming decade. Briefly describe the 5 generalcompetencies needed in the next decade (Hint: See the“About Assurance Services” link. Then follow the“Assurance Services and Academia” link.)Answer:The Committee identified the following five majorimperatives regarding future competencies, each of whichimplies increasing emphasis on the competencies noted:1-1 (continued)Customer focus.Assurance service providers need tounderstand user decision processes and how informationshould enter into those processes. Increased emphasis isneeded on: understanding user needs, communication skills,relationship management, responsiveness and timeliness.Migration to higher value-added information activities. To provide more value to client/decision makers and others, assurance service providers need to focus less on activities involved in the conversion of business events into information ., collecting, classifying, and summarizing activities) and more on activities involved in the transformation of information into knowledge ., analyzing, interpreting, and evaluating activities) that effectively drives decision processes. This will require: analytical skills, business advisory skills, business knowledge, model building (including sensitivity analysis), understanding the client’s business processes, measurement theory (development of operational definitions of concepts, design of appropriate measurement techniques, etc.).Information technology (IT).Assurance services deal in information. Hence, the profound changes occurring in information technology will shape virtually all aspects of assurance services. As information specialists, assurance service providers need to embrace information technology in all of its complex dimensions. Embracing IT means understanding how it is transforming all aspects of business. It also means learning how to effectively use new developments in hardware, software, communications, memory, encryption, etc., in everything assurance service providers do as information specialists, not only in dealing with clients, but also in dealing with each other as individuals,teams, firms, state societies, and national professionalorganizations.Pace of change and complexity. Assurance services will takeplace in an environment of rapid change and increasingcomplexity. Assurance service providers need to investheavily in life-long learning in order to maintain up-to-date knowledge and skills. They will require: intellectualcapability, learning and rejuvenation.Competition.Growth in new assurance services will dependless on franchise/regulation and more on market forces.Assurance service providers need to develop their marketingskills —the ability to see clients’ latent informationand assurance needs and rapidly design and deploy cost-effective services to meet those needs —in order toeffectively compete for market-driven assurance services.Required skills include: marketing and selling,understanding customer needs, designing and deployingeffective solutions.1-1 (continued)(Note: Internet problems address current issues using Internet sources. Because Internet sites are subject to change, Internet problems and solutions are subject to change. Current information on Internet problems is available at。
阿伦斯审计学：一种整合方法课后习题答案ch01
Chapter 1The Demand for Audit and Other Assurance Services Review Questions1-1 The relationship among audit services, attestation services, and assurance services is reflected in Figure 1-3 on page 13 of the text. An assurance service is an independent professional service to improve the quality of information for decision makers. An attestation service is a form of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party. Audit services are a form of attestation service in which the auditor expresses a written conclusion about the degree of correspondence between information and established criteria.The most common form of audit service is an audit of historical financial statements, in which the auditor expresses a conclusion as to whether the financial statements arepresented in conformity with generally accepted accounting principles. An example of an attestation service is a report on the effe ctiveness of an entity’s internal control over financial reporting. There are many possible forms of assurance services, including services related to business performance measurement, health care performance, and information system reliability.1-2 An independent audit is a means of satisfying the need for reliable information on the part of decision makers. Factors of a complex society which contribute to this need are:1.Remoteness of informationa.Owners (stockholders) divorcedfrom managementb.Directors not involved in day-to-day operations or decisionsc.Dispersion of the business amongnumerous geographic locationsand complex corporate structures2.Biases and motives of providerrmation will be biased infavor of the provider when his orher goals are inconsistent withthe decision maker's goals.3.Voluminous dataa.Possibly millions of transactionsprocessed daily via sophisticatedcomputerized systemsb.Multiple product linesc.Multiple transaction locationsplex exchange transactionsa.New and changing businessrelationships lead to innovativeaccounting and reportingproblemsb.Potential impact of transactionsnot quantifiable, leading toincreased disclosures1-3 1. Risk-free interest rate This is approximately the rate the bankcould earn by investing in U.S.treasury notes for the same length oftime as the business loan.2.Business risk for the customer Thisrisk reflects the possibility that thebusiness will not be able to repay itsloan because of economic or businessconditions such as a recession, poormanagement decisions, orunexpected competition in theindustry.rmation risk This risk reflects thepossibility that the information uponwhich the business risk decision wasmade was inaccurate. A likely causeof the information risk is thepossibility of inaccurate financialstatements.Auditing has no effect on either the risk-free interest rate or business risk. However, auditing can significantly reduce information risk.1-4 The four primary causes of information risk are remoteness of information, biases and motives of the provider, voluminous data, and the existence of complex exchange transactions.The three main ways to reduce information risk are:er verifies the information.er shares the information risk withmanagement.3.Audited financial statements areprovided.The advantages and disadvantages of each are as follows:1-5 To do an audit, there must be information in a verifiable form and some standards (criteria) by which the auditor can evaluate the information. Examples of established criteria include generally accepted accounting principles and the Internal Revenue Code. Determining the degree of correspondence between information and established criteria is determining whether a given set of information is in accordance with the established criteria. The information for Jones Company's tax return is the federal tax returns filed by the company. The established criteria are found in the Internal Revenue Code and all interpretations. For the audit of Jones Company's financial statements the information is the financial statements being audited and the established criteria are generally accepted accounting principles.1-6 The primary evidence the internal revenue agent will use in the audit of the Jones Company's tax return include allavailable documentation and other information available in Jones' office or from other sources. For example, when the internal revenue agent audits taxable income, a major source of information will be bank statements, the cash receipts journal and deposit slips. The internal revenue agent is likely to emphasize unrecorded receipts and revenues. For expenses, major sources of evidence are likely to be cancelled checks, vendors' invoices and other supporting documentation.1-7 This apparent paradox arises from the distinction between the function of auditing and the function of accounting. The accounting function is the recording, classifying and summarizing of economic events to provide relevant information to decision makers. The rules of accounting are the criteria used by the auditor for evaluating the presentation of economic events for financial statements and he or she must therefore have an understanding ofgenerally accepted accounting principles (GAAP), as well as auditing standards. The accountant need not, and frequently does not, understand what auditors do, unless he or she is involved in doing audits, or has been trained as an auditor.1-81-9 Five examples of specific operational audits that could be conducted by an internal auditor in a manufacturing company are:1.Examine employee time cards andpersonnel records to determine ifsufficient information is available tomaximize the effective use ofpersonnel.2.Review the processing of salesinvoices to determine if it could bedone more efficiently.3.Review the acquisitions of goods,including costs, to determine if theyare being purchased at the lowestpossible cost considering the qualityneeded.4.Review and evaluate the efficiency ofthe manufacturing process.5.Review the processing of cashreceipts to determine if they aredeposited as quickly as possible.1-10 When using a strategic systems auditing approach in an audit of historical financial statements, an auditor must have a thorough understanding of the client and its environment. This knowledge should include the client’s regulatory and operating environment, business strategies and processes, and measurement indicators. The strategic systems approach is also useful in other assurance or consulting engagements. For example, an auditor who is performing an assurance service on information technology would need to understand the client’s business strategies and processes related to information technology, including such things as purchases and sales via the Internet. Similarly, a practitioner performinga consulting engagement to evaluate the efficiency and effectiveness of a cli ent’s manufacturing process would likely start with an analysis of various measurement indicators, including ratio analysis and benchmarking against key competitors.1-11 The major differences in the scope of audit responsibilities are:1.CPAs perform audits in accordancewith auditing standards of publishedfinancial statements prepared inaccordance with generally acceptedaccounting principles.2.GAO auditors perform compliance oroperational audits in order to assurethe Congress of the expenditure ofpublic funds in accordance with itsdirectives and the law.3.IRS agents perform complianceaudits to enforce the federal tax lawsas defined by Congress, interpretedby the courts, and regulated by theIRS.4.Internal auditors perform complianceor operational audits in order toassure management or the board ofdirectors that controls and policiesare properly and consistentlydeveloped, applied and evaluated.1-12 The four parts of the Uniform CPA Examination are: Auditing and Attestation, Financial Accounting and Reporting, Regulation, and Business Environment and Concepts.1-13 It is important for CPAs to be knowledgeable about e-commerce technologies because more of their clients are rapidly expanding their use of e-commerce. Examples of commonly used e-commerce technologies include purchases and sales of goods through the Internet, automatic inventory reordering via direct connection to inventory suppliers, and online banking. CPAs who perform audits or provide other assurance services about information generated with thesetechnologies need a basic knowledge and understanding of information technology and e-commerce in order to identify and respond to risks in the financial and other information generated by these technologies. Multiple Choice Questions From CPA Examinations1-14 a. (3) b. (2) c. (2) d. (3)1-15 a. (2) b. (3) c. (4) d. (3)Discussion Questions And Problems1-16 a. The relationship among audit services, attestation services andassurance services is reflected inFigure 1-3 on page 13 of the text.Audit services are a form ofattestation service, and attestationservices are a form of assuranceservice. In a diagram, audit servicesare located within the attestationservice area, and attestation services are located within the assurance service area.b. 1. (1) Audit of historical financial statements2.(2) An attestation service otherthan an audit service; or(3) An assurance service that isnot an attestation service(WebTrust developed fromthe AICPA Special Committeeon Assurance Services, butthe service meets the criteriafor an attestation service.)3.(2) An attestation service otherthan an audit service4.(2) An attestation service otherthan an audit service5.(2) An attestation service otherthan an audit service6.(2) An attestation service that isnot an audit service (Reviewservices are a form ofattestation, but areperformed according toStatements on Standards forAccounting and ReviewServices.)7.(2) An attestation service otherthan an audit service8.(2) An attestation service otherthan an audit service9.(3) An assurance service that isnot an attestation service1-17 a. The interest rate for the loan that requires a review report is lowerthan the loan that did not require areview because of lower informationrisk. A review report providesmoderate assurance to financialstatement users, which lowersinformation risk. An audit reportprovides further assurance and lowerinformation risk. As a result ofreduced information risk, the interestrate is lowest for the loan with theaudit report.b.Given these circumstances, Vial-tekshould select the loan from City FirstBank that requires an annual audit. In this situation, the additional cost of the audit is less than the reduction in interest due to lower information risk. The following is the calculation of total costs for each loan:1-17 (continued)c. Vial-tek may desire to have an auditbecause of the many other positivebenefits that an audit provides. Theaudit will provide Vial-tek’smanagement with assurance aboutannual financial information used fordecision-making purposes. The auditmay detect errors or fraud, andprovide management withinformation about the effectivenessof controls. In addition, the auditmay result in recommendations tomanagement that will improveefficiency or effectiveness.d. Under a strategic systems auditapproach, the auditor must have athorough understanding of the clientand its environment, including theclient’s e-commerce technologies,industry, regulatory and operatingenvironment, suppliers, customers,creditors, and business strategies andprocesses. This thorough analysishelps the auditor identify risksassociated with the client’s strategiesthat may affect whether the financialstatements are fairly stated. Whenapplying the strategic systems auditapproach, the auditor often discoversways to help the client improvebusiness operations, therebyproviding added value to the auditfunction.1-18 a. The services provided by Consumers Union are very similar toassurance services provided by CPAfirms. The services provided byConsumers Union and assuranceservices provided by CPA firms aredesigned to improve the quality ofinformation for decision makers.CPAs are valued for theirindependence, and the reportsprovided by Consumers Union arevalued because Consumers Union isindependent of the products tested.b.The concepts of information risk forthe buyer of an automobile and forthe user of financial statements areessentially the same. They are both concerned with the problem of unreliable information being provided. In the case of the auditor, the user is concerned about unreliable information being provided in the financial statements.The buyer of an automobile is likely to be concerned about the manufacturer or dealer providing unreliable information.c.The four causes of information riskare essentially the same for a buyer of an automobile and a user of financial statements:(1)Remoteness of information It isdifficult for a user to obtain muchinformation about either anautomobile manufacturer or theautomobile itself withoutincurring considerable cost. Theautomobile buyer does have theadvantage of possibly knowingother users who are satisfied ordissatisfied with a similar automobile.(2)Biases and motives of providerThere is a conflict between the automobile buyer and the manufacturer. The buyer wants to buy a high quality product at minimum cost whereas the seller wants to maximize the selling price and quantity sold.(3)Voluminous data There is a largeamount of available information about automobiles that users might like to have in order to evaluate an automobile. Either that information is not available or too costly to obtain.1-18 (continued)(4)Complex exchange transactionsThe acquisition of an automobileis expensive and certainly acomplex decision because of allthe components that go intomaking a good automobile andchoosing between a largenumber of alternatives.d.The three ways users of financialstatements and buyers of automobilesreduce information risk are also similar:(1)User verifies information him orherself That can be obtained bydriving different automobiles,examining the specifications ofthe automobiles, talking to otherusers and doing research invarious magazines.(2)User shares information risk withmanagement The manufacturerof a product has a responsibilityto meet its warranties and toprovide a reasonable product.The buyer of an automobile canreturn the automobile forcorrection of defects. In somecases a refund may be obtained.(3)Examine the informationprepared by Consumer ReportsThis is similar to an audit in thesense that independentinformation is provided by anindependent party. Theinformation provided byConsumer Reports is comparableto that provided by a CPA firmthat audited financial statements. 1-19a. T he following parts of the definition of auditing are related to the narrative:(1)Virms is being asked to issue areport about qualitative andquantitative information fortrucks. The trucks are thereforethe information with which theauditor is concerned.(2)There are four establishedcriteria which must be evaluatedand reported by Virms: existenceof the trucks on the night of June 30, 2005, ownership of each truck by Regional Delivery Service, physical condition of each truck and fair market value of each truck.(3)Susan Virms will accumulate andevaluate four types of evidence:(a)Count the trucks todetermine their existence.(b)Use registrations documentsheld by Oatley forcomparison to the serialnumber on each truck todetermine ownership.(c)Examine the trucks todetermine each truck'sphysical condition.(d)Examine the blue book todetermine the fair marketvalue of each truck.(4)Susan Virms, CPA, appearsqualified, as a competent, independent person. She is a CPA, and she spends most of her timeauditing used automobile and truck dealerships and has extensive specialized knowledge about used trucks that is consistent with the nature of the engagement.1-19(continued)(5)The report results are to include:(a)which of the 35 trucks areparked in Regional's parkinglot the night of June 30.(b)whether all of the trucks areowned by Regional DeliveryService.(c)the condition of each truck,using established guidelines.(d)fair market value of eachtruck using the current bluebook for trucks.b.The only parts of the audit that willbe difficult for Virms are:(1)Evaluating the condition, usingthe guidelines of poor, good, andexcellent. It is highly subjective todo so. If she uses a differentcriterion than the "blue book,"the fair market value will not bemeaningful. Her experience willbe essential in using thisguideline.(2)Determining the fair marketvalue, unless it is clearly definedin the blue book for eachcondition.1-20a. T he major advantages and disadvantages of a career as an IRSagent, CPA, GAO auditor, or an internalauditor are:1-20 (continued)EMPLOYMENT ADVANTAGES DISADVANTAGESINTERNAL AUDITOR 1.Extensive exposure to allsegments of the enterprisewith which employed.2.Constant exposure to oneindustry presentingopportunity for expertise inthat industry.3.Likely to have exposure tocompliance, financial andoperational auditing.1.Little exposure to taxationand the audit thereof.2.Experience is limited to oneenterprise, usually withinone or a limited number ofindustries.(b)Other auditing careers that areavailable are:Auditors within many of thebranches of the federalgovernment ., Atomic EnergyCommission)Auditors for many state and localgovernment units ., stateinsurance or bank auditors)1-21 The most likely type of auditor and the type of audit for each of the examples are:1-22 a. The conglomerate should either engage the management advisoryservices division of a CPA firm or itsown internal auditors to conduct theoperational audit.b.The auditors will encounter problemsin establishing criteria for evaluatingthe actual quantitative events and insetting the scope to include alloperations in which significantinefficiencies might exist. In writingthe report, the auditors must chooseproper wording to state that nofinancial audit was performed, thatthe procedures were limited in scopeand that the results reported do notnecessarily include all theinefficiencies that might exist.1-23 a. The CPA firm for the Internet company described in this problemcould address these customerconcerns by performing a WebTrustattestation engagement. TheWebTrust assurance service wascreated by the profession to respondto the growing need for assuranceresulting from the growth of businesstransacted over the Internet.b.The appropriate WebTrust principlefor each of the customer concernsnoted in the problem is as follows:1.Accuracy of product descriptionsand adherence to stated returnpolicies: (3) Processing Integrity.2.Credit card and other personalinformation: (1) Online Privacyand (2) Security.3.Selling information to othercompanies: (1) Online Privacyand (2) Security.4.System failure: (4) Availability.Internet Problem Solution: Assurance Services1-1 This problem requires students to work with the AICPA assurance services Web site.1.Considering the assurance needs ofcustomers and the capabilities ofCPAs, the Special Committee onAssurance Services developedbusiness plans for six assuranceservices. Chapter 1 of the textbookdiscussed several of these services.Go to the service description for theassurance service that most interestsyou (any one of the six). What arethe major aspects or sections of theassociated business plan ., does theplan address market potential,competition, etc.)Answer:Each business plan providesbackground information, describesthe service, assesses marketpotential, discusses issues such ascompetition and why CPAs shouldoffer the service, identifies practice tools available and steps that CPAs must take to begin offering the services.2.The Special Committee's report onAssurance Services discusses competencies needed by assurance providers today and in the coming decade. Briefly describe the 5 general competencies needed in the next decade (Hint: See the “About Assurance Services” link. Then follow the “Assurance Services and Academia” link.)Answer:The Committee identified the following five major imperatives regarding future competencies, each of which implies increasing emphasis on the competencies noted:1-1 (continued)Customer focus.Assurance serviceproviders need to understand userdecision processes and howinformation should enter into thoseprocesses. Increased emphasis isneeded on: understanding userneeds, communication skills,relationship management,responsiveness and timeliness.Migration to higher value-addedinformation activities. To providemore value to client/decision makersand others, assurance serviceproviders need to focus less onactivities involved in the conversionof business events into information .,collecting, classifying, andsummarizing activities) and more onactivities involved in thetransformation of information intoknowledge ., analyzing, interpreting,and evaluating activities) thateffectively drives decision processes.This will require: analytical skills,business advisory skills, business knowledge, model building (including sensitivity analysis), understanding the client’s business processes, measurement theory (development of operational definitions of concepts, design of appropriate measurement techniques, etc.).Information technology (IT). Assurance services deal in information. Hence, the profound changes occurring in information technology will shape virtually all aspects of assurance services. As information specialists, assurance service providers need to embrace information technology in all of its complex dimensions. Embracing IT means understanding how it is transforming all aspects of business. It also means learning how to effectively use new developments in hardware, software, communications, memory, encryption, etc., ineverything assurance service providers do as information specialists, not only in dealing with clients, but also in dealing with each other as individuals, teams, firms, state societies, and national professional organizations.Pace of change and complexity. Assurance services will take place in an environment of rapid change and increasing complexity. Assurance service providers need to invest heavily in life-long learning in order to maintain up-to-date knowledge and skills. They will require: intellectual capability, learning and rejuvenation.Competition.Growth in new assurance services will depend less on franchise/regulation and more on market forces. Assurance service providers need to develop their marketing skills —the ability to seeclients’ latent information andassurance needs and rapidly designand deploy cost-effective services tomeet those needs —in order toeffectively compete for market-driven assurance services. Requiredskills include: marketing and selling,understanding customer needs,designing and deploying effectivesolutions.1-1 (continued)(Note: Internet problems address current issues using Internet sources. Because Internet sites are subject to change, Internet problems and solutions are subject to change. Current information on Internet problems is available at。
审计学-一种整合的方法
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasng Objective 2
Distinguish management’s
responsibility for the financial
6-9
Auditor’s Responsibilities
➢ Material versus immaterial misstatements ➢ Reasonable assurance ➢ Errors versus fraud ➢ Professional skepticism ➢ Fraud resulting from fraudulent financial
2. Divide financial statements into cycles.
3. Know management assertions about accounts.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-2
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-3
Steps to Develop Audit Objectives
1. Understand objectives and responsibilities for the audit.
➢ Direct-effect illegal acts
➢ Indirect-effect illegal acts
审计学一种整合方法AuditingAssuranceServicesAnintegratedappr
Auditing and Assurance Services, 15e (Arens)Chapter 9 Materiality and RiskLearning Objective 9-11) If it is probable that the judgment of a reasonable person will be changed or influenced by the omission or misstatement of information, then that information is, by definition of FASB Statement No. 2:A) material.B) insignificant.C) significant.D) relevant.Answer: ATerms: FASB Statement No. 2; Probable judgment of a reasonable personDiff: EasyObjective: LO 9-1AACSB: Reflective thinking skills2) The scope paragraph of the standard unqualified auditor's report states that "… the standards require that we plan and perform the audit to obtain ________ assurance about whether the financial statements are free of material misstatement." What type of assurance is given?A) ImmediateB) LimitedC) ReasonableD) AbsoluteAnswer: CTerms: Type of assurance providedDiff: EasyObjective: LO 9-1AACSB: Reflective thinking skills3) Auditors are responsible for determining whether financial statements are materiallymisstated, so upon discovering a material misstatement they must bring it to the attention of:A) regulators.B) the audit firm's managing partner.C) the client shareholders.D) the client.Answer: DTerms: Discovery of a material misstatement must bring it to the attentionDiff: EasyObjective: LO 9-1AACSB: Reflective thinking skills4) Determining materiality requires professional judgment.Answer: TRUETerms: MaterialityDiff: EasyObjective: LO 9-1AACSB: Reflective thinking skillsLearning Objective 9-21) Audit standards require the auditor to consider materiality early in the audit. Which statement(s) regarding preliminary materiality are true?I. Preliminary materiality may change during the engagement.II. Preliminary materiality is the maximum amount by which the auditor believes the financials could be misstated and still not affect the decisions of reasonable users.A) I onlyB) II onlyC) both I and IID) neither are trueAnswer: CTerms: Preliminary materiality assessmentDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills2) Why do auditors establish a preliminary judgment about materiality?A) To determine the appropriate level of staff to assign to the auditB) So that the client can know what records to make available to the auditorC) To help plan the appropriate evidence to accumulateD) To finalize the control risk assessmentAnswer: CTerms: Purpose to establish preliminary judgment about materialityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills3) If an auditor establishes a relatively high level for materiality, then the auditor will:A) accumulate more evidence than if a lower level had been set.B) accumulate less evidence than if a lower level had been set.C) accumulate approximately the same evidence as would be the case were materiality lower.D) accumulate an undetermined amount of evidence.Answer: BTerms: High level for materialityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills4) The preliminary judgment about materiality and the amount of audit evidence accumulated are ________ related.A) directlyB) indirectlyC) notD) inverselyAnswer: DTerms: Preliminary judgment about materiality and amount of evidence accumulatedDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills5) Which of the following is the primary basis used to decide materiality for a for-profit entity?A) Net salesB) Net assetsC) Net income before taxD) All of the aboveAnswer: CTerms: Primary basis to decide materiality for a for-profit entityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills6) Auditing standards ________ that the basis used to determine the preliminary judgment about materiality be documented in the audit files.A) permitB) do not allowC) requireD) strongly encourageAnswer: CTerms: Auditing standards; Preliminary judgment about materiality documentedDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills7) Amounts involving fraud are usually considered ________ important than unintentional errors of equal dollar amounts.A) lessB) no lessC) no moreD) moreTerms: Amounts involving fraudDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills8) Qualitative factors can affect an auditor's assessment of materiality. Which of the following statements is true?I. Misstatements that are otherwise immaterial may be material if they affect earnings trends.II. Misstatements that are otherwise minor may be material if there are possible consequences arising from contractual obligations.A) I onlyB) II onlyC) I and IID) neither I nor IIAnswer: CTerms: Qualitative factors can affect auditor's assessment of materialityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills9) The five steps in applying materiality are listed below in random order.1. Estimate the combined misstatement.2. Estimate the total misstatement in the segment.3. Set materiality for the financial statements as a whole.4. Determine performance materiality.5. Compare combined estimate with preliminary judgment about materiality.The first three steps in correct sequence would be:A) 1, 2, 5B) 3, 4, 2C) 2, 1, 5D) 3, 2, 4Terms: Five steps in applying materialityDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills10) Which of the following statements is not correct?A) Materiality is a relative rather than an absolute concept.B) The most important base used as the criterion for deciding materiality is total assets.C) Qualitative factors as well as quantitative factors affect materiality.D) Given equal dollar amounts, frauds are usually considered more important than errors.Answer: BTerms: MaterialityDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills11) Certain types of misstatements are likely to be more important than other types to users, even if the dollar amounts are the same. Which of the following demonstrates this?A)B)C)D)Answer: ATerms: Certain types of misstatements are likely more important than other typesDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills12) When setting a preliminary judgment about materiality:A) more evidence is required for a low dollar amount than for a high dollar amount.B) less evidence is required for a low dollar amount than for a high dollar amount.C) the same amount of evidence is required for either low or high dollar amounts.D) there is no relationship between it and the dollar amount of evidence needed. Answer: ATerms: Setting preliminary judgment about materialityDiff: ChallengingObjective: LO 9-2AACSB: Reflective thinking skills13) Lewis Corporation has a few large accounts receivable that total one million dollars whereasClark Corporation has many small accounts receivable that total one million dollars. Misstatement in any one account is more significant for Lewis corporation because of the concept of:A) materiality.B) audit risk.C) reasonable assurance.D) comparative analysis.Answer: ATerms: MisstatementsDiff: ChallengingObjective: LO 9-2AACSB: Reflective thinking skills14) Audit standards require the auditor to consider the combined amount of misstatement early in the audit. This is known as preliminary materiality judgment. List and discuss the three main factors that affect an auditor's preliminary judgment about materiality.Answer: The three main factors that affect an auditor's judgment about materiality are: •Materiality is a relative rather than an absolute concept. A misstatement of a given size might be material for a small company, whereas the same dollar misstatement could be immaterial for a larger one.•Benchmarks are needed for evaluating materiality. Because materiality is relative, it is necessary to have benchmarks for establishing whether misstatements are material. Net income before taxes is normally the most commonly used benchmark, but other possible benchmarks include current assets, total assets, current liabilities, and owners' equity.•Qualitative factors also affect materiality. Certain types of misstatements are likely to be more important to users than others, even if the dollar amounts are the same, such as misstatements involving frauds.Terms: Factors that affect auditor's preliminary judgmentDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills15) Due to qualitative factors, certain types of misstatements are likely to be more important to users than others, even if the dollar amounts are the same. Identify two qualitative factors that might significantly affect an auditor's materiality judgment, and give an example of each.Answer: Qualitative factors that affect an auditor's materiality judgment include:•Amounts involving fraud. Amounts involving fraud are usually considered more important than unintentional errors of equal dollar amounts because fraud reflects on the honesty and reliability of the management or other personnel involved. For example, an intentional misstatement of inventory would be more important to users than a clerical error in inventory of the same amount.•Misstatements affecting contractual obligations. Misstatements that are otherwise minor may be material if there are possible consequences arising from contractual obligations. For example, if a misstatement causes a required minimum account balance to exceed the minimum, when the correct balance is less than the minimum, this misstatement likely would be important to users.•Amounts affecting a trend in earnings. Amounts that are otherwise immaterial may be material if they affect a trend in earnings. An example is if reported income has increased 3 percent annually for the past five years but income for the current year has declined 1 percent, that change may be material. Similarly, a misstatement that would cause a loss to be reported as a profit may be of concern.Terms: Qualitative factors that affect auditor's materiality judgmentDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills16) The auditor's preliminary judgment about materiality is the maximum amount by which the auditor believes the financial statements could be misstated and still not affect the decisions of reasonable users.Answer: TRUETerms: Preliminary judgments about materialityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills17) Preliminary judgments about materiality are often changed during the course of the engagement.Answer: TRUETerms: Preliminary judgments about materialityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills18) Net assets are the most often used base for deciding materiality.Answer: FALSETerms: Base for deciding materialityDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills19) The lower the dollar amount of the preliminary judgment the more audit evidence is required.Answer: TRUETerms: Amount of preliminary judgment and audit evidence requiredDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills20) Amounts involving fraud are not usually considered qualitative factors affecting the preliminary materiality judgment.Answer: FALSETerms: Qualitative factors affecting preliminary materiality judgment; FraudDiff: EasyObjective: LO 9-2AACSB: Reflective thinking skills21) CPA firms can establish policy guidelines to help their auditors determine materiality.Answer: TRUETerms: Difficulty in applying concept of materialityDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills22) Statements on Auditing Standards provide detailed, objective guidance on how auditors are to establish a preliminary materiality level, thus eliminating the need for subjective auditor judgment in this task.Answer: FALSETerms: Statements on Auditing Standards; Objective guidance on establishing preliminary materiality levelDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills23) If the preliminary judgment of materiality increases, the amount of audit evidence required will decrease.Answer: TRUETerms: Preliminary judgment of materiality and audit evidenceDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skills24) Net income before tax is the normal base used to determine materiality in anot-for-profit company.Answer: FALSETerms: Base used to determine materialityDiff: ModerateObjective: LO 9-2AACSB: Reflective thinking skillsLearning Objective 9-31) When auditors allocate the preliminary judgment about materiality to account balances, the materiality allocated to any given account balance is referred to as:A) the materiality range.B) the error range.C) tolerable materiality.D) performance materiality.Answer: DTerms: Allocate preliminary judgment about materiality to account balancesDiff: EasyObjective: LO 9-3AACSB: Reflective thinking skills2) Auditors generally allocate the preliminary judgment about materiality to the:A) balance sheet only.B) income statement only.C) income statement and balance sheet.D) statement of cash flows.Answer: ATerms: Preliminary materiality allocationDiff: EasyObjective: LO 9-3AACSB: Reflective thinking skills3) Which of the following is an incorrect statement regarding the allocation of the preliminary judgment about materiality to balance sheet accounts?A) Auditors expect certain accounts to have more misstatements than others.B) The allocation has virtually no effect on audit costs because the auditor must collect sufficient appropriate audit evidence.C) Auditors expect to identify overstatements as well as understatements in the accounts.D) Relative audit costs affect the allocation.Answer: BTerms: Allocation of preliminary judgment about materialityDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills4) Which of the following statements is true concerning the allocation of preliminary materiality?A) It is necessary to allocate preliminary materiality to financial statements as a whole rather than by segments.B) Preliminary materiality should be allocated to income statement accounts only.C) Preliminary materiality is required by the SEC.D) The PCAOB term used when preliminary materiality is allocated to segments is tolerable misstatement.Answer: DTerms: Allocation of preliminary materialityDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills5) Which of the following statements is false?A) Either an overstatement of an asset account or an understatement of a liability account would have the same effect on the income statement.B) A misclassification in the balance sheet will have no effect on operating income.C) Either an overstatement of an asset account or an overstatement of a liability accountwould have the same effect on the income statement.D) Either an understatement of an asset account or an overstatement of a liability account would have the same effect on the income statement.Answer: CTerms: Effects of misstatementsDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills6) Which of the following are major difficulties auditors face when allocating materiality to balance sheet accounts?A)B)C)D)Answer: ATerms: Major difficulties auditors face when allocating materiality to balance sheet accounts Diff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills7) When allocating performance materiality:A) it is easy to predict in advance which accounts are mot likely to be misstated.B) only overstatements need to be considered.C) professional judgment is critical.D) the sum of all the performance materiality levels cannot exceed the preliminary judgment about materiality.Answer: CTerms: Major difficulties auditors face when allocating materiality to balance sheet accounts Diff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills8) When allocating materiality, most practitioners choose to allocate to:A) the income statement accounts because they are more important.B) the balance sheet accounts because most audits focus on the balance sheet.C) both balance sheet and income statement accounts because there could be errors on either.D) all of the financial statements because it is required by GAAS.Answer: BTerms: Allocating materialityDiff: ChallengingObjective: LO 9-3AACSB: Reflective thinking skills9) Which of the following is a correct statement regarding performance materiality?A) Determining performance materiality is necessary because auditors accumulate evidence by segments.B) The level of performance materiality does not affect the amount of evidence needed.C) Performance materiality cannot vary for different classes of transactions.D) Performance materiality is required for public companies, but not for private companies.Answer: ATerms: Tolerable misstatementsDiff: ChallengingObjective: LO 9-3AACSB: Reflective thinking skills10) Explain why it is necessary to allocate the preliminary judgment about materiality to individual accounts (segments) in the financial statements. Also explain why allocating to balance sheet accounts is more common than allocating to income statement accounts.Answer: Allocating the preliminary judgment about materiality to individual accounts (segments) is necessary because evidence is accumulated for accounts (segments) rather than for the financial statements as a whole. Allocating to accounts (segments) establishes a tolerable misstatement amount for each account, which helps the auditor decide the appropriate audit evidence to accumulate for each account. Most practitioners allocatemateriality to balance sheet accounts rather than income statement accounts because most income statement misstatements have an equal effect on the balance sheet due to the nature of double-entry accounting. Because there are fewer balance sheet accounts than income statement accounts in most audits, and because most audit procedures focus on balance sheet accounts, materiality should be allocated only to balance sheet accounts.Terms: Allocation of the preliminary judgment about materialityDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills11) Auditor's allocate the preliminary judgment about materiality to financial statement segments rather than by financial statements as a whole. What is the term for the auditor's allocation of preliminary misstatement to account balances? What are three difficulties auditor's face when allocating materiality to balance sheet accounts?Answer: Performance materiality is the term for the auditor's allocation of the preliminary judgment of materiality to any given account balance. The three difficulties auditors face when allocating the preliminary materiality to account balances are:1. Auditors expect certain accounts to have more misstatement than others.2. Both overstatements and understatements must be considered.3. Audit costs can affect the allocation.Terms: Allocation of preliminary misstatement to account balances and difficulties that auditors face allocating preliminary materiality judgment to account balancesDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills12) Most practitioners allocate the preliminary judgment about materiality to both the balance sheet and income statement accounts.Answer: FALSETerms: Allocate preliminary judgment about materiality to balance sheet accountsDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills13) The primary purpose of allocating the preliminary judgment about materiality to financial statement accounts is to help the auditor decide the appropriate evidence to accumulate.Answer: TRUETerms: Primary purpose of allocating the preliminary judgment about materialityDiff: EasyObjective: LO 9-3AACSB: Reflective thinking skills14) Both overstatements and understatements must be considered when allocatingmateriality to balance sheet accounts.Answer: TRUETerms: Allocating materiality; Consideration of overstatements and understatementsDiff: EasyObjective: LO 9-3AACSB: Reflective thinking skills15) If an auditor assigns a tolerable misstatement of $1,000 to accounts payable, he or she would need to obtain more audit evidence for that account than if $100,000 had been assigned.Answer: TRUETerms: Tolerable misstatements and audit evidenceDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skills16) To maximize audit efficiency, the auditor should allocate less tolerable misstatement to accounts that can be verified by using low-cost audit procedures, such as analytical procedures, than to accounts that are more costly to audit.Answer: TRUETerms: Maximize audit efficiency, allocate less tolerable misstatementsDiff: ModerateObjective: LO 9-3AACSB: Reflective thinking skillsLearning Objective 9-41) Auditors are ________ to document the known and likely misstatements in the financial statements under audit.A) permittedB) requiredC) not allowedD) strongly encouragedAnswer: BTerms: Known and likely misstatements in the financial statementsDiff: EasyObjective: LO 9-4AACSB: Reflective thinking skills2) ________ misstatements are those where the auditor can determine the amount of the misstatement in the account.A) PotentialB) LikelyC) KnownD) ProjectedAnswer: CTerms: Misstatements where auditor can determine the amountDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skills3) Likely misstatements can result from:A)B)C)D)Answer: ATerms: Likely misstatements result fromDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skills4) When evaluating the audit findings, the auditor should be satisfied that the:A) amount of known misstatement is documented in the management representation letter.B) estimate of the total known and likely misstatements is less than a material amount.C) estimate of the total likely misstatement includes sample error.D) amount of known misstatement is acknowledged and recorded by the client.Answer: BTerms: Evaluating audit findings and materialityDiff: ChallengingObjective: LO 9-4AACSB: Reflective thinking skills5) Discuss each of the five steps in applying materiality in an audit, and identify the audit phase(s) in which each step is performed. List these steps in the order in which they occur.Answer: Step 1. Set preliminary judgment about materiality. This is the combined amount of misstatements in the financial statements that would be considered material. This decision is made in the planning stage of the audit.Step 2. Allocate preliminary judgment about materiality to segments. In this step, the auditor normally allocates the preliminary judgment about materiality to the balance sheet accounts. The amount of materiality allocated to an account is referred to as that account's performance materiality. This allocation is performed in the audit planning stage.Step 3. Estimate total misstatement in segment. In this step, the auditor projects the sample results to the population. An allowance for sampling risk is also calculated. This would be performed after the substantive tests for each account are completed.Step 4. Estimate the combined misstatement. In this step, the projected errors for eachaccount are added, along with total sampling error, to calculate the combined misstatement. This would be performed after all substantive tests have been completed.Step 5. Compare combined estimated misstatement with preliminary or revised judgment about materiality. If the combined estimated misstatement is less than or equal to the judgment about materiality, then the auditor concludes the financial statements are fairly presented. This would be performed after all substantive tests have been completed, in the final review stage of the audit.Terms: Five steps in applying materiality in auditDiff: ChallengingObjective: LO 9-2, LO 9-3, and LO 9-4AACSB: Reflective thinking skills6) The preliminary judgment on materiality is compared to the total estimated misstatement amount to determine if an account balance is materially misstated.Answer: TRUETerms: Preliminary judgment on materiality; Estimated total misstatementsDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skills7) Total estimated misstatements include known misstatements and projected misstatements plus a sampling error.Answer: TRUETerms: Total estimated misstatements and sampling errorDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skills8) If the total misstatement of an account is known, a sampling error still needs to be determined.Answer: FALSETerms: Total estimated misstatements and sampling errorDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skills9) Sampling error represents the minimum misstatement amount that exists in all accounts subjected to sampling.Answer: FALSETerms: Total estimated misstatements and sampling errorDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skills10) If the auditor approaches the audit of the accounts in s sequential manner, the findings of the audit of accounts audited earlier can be used to revise the performance materiality established for accounts audited later.Answer: TRUETerms: Total estimated misstatements and sampling errorDiff: ModerateObjective: LO 9-4AACSB: Reflective thinking skillsLearning Objective 9-51) Which of the following audit risk components may be assessed in non-quantitative terms?A)B)C)D)Answer: ATerms: Audit risk components assessed in non-quantitative terms Diff: EasyObjective: LO 9-5AACSB: Reflective thinking skills2) Based on audit evidence gathered and evaluated, an auditor decides to increase the assessed level of control risk from that originally planned. To achieve an overall audit risk level that is substantially the same as the planned audit risk level, the auditor would:A) increase materiality levels.B) decrease detection risk.C) decrease substantive testing.D) increase inherent risk.Answer: BTerms: Control risk and planned audit risk modelDiff: ChallengingObjective: LO 9-5AACSB: Reflective thinking skills3) When dealing with audit risk:A) auditors accept some level of risk in performing the audit function.B) most risks that auditors encounter are relatively easy to measure.C) the audit risk model is only used for classes of transactions.D) most audit firms prefer to use a quantitative assessment for risk.Answer: ATerms: Audit riskDiff: ModerateObjective: LO 9-2 and LO 9-5AACSB: Reflective thinking skills4) Why do auditors use the audit risk model when planning an audit?Answer: The audit risk model is used primarily for planning purposes in deciding how much evidence to accumulate in each cycle. The auditor sets an acceptable level of audit risk, (AAR) assesses inherent risk (IR) and control risk (CR), and then uses the following audit risk model to determine an appropriate level of planned detection risk (PDR):PDR =Terms: Audit risk modelDiff: Easy。
阿伦斯-审计学：一种整合的方法-课后习题答案ch02
阿伦斯-审计学：⼀种整合的⽅法-课后习题答案ch02 Chapter 2The CPA ProfessionReview Questions2-1The four major services that CPAs provide are:1. Assurance services Assurance services are independentprofessional services that improve the quality of information fordecision makers. Assurance services include attestation services,which are any services in which the CPA firm issues a report thatexpresses a conclusion about the reliability of an assertion that isthe responsibility of another party. The four categories of attestationservices are audits of historical financial statements, attestation onthe effectiveness of internal control over financial reporting, reviewsof historical financial statements, and other attestation services.2. Accounting and bookkeeping services Accounting services involvepreparing the client's financial statements from the client's records.Bookkeeping services include the preparation of the client'sjournals and ledgers as well as financial statements.3. Tax services Tax services include preparation of corporate,individual, and estate returns as well as tax planning assistance.4. Management consulting services These services range fromsuggestions to improve the client's accounting system to computerinstallations.2-2The major characteristics of CPA firms that permit them to fulfill their social function competently and independently are: 1. Organizational form A CPA firm exists as a separate entity to avoidan employer-employee relationship with its clients. The CPA firmemploys a professional staff of sufficient size to prevent one clientfrom constituting a significant portion of total income and therebyendangering the firm's independence.2. Conduct A CPA firm employs a professional staff of sufficient sizeto provide a broad range of expertise, continuing education, andpromotion of a professional independent attitude and competence.3. Peer review This practice evaluates the performance of CPA firmsin an attempt to keep competence high.2-3The Public Company Accounting Oversight Board provides oversight for auditors of public companies, includingestablishing auditing and quality control standards for public company audits, and performing inspections of the quality controls at audit firms performing those audits.2-4The purpose of the Securities and Exchange Commission is to assist in providing investors with reliable information upon which to make investment decisions. Since most reasonably large CPA firms have clients that must with the SEC each year (all companies filing registration statements under the securities acts of l933 and l934 must financial statements and other reports with the SEC at least once each year), the profession is highly involved with the SEC requirements.The SEC has considerable influence in setting generally accepted accounting principles and disclosure requirements for financial statements because of its authority for specifying reporting requirements considered necessary for fair disclosure to investors. In addition, the SEC has power to establish rules for any CPA associated with audited financial statements submitted to the Commission.2-5The AICPA is the organization that sets professional requirements for CPAs. The AICPA also conducts research and publishes materials on many different subjects related to accounting, auditing, management advisory services, and taxes. The organization also prepares and grades the CPA examinations, provides continuing education to its members, and develops specialty designations to help market and assure the quality of services in specialized practice areas.2-6Statement on Standards for Attestation Engagements was first issued in 1986 and its purposes were to provide a framework for attest engagements and to develop standards for those engagements. In 2001, the Auditing Standards Board issued SSAE 10 in response to the need for more detailed standards for specific types of attestation services. SSAE 10 supercedes the previously issued standards and its main purpose is to improve the usefulness of the attestation standards and provide greater flexibility to practitioners in providing assurance services.2-7 The PCAOB now has responsibility for establishing auditing standards for public companies, while the Auditing Standards Board (ASB) of the AICPA establishes auditing standards for private companies. The ASB previously had responsibility for establishing auditing standards for both public and private companies. Existing auditing standards were adopted by the PCAOB as interim auditing standards for public company audits.2-8 Generally accepted auditing standards are ten general guidelines to aid auditors in fulfilling their professional responsibilities. These guidelines include three general standards concerned with competence, independence, and due professional care; three standards of field work including planning and supervision, study and evaluation of internal control, and the gathering of competent evidential matter; and four standards of reporting which require a statement as to presentation in accordance with generally accepted accounting principles, inconsistency observed in the current period in relation to the preceding period, adequate disclosure, and the expression of an opinion as to the fairness of the presentation of the financial statements.2-8 (continued)Generally accepted accounting principles are specific rules for accounting for transactions occurring in a business enterprise. Examples may be any of the opinions of the FASB.2-9Auditors can obtain adequate technical training and proficiency through formal education in auditing and accounting, adequate practical experience, and continuing professional education. Auditors can demonstrate their proficiency by becoming licensed to practice as CPAs, which requires successful completion of the Uniform CPA Examination. The specific requirements for licensure vary from state to state.2-10For the most part, generally accepted auditing standards are general rather than specific. Many practitioners along with critics of the profession believe the standards should provide more clearly defined guidelines as an aid in determining the extent of evidence to be accumulated. This would eliminate some of the difficult audit decisions and provide a source of defense if the CPA is charged with conducting an inadequate audit. On the other hand, highly specific requirements could turn auditing into mechanical evidence gathering, void of professional judgment. From the point of view of both the profession and the users of auditing services, there is probably a greater harm from defining authoritative guidelines too specifically than too broadly.2-11International Standards on Auditing (ISAs) are issued by the International Auditing Practices Committee (IAPC) of the International Federation of Accountants (IFAC). ISAs are designed to improve the uniformity of auditing practices and related services throughout the world by issuing pronouncements on a variety of audit and attest functions and promoting their acceptance worldwide. A CPA who conducts an audit in accordance with GAAS may not comply with ISAs because there may be additional ISA requirements that extend beyond GAAS requirements.2-12 Quality controls are the procedures used by a CPA firm that help it meet its professional responsibilities to clients. Quality controls are therefore established for the entire CPA firm as opposed to individual engagements.2-13The element of quality control is personnel management. The purpose of the requirement is to help assure CPA firmsthat all new personnel should be qualified to perform their work competently. A CPA firm must have competent employees conducting the audits if quality audits are to occur.2-14 A peer review is a review, by CPAs, of a CPA firm's compliance with its quality control system. A mandatory peer review means that such a review is required periodically. AICPA member firms are required to have a peer review every three years. Registered firms with the PCAOB are subject to quality inspections. These are different than peer reviews because they are performed by independent inspection teams rather than another CPA firm.2-14 (continued)Peer reviews can be beneficial to the profession and to individual firms. By helping firms meet quality control standards, the profession gains if reviews result in practitioners doing higher quality audits. A firm having a peer review can also gain if it improves the firm's practices and thereby enhances its reputation and effectiveness, and reduces the likelihood of lawsuits. Of course peer reviews are costly. There is always a trade off between cost and benefits. A CPA firm also gives up some independence of activities when it is reviewed by another CPA firm.2-15The two divisions of practice that a CPA firm may belong to are the SEC Practice Section (renamed the Center for Public Company Audit Firms)and the Private Companies Practice Section. A firm may belong to one section, both sections, or neither. Many of the self-regulatory activities of the SECPS have been taken over by the PCAOB.Proponents of this division believe that this will improve the quality of practice by CPA firms and that it will improve self-regulation. Critics state that it establishes two classes of CPAs and implies a lower performance quality for firms that are not members of the SEC Practice Section.Multiple Choice Questions From CPA Examinations2-16 a. (1) b. (2) c. (3) d. (3)2-17 a. (2) b. (2) c. (3)Discussion Questions And Problems2-18a.The comments summarize the beliefs of many practitioners about theSarbanes–Oxley Act and the PCAOB. The arguments against the Act can be summarized as four arguments:1. Costs of complying with the Act are excessively high, especially therequirement to report on internal control over financial reporting,and will discourage companies from becoming public companies.2. Relative cost for local audit firms is excessively high.3. Additional oversight is not needed because sufficient qualitycontrols have already been implemented by most audit firms.4. Three other things already provide assurance of adequate quality:a competitive economic environment, legal liability, and auditingstandards.To support these comments, it can be argued that the profession has generally functioned well with relatively little controversy and criticism.2-18 (continued)The arguments against these comments are primarily as follows:1. Reporting on the effectiveness of internal control over financialreporting will provide benefits in improved controls, resulting inhigher quality financial reporting and reduced losses from fraud.2. The increased confidence in financial reporting will increase accessto capital and lower the cost of capital by reducing information risk.3. Changes in the scope of CPA practices and other threats to auditquality required government regulation.4. Regulation of public company audits will not affect most audit firmsthat do not have public company audit clients.b. There is no correct answer to this question. Different people reachdifferent conclusions, depending on the weights put on the various arguments. Time is needed to effectively assess both the costs and benefits of the Act.2-19 a. Engagement performanceb. Personnel managementc. Engagement performanced. Engagement performancee. Independence, integrity, and objectivityf. Monitoringg. Acceptance and continuation of clients and engagementsh. Personnel managementi. Personnel management2-20 a. Rossi and Montgomery's primary ethical consideration is their professional competence to perform all of the audit work for filingwith the SEC. In addition, if Rossi and Montgomery have performedbookkeeping services or certain consulting services for MobileHome, they will not be independent under PCAOB and SECindependence requirements. The firm must also be a registeredfirm with the PCAOB.b. The filing with the SEC, in addition to normal audited financialstatements, will require completion and registration with the SEC ofForm S-1 which includes an audited summary of operations for thelast five fiscal years as well as many additional schedules anddescriptions of the business. Each quarter subsequent to the filing,Form 10-Q must be filed; and within 90 days of the end of eachfiscal year Form 10-K must be filed with the SEC.In addition, Form 8-K must be filed whenever significant events have occurred which are of interest to public investors. These forms must be filed in conformity with Regulation S-X, whichrequires considerable disclosures in addition to those normallyrequired in audited financial statements.2-212-22 a. CPAs can provide the following information and Web links on their firm Web sites: Office locations or affiliationsLines of service the firm provides (audit, tax, management consulting, etc.)Industry specialization information for the firmOnline software tools and databasesLatest tax law developments applicable to clientsCalculators for retirement account decisionsOnline privacy management softwareb. CPA firms invest their resources to develop sophisticated Web siteslargely because of a desire to maintain a client-service approach.Increased competition motivates CPA firms to improve thetraditional paths of providing information to their clients. A CPA firmcan reach clients more quickly and efficiently with vital informationvia the firm’s Web site than through more traditional forms ofcommunication, such as a monthly or quarterly newsletter. Also, asmore clients become sophisticated in the area of technology, theyexpect their CPA firms to do the same by providing a useful Website that has links to other helpful tools and resources.c. The Internet is a useful tool for a CPA firm’s accounting andauditing practice in many ways. A firm’s Web site can be used tomarket the firm’s accounting and auditing practice. The Internetalso connects the firm’s global professional staff, making it easierfor staff from all over the world to provide client service on a timelybasis without having to be physically present at the client’s location.CPAs also use online resources and databases to remain currenton emerging business and standards-setting issues. Examplesinclude Standard and Poor’s Net Advantage Database andGoldman Sachs Research Database. These two databases provideextensive industry-specific information and coverage of companiesthat CPAs use on a subscription basis to stay current on industrydevelopments and to obtain industry data useful for auditing andconsulting.Internet Problem Solution: CPA Vision Project2-1 The CPA Vision Project [] is all about helping the “CPA profession stay on top of the change curve.”With input from CPAs across the nation, the CPA Vision process created a comprehensive and integrated vision of the profession’s future.1. What characteristics and professional services come to mind whenyou hear the term CPA? What is your impression of the public’sstereotype of CPAs?Answer: Student responses will vary.2. Fill in the missing words in the following Vision Statement:Answer:“CPAs are the trusted professionals who enable people and organizations to shape their future. Combining insight with integrity, CPAs deliver value by …Communicating the total picture with clarity and objectivity,Translating complex information into critical knowledge,Anticipating and creating opportunities, andDesigning pathways that transform vision into reality.3. Briefly describe the eight forces that will impact the profession.Answer: The eight forces are:1. Non-CPA Competitors - The number of new, non-CPA competitors, not bound by the profession's code of standardsand ethics is increasing at an alarming rate.2. Decline of new CPAs - The number of students and young people electing to join the CPA profession has dramatically declined.3. Technology Displacement - Many of the traditional, essential skills of CPAs are being replaced by new technologies thatare increasing in number and being rapidly developed, oftenfrom unexpected sources.4. Borderless World- As the world becomes borderless, the marketplace is demanding more complex, real-time adviceand services, presenting unlimited opportunities for CPAs to expand their skills, competencies, and services.5. Leadership Imperative - Corporations are conductingbusiness in a world of commerce that is global, technological, instantaneous, and increasingly virtual. The leadership they require from both internal and external advisors requires new insights, new skills, and extraordinary agility.6. Technological Advances - Technology will continue to challenge and reshape our lifestyles, work patterns,educational experiences, and communication styles and techniques. Technology will rewrite the "rules of business," leaving those who will not harness it and effectively integrateit far behind.7. Market Value Shifts- The perceived value of some of the profession's cornerstone services-accounting, auditing, andtax preparation-is declining in the marketplace.8. Pressure to Transform Finance from Scorekeeper toBusiness Partner - The CPA in business is being challengedto deliver value to the organization and help create asustainable competitive advantage.4. The CPA Vision Project suggests that “the increasing complexities of the global environment and the commodity characteristics of traditional services mandate that the CPA profession migrate up theeconomic value chain.” What is meant by “moving up the economicvalue chain,”and how are CPAs going to accomplish this? (Hint:See the “Final Report.”)Answer: Moving up the economic value chain means moving fromproviding low value products and services to providing higher valueproducts and services (i.e., services that will permit the professionto thrive in a knowledge-based, global economy). The higher on theeconomic value chain, the higher the revenue. “The more a productor service is refined and defined, the less market value it will have.For example: tax preparation services have been commoditizedand automated to the point that they can largely be preparedelectronically. Tax form preparation is a Platform 1 service - afoundation service. The higher economic value of this informationlies in understanding what the foundation service implies-the“where do we go from here”and the “so whats”of business andfinance. Higher Platform services, such as estate and financialplanning are where higher economic benefits exist for the future ofthe profession. Higher Platform services are, and will increasinglybe, the most valued services and functions, and therefore willcommand higher fees and salaries. Traditional services are thefoundation from which CPAs can leverage to higher valueservices.” The report describes 7 platforms.Obviously to move up the value chain CPAs need to develop expertise for and market higher value services. For some this mayrepresent “thinking out of the box.”(Note: Internet problems address current issues using Internet sources. Because Internet sites are subject to change, Internet problems and solutions are subject to change. Current information on Internet problems is available at ).。
审计学-一种整合的方法
6 - 15
Transaction Flow Example
Transactions
Cash disbursements
Payroll services and disbursements
Journals Cash
disbursements journal
Payroll journal
Ledgers, Trial Balance, and Financial
6 - 14
Transaction Flow Example
Transactions Sales
Cash receipts
Journals Sales journal
Cash receipts journal
Ledgers, Trial Balance, and Financial
Statements
6-7
Management’s Responsibilities
The Sarbanes-Oxley Act provides for criminal penalties for anyone who knowingly falsely certifies the statements.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-3
Steps to Develop Audit Objectives
1. Understand objectives and responsibilities for the audit.
审计学-一种整合方法
审计学-一种整合方法审计学是一门综合性的学科，旨在通过评估和改善组织的财务信息，确保其准确、可靠、公正和合法。
它使用各种方法和技术来完成此任务，其中一种常见的方法是整合方法。
整合方法是将不同的审计方法和技术结合起来，以全面、系统地评估和改善组织的财务信息。
整合方法包括以下几个方面：1. 综合使用不同的审计方法：审计学使用了许多不同的方法，例如财务审计、内部审计、运营审计、合规审计等。
这些方法各具特点，在评估和改善财务信息方面起着不同的作用。
整合方法将这些不同的审计方法结合起来，以便综合评估和改善组织的财务信息。
2. 综合使用不同的审计技术：审计学使用了许多不同的技术，例如数据分析、风险评估、内部控制评价等。
这些技术可以帮助审计人员更好地理解组织的财务信息，发现潜在的问题和风险，并提出相应的改进建议。
整合方法将这些不同的审计技术整合在一起，以实现更全面、系统的审计。
3. 整合不同层次的审计：审计学涵盖了不同层次的审计，包括组织级审计、部门级审计和项目级审计等。
整合方法将这些不同层次的审计整合在一起，以充分发挥各级审计的作用，并确保评估和改善财务信息的全面性和准确性。
4. 整合不同领域的知识：审计学需要综合运用经济学、会计学、法律学和管理学等多个领域的知识。
整合方法将这些不同领域的知识整合在一起，以提高审计人员的综合素质和能力，更好地完成审计任务。
整合方法在实践中具有重要的意义和应用价值。
首先，整合方法可以帮助审计人员更全面、系统地评估和改善组织的财务信息，发现潜在的问题和风险，并提出相应的改进建议。
其次，整合方法可以提高审计的效率和质量，避免重复的工作和信息孤岛现象，提高工作的一致性和准确性。
再次，整合方法能够发挥多学科和多层次的优势，提供更全面、客观和可靠的审计意见和结论，满足各方对财务信息的需求和期望。
然而，整合方法也面临一些挑战和难题。
首先，整合不同的方法、技术和知识需要审计人员具备较高的综合素质和能力，这对人才培养和选拔提出了更高的要求。
阿伦斯审计学：一种整合方法课后习题答案.docx
Chapter 1The Demand for Audit and Other Assurance ServicesReview Questions1-1The relationship among audit services,attestation services,and assurance services is reflected in Figure 1-3 on page 13 of the text. Anassurance service is an independent professional service to improve thequality of information for decision makers. An attestation service is aform of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party.Audit services are a form of attestation service in which the auditor expresses a written conclusion about the degree of correspondence between information and established criteria.The most commonform of audit service is an audit of historical financial statements, in which the auditor expresses a conclusion as towhether the financial statements are presented in conformity with generally accepted accounting principles.An example of an attestation service is a report on the effe ctiveness of an entity’s internal control over financial reporting.There are many possible forms of assurance services,including services related to business performance measurement, health care performance, and information system reliability.1-2An independent audit is a means of satisfying the need for reliable information on the part of decision makers.Factors of a complex society which contribute to this need are:1.Remoteness of informationa.Owners (stockholders) divorced from managementb.Directors not involved in day-to-day operations or decisionsc.Dispersion of the business among numerous geographiclocations and complex corporate structures2.Biases and motives of providerrmation will be biased in favor of the providerwhen his or her goals are inconsistent with thedecision maker's goals.3.Voluminous dataa.Possibly millions of transactions processed dailyvia sophisticated computerized systemsb.Multiple product linesc.Multiple transaction locationsplex exchange transactionsa.New and changing business relationships leadto innovative accounting and reporting problemsb.Potential impact of transactions not quantifiable, leading toincreased disclosures1-3 1. Risk-free interest rate This is approximately the rate the bank couldearn by investing in U.S. treasury notes for the same length of time asthe business loan.2.Business risk for the customer This risk reflects the possibility that thebusiness will not be able to repay itsloan because of economic or business conditions such as arecession,poor management decisions,or unexpectedcompetition in the industry.rmation risk This risk reflects the possibility thatthe information upon which the business risk decision was made wasinaccurate. A likely cause of the information risk is the possibility ofinaccurate financial statements.Auditing has no effect on either the risk-free interest rate or business risk.However, auditing can significantly reduce informationrisk.1-4The four primary causes of information risk are remoteness of information,biases and motives of the provider,voluminous data,and the existence of complex exchange transactions.The three main ways to reduce information risk are:er verifies the information.er shares the information risk with management.3.Audited financial statements are provided.The advantages and disadvantages of each are as follows:ADVANTAGES DISADVANTAGESUSER VERIFIES 1. User obtains information 1.High cost ofINFORMATION desired.obtaining2. User can be more information.confident of the 2.Inconvenience toqualifications and the personactivities of the person providing thegetting the rmation becauselarge number ofusers would be onpremises.USER SHARES 1.No audit costs incurred. INFORMATIONRISK WITHMANAGEMENT er may not beable to collecton losses.AUDITED 1.Multiple users obtain 1. May not meet needs FINANCIAL the information.of certain users. STATEMENTS ARE rmation risk can 2. Cost may be higher PROVIDED usually be reduced than the benefitssufficiently to satisfy in some situations,users at reasonable such as for a smallpany.3.Minimal inconvenience tomanagement by havingonly one auditor.1-5To do an audit, there must be information in a verifiable form and some standards( criteria)by which the auditor can evaluate the information. Examples of established criteria include generally acceptedaccounting principles and the Internal Revenue Code.Determining the degree of correspondence between information and established criteria is determining whether a given set of information is in accordance with theestablished criteria. The information for Jones Company's tax return isthe federal tax returns filed by the company. The established criteriaare found in the Internal Revenue Code and all interpretations. For theaudit of Jones Company's financial statements the information is the financial statements being audited and the established criteria are generally accepted accounting principles.1-6The primary evidence the internal revenue agent will use in the audit of the Jones Company's tax return include all available documentation and other information available in Jones' office or fromother sources.For example,when the internal revenue agent audits taxable income, a major source of information will be bank statements,the cash receipts journal and deposit slips. The internal revenue agentis likely to emphasize unrecorded receipts and revenues. For expenses,major sources of evidence are likely to be cancelled checks,vendors' invoices and other supporting documentation.1-7This apparent paradox arises from the distinction between the function of auditing and the function of accounting.The accounting function is the recording,classifying and summarizing of economic events to provide relevant information to decision makers. The rules ofaccounting are the criteria used by the auditor for evaluating the presentation of economic events for financial statements and he or shemust therefore have an understanding of generally accepted accounting principles(GAAP), as well as auditing standards.The accountant need not, and frequently does not, understand what auditors do, unless he orshe is involved in doing audits, or has been trained as an auditor.1-8OPERATIONAL COMPLIANCE AUDITS OF FINANCIALAUDITS AUDITS STATEMENTSPURPOSE To evaluate To determine To determinewhether whether the client whether theoperating is following overallprocedures are specific procedures financialefficient and set by higher statements areeffective authority presented inaccordance withspecifiedcriteria(usually GAAP) USERS OF Management of Authority setting Different groups AUDIT REPORT organization down procedures,for differentinternal or purposes — manyexternal outside entities NATURE Highly Not standardized,Highlynonstandard;but specific and standardizedoften usually objectivesubjectivePERFORMED BY:CPAsFrequently Occasionally AlmostuniversallyGAOFrequently Frequently Occasionally AUDITORSIRSNever Universally NeverAUDITORSINTERNALFrequently Frequently Frequently AUDITORS1-9 Five examples of specific operational audits that could be conducted by an internal auditor in a manufacturing company are:1.Examine employee time cards and personnel records to determine ifsufficient information is available to maximizethe effective use of personnel.2.Review the processing of sales invoices to determine ifit could be done more efficiently.3.Review the acquisitions of goods,including costs,todetermine if they are being purchased at the lowest possiblecost considering the quality needed.4.Review and evaluate the efficiency of the manufacturingprocess.5.Review the processing of cash receipts to determine ifthey are deposited as quickly as possible.1-10 When using a strategic systems auditing approach in an audit of historical financial statements,an auditor must have a thorough understanding of the client and its environment. This knowledge shouldinclude the client ’s regulatory and operating environment,business strategies and processes,and measurement indicators.The strategic systems approach is also useful in other assurance or consulting engagements. For example, an auditor who is performing an assurance service on information technology would need to understand the client’s business strategies and processes related to information technology, including such things as purchases and sales via the Internet. Similarly,a practitioner performing a consulting engagement to evaluate the efficiency and effectiveness of a cli ent ’s manufacturing process would likely start with an analysis of various measurement indicators, including ratio analysis and benchmarking against key competitors.1-11The major differences in the scope of audit responsibilities are:1.CPAs perform audits in accordance with auditing standards ofpublished financial statements prepared in accordance withgenerally accepted accounting principles.2.GAO auditors perform compliance or operational audits inorder to assure the Congress of the expenditure of publicfunds in accordance with its directives and the law.3.IRS agents perform compliance audits to enforce thefederal tax laws as defined by Congress, interpreted by thecourts, and regulated by the IRS.4.Internal auditors perform compliance or operational auditsin order to assure management or the board of directors thatcontrols and policies are properly and consistentlydeveloped, applied and evaluated.1-12 The four parts of the Uniform Attestation, Financial Accounting CPA Examinationand Reporting,are: AuditingRegulation,andandBusiness Environment and Concepts.1-13 It is important for CPAs to be knowledgeable about e-commerce technologies because more of their clients are rapidly expanding theiruse of e-commerce. Examples of commonly used e-commerce technologiesinclude purchases and sales of goods through the Internet,automatic inventory reordering via direct connection to inventory suppliers,and online banking.CPAs who perform audits or provide other assurance services about information generated with these technologies need a basic knowledge and understanding of information technology and e-commerce in order to identify and respond to risks in the financialand other information generated by these technologies.Multiple Choice Questions From CPA Examinations1-14 a.(3) b.(2) c.(2) d.(3)1-15 a.(2) b.(3) c.(4) d.(3)Discussion Questions And Problems1-16 a.The relationship among audit services, attestation servicesand assurance services is reflected in Figure 1-3 on page 13of the text.Audit services are a form of attestationservice,and attestation services are a form of assuranceservice. In a diagram, audit services are located within theattestation service area, and attestation services arelocated within the assurance service area.b. 1.(1)Audit of historical financial statements2.(2)An attestation service other than an auditservice; or(3)An assurance service that is not an attestationservice ( WebTrust developed from the AICPASpecial Committee on Assurance Services, but theservice meets the criteria for an attestation service.)3.(2)An attestation service other than an auditservice4.(2)An attestation service other than an auditservice5.(2)An attestation service other than an auditservice6.(2)An attestation service that is not an auditservice(Review services are a form ofattestation,but are performed according toStatements on Standards for Accounting andReview Services.)7.(2)An attestation service other than an auditservice8.(2)An attestation service other than an auditservice9.(3) An assurance service that is not an attestationservice1-17 a.The interest rate for the loan that requires a review reportis lower than the loan that did not require a review becauseof lower information risk. A review report provides moderateassurance to financial statement users,which lowersinformation risk. An audit report provides further assuranceand lower information risk.As a result of reducedinformation risk, the interest rate is lowest for the loanwith the audit report.b.Given these circumstances,Vial-tek should select the loanfrom City First Bank that requires an annual audit. In thissituation, the additional cost of the audit is less than thereduction in interest due to lower information risk.Thefollowing is the calculation of total costs for each loan:LENDERCPA COST OF CPA ANNUAL ANNUAL SERVICE SERVICES INTEREST LOAN COSTExisting loan None0$ 142,500$ 142,500 First National Review$ 12,000$ 127,500$ 139,500 BankCity First Bank Audit$ 20,000$ 112,500$ 132,5001-17 (continued)c.Vial-tek may desire to have an audit because of the manyother positive benefits that an audit provides.The auditwill provide Vial-tek ’s management with assurance aboutannual financial information used for decision-makingpurposes. The audit may detect errors or fraud, and providemanagement with information about the effectiveness ofcontrols.In addition,the audit may result inrecommendations to management that will improve efficiencyor effectiveness.d.Under a strategic systems audit approach,the auditor musthave a thorough understanding of the client and itsenvironment, including the client’s e -commerce technologies,industry,regulatory and operating environment,suppliers,customers, creditors, and business strategies and processes.This thorough analysis helps the auditor identify risksassociated with the client ’s strategies that may affectwhether the financial statements are fairly stated.Whenapplying the strategic systems audit approach,the auditoroften discovers ways to help the client improve businessoperations,thereby providing added value to the auditfunction.1-18 a.The services provided by Consumers Union are very similar toassurance services provided by CPA firms.The servicesprovided by Consumers Union and assurance services providedby CPA firms are designed to improve the quality ofinformation for decision makers.CPAs are valued for theirindependence,and the reports provided by Consumers Unionare valued because Consumers Union is independent of theproducts tested.b.The concepts of information risk for the buyer of anautomobile and for the user of financial statements areessentially the same.They are both concerned with theproblem of unreliable information being provided.In thecase of the auditor, the user is concerned about unreliableinformation being provided in the financial statements. Thebuyer of an automobile is likely to be concerned about themanufacturer or dealer providing unreliable information.c.The four causes of information risk are essentially the samefor a buyer of an automobile and a user of financialstatements:(1)Remoteness of information It is difficult for a userto obtain much information about either an automobilemanufacturer or the automobile itself withoutincurring considerable cost. The automobile buyer doeshave the advantage of possibly knowing other users whoare satisfied or dissatisfied with a similar automobile.(2)Biases and motives of provider There is a conflictbetween the automobile buyer and the manufacturer. Thebuyer wants to buy a high quality product at minimumcost whereas the seller wants to maximize the sellingprice and quantity sold.(3)Voluminous data There is a large amount of availableinformation about automobiles that users might like tohave in order to evaluate an automobile.Either that information is not available or too costly to obtain.1-18(continued)(4)Complex exchange transactions The acquisition of anautomobile is expensive and certainly a complexdecision because of all the components that go intomaking a good automobile and choosing between a largenumber of alternatives.d. The three ways users of financial statements and buyers ofautomobiles reduce information risk are also similar:(1)User verifies information him or herself That can beobtained by driving different automobiles,examiningthe specifications of the automobiles,talking toother users and doing research in various magazines.(2)User shares information risk with management The manufacturerof a product has a responsibility to meetits warranties and to provide a reasonable product.The buyer of an automobile can return the automobilefor correction of defects. In some cases a refund maybe obtained.(3)Examine the information prepared by Consumer ReportsThis is similar to an audit in the sense thatindependent information is provided by an independentparty. The information provided by Consumer Reports iscomparable to that provided by a CPA firm that auditedfinancial statements.1-19 a. The following parts of the definition of auditing are relatedto the narrative:(1)Virms is being asked to issue a report aboutqualitative and quantitative information for trucks.The trucks are therefore the information with whichthe auditor is concerned.(2)There are four established criteria which must beevaluated and reported by Virms:existence of thetrucks on the night of June30, 2005,ownership ofeach truck by Regional Delivery Service,physicalcondition of each truck and fair market value of eachtruck.(3)Susan Virms will four types ofaccumulate and evaluateevidence :(a)Count the trucks to determine their existence.(b)Use registrations documents held by Oatley forcomparison to the serial number on each truck todetermine ownership.(c)Examine the trucks to determine each truck's physicalcondition.(d)Examine the blue book to determine the fair marketvalue of each truck.(4)Susan Virms,CPA, appears qualified,as a competent,independent person. She is a CPA, and she spends mostof her time auditing used automobile and truck dealerships and has extensive specialized knowledge about used trucks that is consistent with the nature of the engagement.1-19(continued)(5)The report results are to include:(a)which of the 35 trucks are parked in Regional'sparking lot the night of June 30.(b)whether all of the trucks are owned byRegional Delivery Service.(c)the condition of each truck, using establishedguidelines.(d)fair market value of each truck using the current bluebook for trucks.b.The only parts of the audit that will be difficult forVirms are:(1)Evaluating the condition, using the guidelines of poor,good, and excellent. It is highly subjective to do so.If she uses a different criterion than the"bluebook,"the fair market value will not be meaningful.Her experience will be essential in using thisguideline.(2)Determining the fair market value,unless it isclearly defined in the blue book for each condition.1-20 a. The major advantages and disadvantages of a career as an IRS agent, CPA, GAO auditor, or an internal auditor are:EMPLOYMENT ADVANTAGES DISADVANTAGESINTERNAL 1.Extensive training in 1.Experience limited to REVENUE individual, corporate,taxes.AGENT gift, trust and other 2.No experience withtaxes is available with operational or financialconcentration in area statement auditing.chosen. 3.Training is not2.Hands-on experience with extensive with anysophisticated selection business enterprise.techniques.CPA 1.Extensive training in 1. Exposure to taxes and toaudit of financial the business enterprisestatements, compliance may not be as in-depthauditing and operational as the internal revenueauditing.agent or the internal2.Opportunity for auditor.experience in auditing, 2. Likely to be lesstax consulting, and exposed to operationalmanagement consulting auditing than is likelypractices.for internal auditors.3.Experience in a diversityof enterprises andindustries with theopportunity to specializein a specific industry.GAO AUDITOR 1.Increasing opportunity 1.Little exposure tofor experience in diversity of enterprisesoperational auditing.and industries.2.Exposure to highly 2.Bureaucracy of federalsophisticated statistical government.sampling and computerauditing techniques.1-20(continued)EMPLOYMENT ADVANTAGESINTERNAL 1.Extensive exposure to all AUDITOR segments of theenterprise with whichemployed.2.Constant exposure to oneindustry presentingopportunity for expertisein that industry.3.Likely to have exposureto compliance, financialand operational auditing.DISADVANTAGES1.Little exposure totaxation and theaudit thereof.2.Experience is limited toone enterprise, usuallywithin one or a limitednumber of industries.(b)Other auditing careers that are available are:Auditors within many of the branches of the federalgovernment ., Atomic Energy Commission)Auditors for many state and local government units .,state insurance or bank auditors)1-21 The most likely type of auditor and the type of audit for each ofthe examples are:EXAMPLE TYPE OF AUDITOR TYPE OF AUDITIRS Compliance1.GAO OperationalInternal auditor or CPA Operational2.CPA or Internal auditor Financial statementsGAO Operational3.CPA Financial statementsGAO Financial statements4.IRS ComplianceCPA Financial statements5.Internal auditor or CPA ComplianceInternal auditor or CPA Financial statements6.GAO Compliance7.8.9.10.11.12.1-22 a.The conglomerate should either engage the management advisory services division of a CPA firm or its own internalauditors to conduct the operational audit.b.The auditors will encounter problems in establishingcriteria for evaluating the actual quantitative events andin setting the scope to include all operations in whichsignificant inefficiencies might exist.In writing thereport,the auditors must choose proper wording to statethat no financial audit was performed,that the procedureswere limited in scope and that the results reported do notnecessarily include all the inefficiencies that might exist.1-23 a.The CPA firm for the Internet company described in this problem could address these customer concerns by performinga WebTrust attestation engagement.The WebTrust assuranceservice was created by the profession to respond to thegrowing need for assurance resulting from the growth ofbusiness transacted over the Internet.b.The appropriate WebTrust principle for each of the customerconcerns noted in the problem is as follows:1.Accuracy of product descriptions and adherence tostated return policies: (3) Processing Integrity.2.Credit card and other personal information: (1)Online Privacy and (2) Security.3.Selling information to other companies: (1) Online Privacy and(2) Security.4.System failure: (4) Availability.Internet Problem Solution: Assurance Services1-1 This problem requires students to work with the AICPA assurance services Web site.1.Considering the assurance needs of customers and thecapabilities of CPAs, the Special Committee on AssuranceServices developed business plans for six assurance services.Chapter 1of the textbook discussed several of theseservices.Go to the service description for the assuranceservice that most interests you (any one of the six). Whatare the major aspects or sections of the associatedbusiness plan ., does the plan address market potential,competition, etc.?)Answer: Each business plan provides background information,describes the service, assesses market potential, discussesissues such as competition and why CPAs should offer the service,identifies practice tools available and steps that CPAs must take tobegin offering the services.2.The Special Committee's report on Assurance Services discussescompetencies needed by assurance providers todayand in the coming decade.Briefly describe the 5 generalcompetencies needed in the next decade (Hint:See the“About Assurance Services ”link.Then follow the“Assurance Services and Academia” link.)Answer: The Committee identified the following five imperatives regarding future competencies, each of implies increasing emphasis on the competencies noted:major which1-1(continued)Customer focus .Assurance service providers need tounderstand user decision processes and how informationshould enter into those processes.Increased emphasis isneeded on:understanding user needs,communication skills,relationship management, responsiveness and timeliness.Migration to higher value-added information activities.Toprovide more value to client/decision makers and others,assurance service providers need to focus less on activitiesinvolved in the conversion of business events intoinformation.,collecting,classifying,and summarizingactivities)and more on activities involved in thetransformation of information into knowledge .,analyzing,interpreting,and evaluating activities)that effectivelydrives decision processes.This will require:analyticalskills, business advisory skills, business knowledge, modelbuilding (including sensitivity analysis), understanding theclient’s business processes,measurement theory(development of operational definitions of concepts, designof appropriate measurement techniques, etc.).Information technology(IT).Assurance services deal ininformation.Hence,the profound changes occurring ininformation technology will shape virtually all aspects ofassurance services.As information specialists,assuranceservice providers need to embrace information technology inall of its complex dimensions.Embracing IT meansunderstanding how it is transforming all aspects of business.It also means learning how to effectively use newdevelopments in hardware, software, communications, memory,encryption, etc., in everything assurance service providersdo as information specialists,not only in dealing withclients, but also in dealing with each other as individuals,teams,firms,state societies,and national professionalorganizations.Pace of change and complexity.Assurance services will takeplace in an environment of rapid change and increasingcomplexity.Assurance service providers need to investheavily in life-long learning in order to maintain up-to-date knowledge and skills.They will require:intellectualcapability, learning and rejuvenation.Competition.Growth in new assurance services will dependless on franchise/regulation and more on market forces.Assurance service providers need to develop their marketingskills—the ability to see clients ’ latent informationand assurance needs and rapidly design and deploy cost-effective services to meet those needs—in order toeffectively compete for market-driven assurance services.Required skills include:marketing and selling,understanding customer needs,designing and deployingeffective solutions.1-1(continued)( Note: Internet problems address current issues using Internet Because Internet sites are subject to change, Internet problems and solutionsare subject to change.Current information on Internet problems is atsources. available。
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Steps to Develop Audit Objectives
•4. Know general audit objectives for • classes of transactions and accounts.
•5. Know specific audit objectives for • classes of transactions and accounts.
➢ Actions when the auditor knows of an illegal act
Learning Objective 4
Classify transactions and account balances into financial statement cycles and identify benefits of a cycle approach to segmenting the audit.
Auditor’s Responsibilities for Discovering Illegal Acts
➢ Evidence accumulation and other actions • when there is reason to believe direct- or • indirect-effect illegal acts may exist
•The Sarbanes-Oxley Act provides for criminal •penalties for anyone who knowingly falsely •certifies the statements.
Learning Objective 3
Explain the auditor’s responsibility for discovering material misstatements.
Steps to Develop Audit Objectives
•1. Understand objectives and • responsibilities for the audit.
•2. Diபைடு நூலகம்ide financial statements into cycles.
•3. Know management assertions about • accounts.
Financial Statements Cycles
•Audits are performed by dividing the financial •statements into smaller segments or components.
审计学-一种整合的方法
2020年7月9日星期四
Learning Objective 1
Explain the objective of conducting an audit of financial statements and an audit of internal controls.
Objective of Conducting an Audit of Financial Statements
Learning Objective 2
Distinguish management’s responsibility for the financial statements and internal control from the auditor’s responsibility for verifying the financial statements and effectiveness of internal control.
Auditor’s Responsibilities for Discovering Illegal Acts
➢ Direct-effect illegal acts
➢ Indirect-effect illegal acts
➢ Evidence accumulation when there is no reason to believe indirect-effect illegal act exists
•It requires the CEO and the CFO of public •companies to certify the quarterly and annual •financial statements submitted to the SEC.
Management’s Responsibilities
Auditor’s Responsibilities
➢ Material versus immaterial misstatements ➢ Reasonable assurance ➢ Errors versus fraud ➢ Professional skepticism ➢ Fraud resulting from fraudulent financial reporting versus misappropriation of assets
Management’s Responsibilities
•Management is responsible for the financial •statements and for internal control.
•The Sarbanes-Oxley Act increases management’s •responsibility for the financial statements.
•The objective of the ordinary audit of financial •statements is the expression of an opinion of •the fairness with which they present fairly, in •all respects, financial position, result of •operations, and its cash flows in •conformity with GAAP.