审计学：一种整合方法_第12版_英文版Chapter14
审计学：一种整合方法_第12版_英文版Chapter01-46页精选文档
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Distinguish Between Auditing and Accounting
Accounting is the recording, classifying, and summarizing of economic events for the purpose of providing financial information used in decision making.
Auditing should be done by a competent, independent person.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Information and Established Criteria
The competence of the individual performing the audit is of little value if he or she is biased in the accumulation and evaluation of evidence.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Economic Demand for Auditing
Information risk reflects the possibility that the information upon which the business risk decision was made was inaccurate.
墨菲物流学英文版第12版课后习题答案
PART IIANSWERS TO END-OF-CHAPTER QUESTIONSCHAPTER 14: INTERNATIONAL LOGISTICS14-1. Discuss some of the key political restrictions on cross-border trade.Political restrictions on cross-border trade can take a variety of forms. Many nations ban certain types of shipments that might jeopardize their national security. Likewise, individual nations may band together to pressure another country from being an active supplier of materials that could be used to build nuclear weapons. Some nations restrict the outflow of currency because a nation,s economy will suffer if it imports more than it exports over a long term. A relatively commonpolitical restriction on trade involves tariffs, or taxes that governments place on the importation of certain items. Another group of political restrictions can be classified as nontariff barriers, which refer to restrictions other than tariffs that are placed upon imported products. Another political restriction involves embargoes, or the prohibition of trade between particular countries.14-2. How might a particular country,s government be involved in international trade?Governments may exert strong control over ocean and air traffic because they operate as extensions of a nation,s economy and most of the revenue flows into that nation's economy. In some cases, import licenses may restrict movement to a vessel or plane owned or operated by the importing country. In addition, some nations provide subsidies to develop and/or maintain their ocean and air carriers. Governments also support their own carriers through cargo preference rules, which require a certain percentage of traffic to move on a nation,s flag vessels. Although federal governments have often owned ocean carriers and international airlines, some government-owned international carriers are moving toward the private sector.14-3. Discuss how a nation,s market size might impact international trade and, in turn,international logistics.Population is one proxy for market size, and China and India account for about one-third of the world's population. As such, these two countries might be potentially attractive markets because of their absolute and relative size. Having said this, India has a relatively low gross domestic product per capita, and because of this some customers buy singleuse packets of products called sachets. From a logistical perspective, single-use packets require different packaging, and are easier to lose and more prone to theft than products sold in larger quantities.14-4. How might economic integration impact international logistics?Potential logistical implications of economic integration include reduced documentation requirements, reduced tariffs, and the redesign of distribution networks. For example,Poland and the Czech Republic have become favorite distribution sites with the eastward expansion of the European Union.14-5. How can language considerations impact the packaging and labeling of international shipments?With respect to language, cargo handlers may not be able to read and understand the language of the exporting country, and it would not be unusual for cargo handlers in some countries to beilliterate. Hence, cautionary symbols, rather than writing, must be used. A shipper,s mark, which looks like a cattle brand, is used in areas where dockworkers cannot read but need a method to keep documents and shipments together.14-6. What is a certificate of origin, a commercial invoice, and a shipper,s export declaration?A certificate of origin specifies the country or countries in which a product is manufactured .This document can be required by governments for control purposes or by an exporter to verify thelocation of manufacture. A commercial invoice is similar in nature to a domestic bill of lading in the sense that a commercial invoice summarizes the entire transaction and contains (or should contain) key information to include a description of the goods, the terms of sale and payment, the shipment quantity, the method of shipment, and so on. A shipper,s export declaration contains relevant export transaction data such as the transportation mode(s), transaction participants, and a description of what is being exported.14-7. Discuss international terms of sale and Incoterms.International terms of sale determine where and when buyers and seller will transfer 1) the physical goods; 2) payment for goods, freight charges, and insurance for the in-transit goods; 3) legal title to the goods; 4) required documentation; and 5) responsibility for controlling or caring for the goods in transit. The International Chamber of Commerce is in charge of establishing, and periodically revising, the terms of sale for international shipments, commonly referred to as Incoterms. The most recent revision, Incoterms 2010, reflects the rapid expansion of global trade with a particular focus on improved cargo security and new trends in cross-border transportation. Incoterms 2010 are now organized by modes of transport and the terms can be used in both international and domestic transportation.14-8. Name the four methods of payment for international shipments. Which method is riskiest for the buyer? For the seller?Four distinct methods of payment exist for international shipments: cash in advance, letters of credit, bills of exchange, and the open account. Cash in advance is of minimal risk to the seller, but is the riskiest for the buyer-what if the paid-for product is never received? The open account involves tremendous potential risk for the seller and minimal risk for the buyer.14-9. Discuss four possible functions that might be performed by international freight forwarders.The text describes eight functions, such as preparing an export declaration and booking space on carriers, so discussion of any four would be appropriate.14-10. What is an NVOCC?An NVOCC (nonvessel-operating common carrier) is often confused with an international freight forwarder. Although both NVOCCs and international freight forwarders must be licensed by the Federal Maritime Commission, NVOCCs are common carriers and thus have common carrier obligations to serveand deliver, among other obligations. NVOCCs consolidate freight from different shippers and leverage this volume to negotiate favorable transportation rates from ocean carriers. From the shipper's perspective, an NVOCC is a carrier; from an ocean carrier,s perspective, an NVOCC is a shipper.14-11. What are the two primary purposes of export packing?One function is to allow goods to move easily through customs. For a country assessing duties on the weight of both the item and its container, this means selecting lightweight packing materials. The second purpose of export packing is to protect products in what almost always is a more difficult journey than they would experience if they were destined for domestic consignees.14-12. Discuss the importance of water transportation for international trade.A frequently cited statistic is that approximately 60 percent of cross-border shipments move by water transportation. Another example of the importance of water transportation in international trade involves the world,s busiest container ports as measured by TEUs (twenty-foot equivalent units) handled; 9 of the 10 busiest container ports are located in Asia, with 7 of the busiest ports located in China.14-13. Explain the load center concept. How might load centers affect the dynamics of international transportation?Load centers are major ports where thousands of containers arrive and depart each week. As vessel sizes increase, it becomes more costly to stop at multiple ports in a geographic area, and as a result, operators of larger container ships prefer to call at only one port in a geographic area. Load centers might impact the dynamics of international trade in the sense that some ports will be relegated to providing feeder service to the load centers.14-14. Discuss the role of ocean carrier alliances in international logistics.In the mid-1990s, ocean carrier alliances, in which carriers retain their individual identities but cooperate in the area of operations, began forming in the container trades. These alliances provide two primary benefits to participating members, namely, the sharing of vessel space and the ability to offer shippers a broader service network. The size of the alliance allows them to exercise considerable clout in their dealings with shippers, port terminal operators, and connecting land carriers.14-15. How do integrated air carriers impact the effectiveness and efficiency of international logistics?Integrated air carriers own all their vehicles and the facilities that fall in-between. These carriers often provide the fastest service between many major points. They are also employed to carry the documentation that is generated by—and is very much a part of— the international movement of materials. The integrated carriers also handle documentation services for their clients.14-16. How do open-skies agreements differ from bilateral agreements?Bilateral agreements generally involved two countries and tended to be somewhat restrictive in nature. For example, the bilateral agreements would specify the carriers that were to serve particular city pairs. By contrast, open skies agreements liberalize aviation opportunities andlimit federal government involvement. For example, the Open Aviation Agreement between the United States and 27 European Union (EU) member states allows any EU airline as well as any U.S. airline to fly between any point in the EU and any point in the United States.14-17. Discuss the potential sources of delays in certain countries with respect to motor carrier shipments that move across state borders.One source of delays is that certain countries limit a motor carrier,s operations to within a particular state,s borders; as a result, multi-state shipments must be transferred from one company,s vehicle to another company,s vehicle whenever crossing into another state. Another source of delays is that certain countries conduct inspections of trucks as they move from one state to another. This can include physical counting and inspection of all shipments, inspection of documentation, and vehicle inspection, as well as driver inspection.14-18. Define what is meant by short-sea shipping (SSS), and discuss some advantages of SSS.Short-sea shipping (SSS) refers to waterborne transportation that utilizes inland and coastal waterways to move shipments from domestic ports to their destination. Potential benefits to SSS include reduced rail and truck congestion, reduced highway damage, a reduction in truck-related noise and air pollution, and improved waterways utilization.14-19. What are some challenges associated with inventory management in cross-border trade?Because greater uncertainties, misunderstandings, and delays often arise in international movements, safety stocks must be larger. Furthermore, inventory valuation on an international scale isdifficult because of continually changing exchange rates. When a nation,s (or the world's) currency is unstable, investments in inventories rise because they are believed to be less risky than holding cash or securities.Firms involved in international trade must give careful thought to their inventory policies, in part because inventory available for sale in one nation may not necessarily serve the needs of markets in nearby nations. Product return policies are another concern with respect to international inventory management. One issue is that, unlike the United States where products can be returned for virtually reason, some countries don,t allow returns unless the product is defective in some respect.14-20. What is the Logistics Performance Index? How can it be used?The Logistics Performance Index (LPI) was created in recognition of the importance of logistics in global trade. The LPI measures a country,s performance across six logistical dimensions:•Efficiency of the clearance process (i.e., speed, simplicity, and predictability of formalities) by border control agencies, including customs;•Quality of trade- and transport-related infrastructure (e.g., ports, railroads, roads, and information technology);•Ease of arranging competitively priced shipments;•Competence and quality of logistics services (e.g., transport operators and customs brokers);•Capability to track and trace consignments;•Timeliness of shipments in reaching the destination within the scheduled or expected delivery time.The LPI is a potentially valuable international logistics tool because the data can be analyzed from several different perspectives. First, the LPI can be analyzed for all countries according to the overall LPI score as well as according to scores on each of the six dimensions. Second, the LPI can be analyzed in terms of an individual country's performance over time, relative to its geographic region, and relative to its income group.PART IIICASE SOLUTIONSCASE 14-1: Nurnberg Augsburg Maschinenwerke (N.A.M.)Question 1: Assume that you are Weiss. How many viable alternatives do you have to consider regarding the initial shipment of 25 buses?The answer to this question can vary depending on how students define “viable alternatives.” If we take a broad perspective and just focus on the primary cities, Bremerhaven does not appear to be an option because there is no scheduled liner service in the desired time frame. That leaves us with Prague to Santos through Hamburg and Prague to Santos through Rotterdam. Several of the vessel departure dates for both alternatives are not feasible. For example, the 18-day transit time from Hamburg eliminates both the October 31 and November 3 departures; likewise, the 17-day transit time from Rotterdam eliminates the November 2 departure. And although the October 27 departure from Hamburg or the October 28 departure from Rotterdam should get the buses to Santos by November 15, neither departure leaves much room for potential transit delays (e.g., a late season hurricane). As such, it appears that Weiss has but two viable alternatives: the October 24 departure from Hamburg and the October 23 departure from Rotterdam.Question 2: Which of the routing alternatives would you recommend to meet the initial 90-day deadline for the 25-bus shipment? Train or waterway? To which port(s)? What would it cost?If one assumes that rail transport is used from Prague to either Hamburg or Rotterdam, then thetotal transportation costs of the two alternatives are virtually identical. Although rail costs to Rotterdam are €300 higher than to Hamburg, the shipping costs from Rotterdam are €300 lower than from Hamburg (based on €6000 x .95). Because the total transportation costs are essentially the same, the decision likely needs to be based on service considerations. The initial shipment is extremely important. It might be suggested that Prague to Hamburg by rail and Hamburg to Santos by ocean vessel is the preferred alternative. Our rationale is that the provided transit times with Hamburg are definitive— that is, 3 days by rail and 18 days by water. With Rotterdam, by contrast, the rail transit time is either 4 or 5 days, although water transportation is 17 days.Question 3: What additional information would be helpful for answering Question 2?A variety of other information would be helpful for answering Question 2. For example, the case offers no insight about port congestion issues and how this congestion might impact the timeliness of shipment loadings. There also is no information about port performance in terms of loss and damage metrics. In addition, although the case indicates that rail transit time from Prague iseither four or five days, it might be helpful to know what percentage of shipments is completed in four days. Students are likely to come up with more suggestions.Question 4: How important, in fact, are the transport costs for the initial shipment of 25 buses?Clearly, with ocean shipping costs of either €5700 or €6000 per bus, transportation costs cannot be ignored. Having said this, the initial shipment holds the key to the remainder of the order (another 199 buses) and appears to be instrumental in securing another order for 568 buses (for a total of 767 more buses). As such, N.A.M might be somewhat flexible with respect to transportation costs for the initial shipment. Suppose, for example, that N.A.M. can earn a profit of €5000 per bus (such profit on a €120000 bus is by no means exorbitant). A profit of €5000 x 767 buses yields a total profit of €3,835,000. Because of such a large upside with respect to additional orders,N.A.M. might focus on achieving the specified metrics for the initial shipment without being overly concerned with transportation costs.Question 5: What kinds of customer service support must be provided for this initial shipment of 25 buses? Who is responsible?Although a number of different constituencies is involved in the initial shipment (e.g., railroads, dock workers, ocean carrier, etc.), the particular customers—the public transit authorities—are buying product from N.A.M. Because of this, N.A.M. should be the responsible party with respect to customer service support. There are myriad customer service support options that might be provided. Real-time shipment tracking should be an option so that the customers can know, at any time, the location of the shipment. N.A.M. might also provide regular updates of shipment progress; perhaps N.A.M. could email or fax important progress points (e.g., the shipment has left Prague; the shipment has arrived in Hamburg, etc.) to the customers. Because successful performance on theinitial shipment is crucial to securing future business, N.A.M. might have one of its managers actually accompany the shipment.Question 6: The Brazilian buyer wants the buses delivered at Santos. Weiss looks up theInternational Chamber of Commerce,s Incoterms and finds three categories of “delivered” terms:DAT (Delivered at Terminal). In this type of transaction, the seller clears the goods forexport and bears all risks and costs associated with delivering the goods and unloading them at the terminal at the named port or place of destination. The buyer is responsible for all costs and risks from this point forward including clearing the goods for import at the named country of destination.DAP (Delivered at Place). The seller clears the goods for export and bears all risks and costs associated with delivering goods to the named place of destination not unloaded. The buyer is responsible for all costs and risks associated with unloading the goods and clearing customs to import goods into the named country of destination.DDP (Delivered Duty Paid). The seller bears all risks and costs associated with delivering the goods to the named place of destination ready for unloading and clearing for import.How should he choose? Why?Again, given the importance of the initial shipment, it would appear that the more control thatN.A.M. has over the process, the better. Although the DDP option is likely the costliest option, it also affords N.A.M. more control later into the shipment process. Moreover, a willingness by N.A.M. to take on the additional costs associated with DDP might be viewed in a positive fashion by the customers.Question 7: Would you make the same routing recommendation for the second, larger (199 buses) component of the order, after the initial 90-day deadline is met? Why or why not?Time pressures do not appear to be as critical for the larger component of the order, so this might argue for use of water transportation between Prague and Hamburg. The rationale would be that even though water transportation is slower, it saves money (€48 per bus) over rail shipments. Alternatively, given that the selling price per bus is likely to be around €120000, trading off three days of transit time in exchange for a savings of €48 might not be such a good idea.Question 8：How important, if at all, is it for N.A.M. to ship via water to show its support of the European Union,s Motorways of the Seas concept?This question may generate a variety of opinions from students. For example, some students might argue that Question 75s answer also applies to Question 8. Having said this, the case doesn,t delve too deeply into potential environmental considerations associated with water transportation, so a pure cost-benefit analysis (such as Question 7) might be insufficient. Furthermore, because the European Union (EU) continues to be a contentious issue for many Europeans, the answer to Question 8 might depend upon one,s view of the EU. Thus, someone who is supportive of the EU might lean toward supporting the Motorways of the Seas concept, while someone not supportive of the EU might lean against supporting the Motorways of the Seas concept.。
审计学-一种整合的方法
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Resolving Ethical Dilemmas
4. Identify the alternatives available to the person who must resolve the dilemma
5. Identify the likely consequence of each alternative
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Special Need for Ethical Conduct in Professions
Our society has attached a special meaning to the term professional. Professionals are expected to conduct themselves at a higher level than most other members of society.
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A Person Chooses to Act Selfishly – Example
Person A finds a briefcase containing important papers and $1,000. He tosses the briefcase and keeps the money.
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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
审计学-一种整合的方法
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Steps to Develop Audit Objectives
1. Understand objectives and responsibilities for the audit.
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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：一种整合方法阿伦斯英文版第12版课后问题详解Chapter18SolutionsManual
Chapter 18Audit of the Payroll andPersonnel CycleReview Questions18-1 General ledger accounts that are likely to be affected by the payroll and personnel cycle in most audits include the following:Cash Direct laborInventory Salary expenseConstruction in progress Commission expenseWages payable Payroll tax expensePayroll taxes withheldAccrued payroll taxes18-2In companies where payroll is a significant portion of inventory, as in manufacturing and construction companies, the improper account classification of payroll can significantly affect asset valuation for accounts such as work in process, finished goods, and construction in process. For example, if the salaries of administrative personnel are incorrectly charged to indirect manufacturing overhead, the overhead charged to inventory on the balance sheet can be overstated. Similarly, if the indirect labor cost of individual employees is charged to specific jobs or processes, the valuation of inventory is affected if labor is improperly classified. When some jobs are billed on a cost plus basis, revenue and the valuation of inventory are both affected by improperly classifying labor to jobs.18-3Five tests of controls that can be performed for the payroll and personnel cycle are:1. Examine time card for indication of approval to ensure thatpayroll payments are properly authorized. The purpose ofthis test is to determine that recorded payroll payments arefor work actually performed by existing employees(occurrence).2. Account for a sequence of payroll checks to ensure existingpayroll payments are recorded. The purpose of this test isto determine that existing payroll transactions are recorded(completeness).3. Examine time cards to ensure that recorded payroll paymentsare for work actually performed by existing employees. The purpose of this test is the same as in item 1 above.4. Compare postings to the chart of accounts to ensure thatpayroll transactions are properly classified.(Classification)5. Observe when recording takes place to ensure that payrolltransactions are recorded on a timely basis. (Timing)18-4The percentage of total audit time in the cycle devoted to performing tests of controls and substantive tests of transactions is usually far greater in the payroll and personnel cycle than for the sales and collection cycle because there is relatively little independent third party evidence, such as confirmation, to verify the related payroll accounts. In contrast, the accounts related to the sales and collection cycle can usually be verified for the most part by confirmations from customers. In addition, in the sales and collection cycle, verification of the realizability of receivables and sales cutoff tests are important and time- consuming tasks.18-5The auditor should be concerned with whether the human resources department is following the proper hiring and termination procedures. An obvious reason for this would be to ensure that there are adequate safeguards against hiring and retaining incompetent and untrustworthy people. The ramifications of hiring such people can range from simple inefficiency and waste to outright fraud or theft. More importantly, though, it is necessary for the auditor to assure himself or herself that the client is hiring and terminating according to operations standards and procedures. It is necessary to see if the internal controls are working as planned before they can be effectively evaluated. To say that the auditor doesn't care who is hired and who is fired is to suggest that he or she doesn't care if the internal controls work according to any standards. Failure to follow proper termination procedures could lead to fraudulent payments for work not performed.18-6To trace a random sample of prenumbered time cards to the related payroll checks in the payroll register and compare the hours worked to the hours paid is to test if those employees who worked are being paid for their time actually worked. Employees are likely to inform management if they are not paid, or underpaid. To trace a random sample of payroll checks from the payroll register and compare the hours worked to the hours paid is to test if the recorded payroll payments are for work actually performed by existing employees. This test, in effect, attempts to discover nonexistent employees or duplicate payments, if there are any. For this reason, the second procedure is typically more important to the audit of payroll.18-7In auditing payroll withholding and payroll tax expense, the emphasis should normally be on evaluating the adequacy of the payroll tax return preparation procedures rather than the payroll tax liability, because a major reason for misstatements in the liability account is incorrect preparation of the returns in the past. If the preparationprocedures are inadequate, and the amounts do not appear reasonable, then the auditor should expand his or her work and recompute the withholding and expense amounts to determine that the proper amount has been accrued. In addition, the auditor should consider the amount of penalties which may be assessed for inadequate withholdings and include these amounts in the accrual if they are significant.18-8Several analytical procedures for the payroll and personnel cycle and misstatements that might be indicated by significant fluctuations are as follows:18-9An auditor should perform audit tests primarily designed to uncover fraud in the payroll and personnel cycle when he or she has determined that internal controls are deficient (or the opportunity exists for management to override the internal controls) or when there are other reasons to suspect fraud. Audit procedures that are primarily for the detection of fraud in the payroll and personnel cycle include:1. Examine cancelled payroll checks for employee name,authorized signature, and proper endorsement (especially forsecond endorsements) to discover checks going to nonexistentemployees. The endorsement should be compared to signatureson W-4 forms.2. Trace selected transactions recorded in the payroll journalor listing to the human resources department files to determine whether the employees were actually employed during the period.3. Select several terminated employees from payroll records todetermine whether each former employee received his or her termination pay in accordance with company policy and to determine that the employee's pay was discontinued on the date of termination.18-9 (continued)4. Examine the subsequent payroll periods of terminatedemployees to ascertain that the employees are no longerbeing paid.5. Request a surprise payroll payoff to observe if anyunclaimed checks result, which will necessitate extensiveinvestigation.18-10 The Payroll Master File is maintained for each employee indicating the gross pay for each payment period, deductions from the gross pay, the net pay, the check number, and the date. The purpose of this record is to provide detailed information for federal and state income tax purposes, and to serve as the final record of what each employee was actually paid.The W-2 Form is issued to each employee at the end of each calendar year and indicates his or her gross pay, income taxes withheld, and FICA withheld for the year. In serving as a summary of the employee's earnings record, the W-2 form conveniently provides information necessary for the employee to fill out his or her income tax returns.A Payroll Tax Return is the form required by and submitted to the local, state and federal governments for the payment of withheld taxes and the employer's portion of FICA taxes and state and federal unemployment compensation taxes.18-11 Where the primary objective is to detect fraud, the auditor will examine the following supporting documents and records:1. Cancelled payroll checks for employee name, authorizedsignature and proper endorsement, watching specifically forunusual or recurring second endorsements.2. Payroll journal or listing, tracing transactions to thepersonnel files to determine whether the employees wereactually employed during the payroll period.3. Payroll journal or listing and individual payroll records,selecting terminated employees to determine whether eachterminated employee received his or her termination pay inaccordance with company policy and whether each employee waspaid in the subsequent payroll period.4. Payroll checks, observing each employee as he or she picksup and signs for his or her check.5. Time cards, testing them for reasonableness or observingwhether they are being punched by the proper employees.18-12 Types of authorizations in the payroll and personnel cycle are:1. Deduction authorization, without which the wrong amount (orno deduction) may be deducted from the employee's paycheck.2. Rate authorizations, without which the employee may begetting paid at the wrong rate.3. Time card authorization, without which the employee may begetting paid for the wrong quantity of hours worked.18-12(continued)4. Payroll check authorization, without which unauthorizedfunds may be paid out.5. Commission rate authorization, without which the salespeoplemight be improperly compensated for their sales efforts.6. Authorization to hire a new employee, without whichnonexistent or unqualified personnel may be added to thepayroll.18-13 It is common to verify total officers' compensation even when the tests of controls and substantive tests of transactions results in payroll are excellent because the salaries and bonuses of officers must be included in the SEC's 10-K Report and the federal income tax return and because management may be in a position to pay themselves more than the authorized amount, since the controls over the officers' payroll are typically weaker and therefore easier to override than those of the normal payroll.The usual audit procedure used to verify the officers' compensation is to obtain the authorized salary of each officer from the minutes of the board of directors and compare it to the related earnings record.18-14 An imprest payroll account is a separate payroll bank account in which a constant balance, either zero or small, is maintained. When a payroll is paid, the exact amount of the net payroll is transferred by check or electronic funds transfer from the general account to the imprest account. The purpose and advantage of an imprest payroll account is that it limits the company's exposure to payroll fraud by limiting the amount that may be misappropriated.18-15 Several audit procedures the auditor can use to determine whether recorded payroll transactions are recorded at the proper amounts are:1. Recompute hours worked from time cards.2. Compare pay rates with union contract, approval by the boardof directors, or other source.3. Recompute gross pay.4. Check withholdings by reference to tax tables andauthorization forms in personnel files.5. Recompute net pay.6. Compare cancelled check with payroll journal or listing foramount.18-16 Attributes sampling can be used in the payroll and personnel cycle in performing tests of controls and substantive tests of transactions with the following objectives:1. Time card hours agree with payroll computations.2. Overtime hours are approved.3. Foreman approves all time cards.4. Hourly rates agree with personnel files and union contracts.18-16 (continued)5. Gross pay calculation is verified.6. Exemptions taken agree with W-4.7. Income tax, other deductions, and net pay calculations areverified.8. Authorizations are available for voluntary withholdings andmiscellaneous deductions.9. Paycheck endorsement is same as signature on W-4 form.The frequency of control deviations or monetary errors must be estimated prior to performing the tests. This estimate together with the acceptable risk of assessing control risk too low (ARACR) and the tolerable exception rate will enable the auditor to determine the sample size required. Once the tests are performed on the sample, evaluation of the results will indicate whether the exception rate is lower than, equal to, or higher than that anticipated. The auditor must then use this judgment to decide the appropriate action to take.Multiple Choice Questions From CPA Examinations18-17 a. (2) b. (1) c. (3)18-18 a. (1) b. (4) c. (4) d. (4)Discussion Questions and Problems18-1918-2018-2118-2218-23 A flowchart of steps for each type of test is given below(requirements a, b, and c):18-24 a. Brendin's approach to determining why this year's payroll tax expense was so high suffers from two seriousdeficiencies: First, it lacks relevance, and second, it istoo narrowly focused. The approach lacks relevance in thathe is testing payroll withholding which is not the same aspayroll tax expense. Some payroll taxes are related towithholding such as FICA, but income tax withheld does notgive rise to an expense, and certain payroll taxes, such asunemployment compensation, are not withheld. The approach istoo narrowly focused in that the analytical test resultscould have resulted from a misstatement of the payrollitself; Brendin does not appear to be considering thispossibility.b. A more suitable approach for determining whether payroll taxwas properly stated in the current year would be to evaluatethe reasonableness of the total payroll, reconcile thepayroll to amounts shown on payroll tax reports, and checkcomputations as shown on those reports for reasonableness.18-25 The following audit procedures should be used to verify the payroll related accounts:1. Accrued payroll:a. Review the company's policy for computing the accrualand whether it is consistent with the prior year.b. Assess whether 60 percent is a reasonableapproximation of the portion of the subsequent payrollapplication to the current year.c. Test the subsequent payroll for cutoff and accuracy.d. Determine that the computation of the accrual iscorrect.2. Withheld payroll taxes:a. Compare the balance in the liability account with thepayroll journal or listing.b. Reconcile the amount to subsequent payroll tax reportsand cash disbursed.c. Review in light of the subsequent period's payroll.3. Accrued payroll taxes:a. Trace FICA withheld from payroll journal or listing topayroll tax reports.b. Review amounts on payroll tax reports forreasonableness.c. Reconcile accruals to payroll tax reports.d. Examine subsequent cash disbursed.18-26 a. The purpose of a surprise payroll payoff is to determine whether or not nonexistent personnel are included in thepayroll.b. Procedures other than a surprise payroll payoff that can beused to discover nonexistent employees are:1. Examine cancelled payroll checks for employee name,authorized signature, and proper endorsement that agreeswith the employee's signed W-4 form.18-26(continued)2. Select several terminated employees from payroll recordsto determine whether each former employee received his orher termination pay in accordance with company policy andwas not paid in subsequent payrolls.c. When the payroll payoff is taking place, the client shouldobserve these control procedures:1. All employees must prove identity.2. Unclaimed paychecks must be further investigated.Unclaimed paychecks might be accounted for byemployees who are sick or on vacation. After allpresent employees have received their checks, theremaining paychecks should be traced to the personnelfiles to determine if these employees were everemployed by the client. Thereafter, if practical, theremaining checks should be held until the employeescan be present with proper identification to claim thecheck.d. See c.2 above.18-2718-27 (continued)18-28 a. An audit program to verify sales commission expense is as follows:1. Select a sample of office copies of sales invoices.a. Check commissions rate to commissions rate file.b. Check computation of sales commissions.c. Examine invoices for internal verification byaccounts receivable clerk.d. Trace sales commission amounts to salescommission ledger.2. Foot the sales commission ledger for one or moremonths, and trace the total to the general ledger.3. Compare totals for periods in the sales commissionledger to period balances of sales commission expense.b. An audit program to verify accrued sales commissions is:1. Compare the accrual with that of the previous year.Investigate any significant change.2. Compare the amount of commissions paid to the salesmenon the fifteenth of the month following year-end tothe total accrued commissions at year-end. Obtain areconciliation and explanation for any reconcilingitems.3. Send confirmations to salesmen for the larger amountsof accrued commissions and a sample of the smalleramounts.Case18-29 a. Conventional forms and documents in a payroll system include the following:Personnel recordsDeduction authorization formsRate authorization formsTime cards and job time ticketsPayroll checksPayroll journal or listing and labor distributionEarnings recordW-2 formPayroll tax returnsIn using the computer service center, it appears that there is no loss in documentation in substance; however, theearnings record is not printed out each pay period, thus,the current version is usually in machine readable form.(This assumes that authorization forms exist although theyare not discussed in the case.) The fact that the earningsrecord is in magnetic form is not a problem, as long as theservice bureau has adequate backup and recovery controls.The above analysis reflects the fact that Leggert's internal controls in the payroll area are generally good.There is good segregation of duties between the Presidentand Clark, assuming both are trustworthy, honest people.Procedures, forms, records, and reports are comprehensiveand well-designed.The only potential deficiency in internal control is that errors in details could be made by the service bureauand not necessarily be caught. It is difficult to imagine that these would be material.18-29 (continued)b.c. Procedures in performance format:1. Make observations of the following activities by MaryClark:a) Control, collection and processing of time cards.b) Rechecking of hours on time cards.c) Processing and approval of payroll journal or listing.d) Posting of general ledger.2. Make observations of the following activities by thePresident:a) Maintenance of personnel files.b) Distribution of paychecks.c) Processing and approval of payroll journal or listing.d) Posting of general ledger.3. Make observations of the following general matters andactivities:a) Use of time clock by employees.b) Existence and use of adequate chart of accounts.4. Select a sample of payroll check numbers and:a) Account for existence and recording of paychecks.b) Examine paychecks for President's signature.c) Examine checks for proper endorsement.d) Compare cancelled checks with personnel records. 18-29 (continued)e) Compare date on check with date recorded inpayroll journal or listing and on the time card.5. Select a sample of payroll entries from the payrolljournal or listing and perform the following steps:a) Obtain time cards, examine for President'sapproval, and trace hours to payroll journal orlisting.b) Examine personnel files and authorization forrates and deductions.c) Recompute gross pay, deductions, and net pay.d) Compare account classification with chart ofaccounts or procedures manual.6. Select a sample of payroll journals and perform thefollowing steps:a) Examine payroll journal for approval by Clark.b) Trace postings to general ledger.d. A sampling data sheet follows. Note that this sampling datasheet was prepared using attributes sampling. The onlydifference between this approach and a nonstatisticalapproach is the determination of sample size. Undernonstatistical sampling, students’ sample sizes will vary.Internet Problem Solution: Outsourcing the Payroll Function18-1 You have just landed a new client for your firm - a new hotel constructed in Atlanta, Georgia. Although construction of the hotel is complete, the company has not completed hiring all the necessary employees. The company's president has approached you with several questions related to the company's payroll. Please answer the following questions posed by the president about outsourcing the payroll function. (Hint: Visit [/] to find some of your answers. You may need to do other research on the Internet to answer these questions.)1.“I'm considering outsourcing our payroll function. What aresome of the issues that I should think about before deciding to outsource?”Answer: Student responses will vary. However, the following issues are among those that the president should consider:∙Typical outsourcing agreements are long-term. A long-term contract with the outsourcing provider mayprove inflexible if future business needsnecessitate a change.∙Outsourcing results in a loss of control over the company’s data. The president may be concernedabout sharing of data with competitors.∙The president should also consider the adequacy of the service provider’s system. Does the providerutilize the most current technology? Can theprovider manage a significant increase in volume oftransactions? Will the provider continue to offerexcellent service?∙Can the service provider deliver all of the necessary salaries and wages reports and analysesthat the company may want or need?∙Costs are typically lower when outsourcing major IS functions. The company will be able to avoidinvestments in certain hardware and software as wellas in personnel if the payroll function isoutsourced.2.“If I decide to outsource the payroll function, whatpayroll service companies would you suggest I consider?”Answer: There are a variety of payroll service companies including ADP [/] and Ceridian [/].18-1 (continued)3.“I have several vacant positions at my new hotel. I'mconcerned that my beginning salaries might be too low. Couldyou find out what nationwide median salaries are for thevacant positions? The vacant positions are: restaurantmanager, catering sales manager, security director, and thefront office manager. Make certain that you let me know whatsalaries are in our region of the country. I may have notconsidered that properly when I advertised the positions.”Answer: Median salary information can be found on’s web site. The “HCECompensation”link[/careerresources/lodgprop.asp] will direct students to the appropriate location.There they will have to select the appropriate categorywhich, in this case, is a “lodging property.”Studentsshould then scroll down the salaries information until theyfind data for the South Atlantic Region. The median salariesare: restaurant manager - $37,151.62; catering sales manager- $38,472.10; security director - $52,810.67; and frontoffice manager - $37,947.73. You might wish to point out tothe students the difficulty in interpreting such data asthat presented on this site. Specifically, median salariesdata are presented for a number of categories such as sizeof facility, geographic region, and location. Theinquisitive student should inquire about these differencesand so a liberal view may be appropriately applied whengrading this component of the problem.(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 /arens).。
审计学：一种整合方法_第12版_英文版Cha
Financial Statements Cycles
Learning Objective 4
• Classify transactions and account • balances into financial statement • cycles and identify benefits of a • cycle approach to segmenting • the audit.
Objective of Conducting an Audit o f 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.
Management’s Responsibilities
Management is responsible for the financial statements and for internal control.
The Sarbanes-Oxley Act increases management’s responsibility for the finຫໍສະໝຸດ ncial statements.
The Sarbanes-Oxley Act provides for criminal penalties for anyone who knowingly falsely certifies the statements.
审计学：一种整合方法_第12版_英文版Chapter14
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
14 - 9
Bad Debt Expense Transaction
Accounts Business Functions Documents and Records
Accounts receivable trial balance
Monthly statement
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Processing and Recording Cash Receipts
Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions
Chapter 14
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
14 - 2
Accounts in the Sales and Collection Cycle
Sales Cash sales
Sales on account Accounts Receivable Beginning Cash receipts balance Sales on account Ending balance Sales returns and allowances Write-off of uncollectible accounts
审计学一种整合方法英文版第十四版教学设计 (2)
Audit: A Comprehensive Approach to Integrated Methodology - Teaching Design for the 14th Edition BackgroundAuditing is a crucial aspect of modern business practices. It involves examining financial statements, records, and operations to ensure that they comply with legal and industry standards. To prepare students for this critical field of work, a comprehensive approach for auditing must be taught. The 14th edition of the Audit: A Comprehensive Approach to Integrated Methodology textbook is designed to provide students with a comprehensive understanding of auditing.Learning ObjectivesThe primary learning objectives of this course are to:•Introduce students to the fundamentals of auditing.•Equip students with the knowledge necessary to understand how auditing is conducted.•Teach students to think critically and analyze data to identify potential issues.• d students in developing strong communication skills.•Help students understand the legal and ethical issues that arise in the field of auditing.Course OutlineThe course is divided into ten modules, each contning several chapters. The breakdown is as follows:Module 1: Introduction to AuditingThis module introduces students to the basics of auditing and explns the importance of the field in modern business practices.Module 2: The Auditing ProcessHere, students learn about the various steps involved in theauditing process, including planning, testing, and reporting.Module 3: Risk AssessmentThis module focuses on teaching students the importance of risk assessment in auditing and helps them understand how to identify potential risks.Module 4: Internal ControlsIn this module, students learn about the essential role of internal controls in auditing and how to design and evaluate internal controls.Module 5: Audit EvidenceThis module focuses on teaching students how to gather and analyze audit evidence to support their findings.Module 6: SamplingHere, students learn about the importance of sampling in auditing and how to design and use different sampling techniques.Module 7: Fraud DetectionThis module teaches students about the various types of fraud, how to detect them, and how to design internal controls to prevent fraud from occurring.Module 8: Legal EnvironmentIn this module, students learn about the legal and ethical issues that arise in the field of auditing.Module 9: Audit ReportsHere, students learn about the different types of audit reports and how to write them.Module 10: Special Auditing TopicsThe final module covers special topics in auditing, such as auditing information systems and environmental auditing.Teaching MethodologyThe course will be taught using a variety of methods, including lectures, case studies, and group projects. The lectures will provide students with an overview of the module topics and key concepts, while case studies will allow them to apply their knowledge to real-world scenarios. Group projects will encourage students to collaborate with their peers and develop strong communication and teamwork skills.AssessmentAssessment will be based on a combination of quizzes, exams, case studies, and group projects. The quizzes and exams will test students’understanding of the module topics, while the case studies and group projects will assess their ability to apply their knowledge to real-world situations.ConclusionThe 14th edition of Audit: A Comprehensive Approach to Integrated Methodology provides students with a comprehensive understanding of auditing and prepares them for successful careers in the field. Through a combination of lectures, case studies, and group projects, students will learn how to think critically, analyze data, and communicate effectively in this critical field.。
审计学：一种整合方法(英文版) 第14版 参考答案AEB14_SM_CH01_v1
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 12 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 accordance with an applicable financial reporting framework such as U.S. GAAP or IFRS. An example of an attestation ser vice is a report on the effectiveness 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 or decisionsc. Dispersion of the business among numerous geographiclocations and complex corporate structures2. Biases and motives of providera. Information will be biased in favor of the provider when his orher goals are inconsistent with the decision maker's goals.3. Voluminous dataa. Possibly millions of transactions processed daily viasophisticated computerized systemsb. Multiple product linesc. Multiple transaction locations4. Complex exchange transactionsa. New and changing business relationships lead to innovativeaccounting 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 could earn by investing in U.S. treasury notes for the same length of timeas the business loan.2. Business risk for the customer This risk reflects the possibility thatthe business will not be able to repay its loan because of economicor business conditions such as a recession, poor managementdecisions, or unexpected competition in the industry.3. Information risk This risk reflects the possibility that the informationupon which the business risk decision was made was inaccurate. Alikely cause of the information risk is the possibility of inaccuratefinancial 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:1. User verifies the information.2. User 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 and electronic funds transfers, 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 accounting standards, 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 records and personnel records to determineif sufficient information is available to maximize the effective use ofpersonnel.2. Review the processing of sales invoices to determine if it could bedone more efficiently.3. Review the acquisitions of goods, including costs, to determine ifthey are being purchased at the lowest possible cost consideringthe quality needed.1-9 (continued)4. Review and evaluate the efficiency of the manufacturing process.5. Review the processing of cash receipts to determine if they aredeposited as quickly as possible.1-10 When auditing 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. This strategic understanding 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 an d 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 client’s manufacturing process woul d 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 with U.S.GAAP or IFRS.2. GAO auditors perform compliance or operational audits in order toassure the Congress of the expenditure of public funds in accordancewith its directives and the law.3. IRS agents perform compliance audits to enforce the federal taxlaws as defined by Congress, interpreted by the courts, and regulatedby the IRS.4. Internal auditors perform compliance or operational audits in orderto assure management or the board of directors that controls andpolicies are properly and consistently developed, applied andevaluated.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 information technology, including e-commerce, because many of their clients rely extensively on these technologies. 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 12 of the text.Audit services are a form of attestation service, and attestationservices are a form of assurance service. In a diagram, auditservices are located within the attestation service area, andattestation services are located within the assurance service area.b. 1. (2) An attestation service other than an audit service2. (1) An audit of historical financial statements3. (2) An attestation service other than an audit service4. (2) An attestation service other than an audit service; or(3) An assurance service that is not an attestation service(WebTrust developed from the AICPA Special Committeeon Assurance Services, but the service meets thecriteria for an attestation service.)5. (2) An attestation service other than an audit service6. (2) An attestation service other than an audit service7. (2) An attestation service that is not an audit service(Review services are a form of attestation, but areperformed according to Statements on Standards forAccounting and Review Services.)8. (2) An attestation service other than an audit service9. (2) An attestation service other than an audit service10. (3) An assurance service that is not an attestation service 1-17 a. The interest rate for the loan that requires a review report is lower than the loan that did not require a review because of lowerinformation risk. A review report provides moderate assurance tofinancial statement users, which lowers information risk. An auditreport provides further assurance and lower information risk. As aresult of reduced information risk, the interest rate is lowest for theloan with the audit report.b. Given these circumstances, Busch should select the loan from FirstCity Bank that requires an annual audit. In this situation, theadditional cost of the audit is less than the reduction in interest dueto lower information risk. The following is the calculation of totalcosts for each loan:c. Busch should select the loan from United National Bank due to thehigher cost of the audit and the reduced interest rate for the loanfrom United National Bank. The following is the calculation of totalcosts for each loan:d. Busch may desire to have an audit because of the many otherbenefits that an audit provides. The audit will provide Busch’smanagement with assurance about annual financial information usedfor decision-making purposes. The audit may detect errors or fraud, andprovide management with information about the effectiveness ofcontrols. In addition, the audit may result in recommendations tomanagement that will improve efficiency or effectiveness.e. The auditor must have 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 helpsthe auditor identify risks associated with the client’s strategies thatmay affect whether the financial statements are fairly stated. Thisstrategic knowledge of the client’s business often helps the auditoridentify ways to help the client improve business operations, therebyproviding added value to the audit function.1-18 a. The services provided by Consumers Union are very similar to assurance services provided by CPA firms. The services providedby Consumers Union and assurance services provided by CPAfirms are designed to improve the quality of information for decisionmakers. CPAs are valued for their independence, and the reportsprovided by Consumers Union are valued because ConsumersUnion is independent of the products tested.b. The concepts of information risk for the buyer of an automobile andfor 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 same for abuyer of an automobile and a user of financial statements:(1) Remoteness of information It is difficult for a user to obtainmuch information about either an automobile manufactureror the automobile itself without incurring considerable cost.The automobile buyer does have the advantage of possiblyknowing other users who are satisfied or dissatisfied with asimilar automobile.(2) Biases and motives of provider There is a conflict betweenthe automobile buyer and the manufacturer. The buyer wantsto buy a high quality product at minimum cost whereas theseller 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 havein order to evaluate an automobile. Either that information isnot available or too costly to obtain.(4) Complex exchange transactions The acquisition of anautomobile is expensive and certainly a complex decisionbecause of all the components that go into making a goodautomobile and choosing between a large number ofalternatives.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 be obtainedby driving different automobiles, examining the specifications ofthe automobiles, talking to other users and doing research invarious magazines.(2) User shares information risk with management Themanufacturer of a product has a responsibility to meet itswarranties and to provide a reasonable product. The buyerof an automobile can return the automobile for correction ofdefects. In some cases a refund may be obtained.(3) Examine the information prepared by Consumer ReportsThis is similar to an audit in the sense that independentinformation is provided by an independent party. Theinformation provided by Consumer Reports is comparable tothat provided by a CPA firm that audited financial statements.1-19 a. The following parts of the definition of auditing are related to the narrative:(1) Altman is being asked to issue a report about qualitative andquantitative information for trucks. The trucks are thereforethe information with which the auditor is concerned.(2) There are four established criteria which must be evaluatedand reported by Altman: existence of the trucks on the nightof June 30, 2011, ownership of each truck by RegionalDelivery Service, physical condition of each truck and fairmarket value of each truck.(3) Samantha Altman will accumulate and evaluate four types ofevidence:(a) Count the trucks to determine their existence.(b) Use registrations documents held by Burrow 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) Samantha Altman, CPA, appears qualified, as a competent,independent person. She is a CPA, and she spends most ofher time auditing used automobile and truck dealerships andhas extensive specialized knowledge about used trucksthat is consistent with the nature of the engagement.(5) The report results are to include:(a) which of the 25 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 the current bluebook for trucks.b. The only parts of the audit that will be difficult for Altman are:(1) Evaluating the condition, using the guidelines of poor, good,and excellent. It is highly subjective to do so. If she uses adifferent criterion than the "blue book," the fair market valuewill not be meaningful. Her experience will be essential inusing this guideline.(2) Determining the fair market value, unless it is clearly definedin 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:(b) Other auditing careers that are available are:Auditors within many of the branches of the federal government(e.g., Atomic Energy Commission)Auditors for many state and local government units (e.g., 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. Financial statement audits reduce information risk, which lowers borrowing costs. An audit also provides assurances to managementabout information used for decision-making purposes, and may alsoprovide recommendations to improve efficiency or effectiveness ofoperations.b. Hogan and Czarnecki likely provide tax services, accountingservices, and management advisory services. They may also provideadditional assurance and attestation services other than audits offinancial statements.c. Student answers will vary. They may identify new types of informationthat require assurance, such as environmental or corporateresponsibility reporting. Students may also identify opportunitiesfor consulting or management advisory services, such as assistancewith the adoption of international financial reporting standards.Internet Problem Solution: CPA RequirementsInternet Problem 1-1a. Answers will vary by state. Most states require 150 hours ofeducation, with specific requirements for number of accounting hoursand credit hours in other subject areas.b. Most states have frequently addressed questions. Many of theseaddress education requirements, as well as information on how toprepare for the exam, as well as information on applying for licensure.Internet Problem 1-1 (continued)c. The Elijah Watt Sells award program was established in 1923by the American Institute of Certified Public Accountants(AICPA) to recognize outstanding performance on the UniformCPA Examination. The Sells award is presented annually to tencandidates with the highest cumulative scores who completedtesting during the previous calendar year and passed all foursections of the Uniform CPA Examination on their first attempt.d. Passing information is available on the CPA Examination portion ofthe AICPA web site. Recent passing rates have been approximately45% for each section.(Note: Internet problems address current issues using Internet sources. Because Internet sites are subject to change, Internet problems and solutions may change. Current information on Internet problems is available at /arens.)。
审计学一种整合方法第英文版
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
1-4
Information and Established Criteria
The Act established the Public Company Accounting Oversight Board.
It also requires auditors to attest to management reports on the effectiveness of internal control over financial reporting.
1-3
Nature of Auditing
Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
1-6
Competent, Independent Person
The auditor must be qualified to understand the criteria used and must be competent to know the types and amount of evidence to accumulate to reach the proper conclusion after the evidence has been examined.
审计学一种整合方法第版英文版Chapter
Four-Step Approach to Designing Control and Substantive Tests
Apply transaction-related audit objectives to a class
of transactions (Step 1)
Further Audit Procedures
Tests of controls Substantive tests of transactions Analytical procedures Tests of details of balances
Relationship Between Further Audit Procedures and Evidence Type of Evidence
tests of transactions for sales and collection cycle
Audit procedures Sample size
Items to select Timing
Approach to Designing Tests of Details of Balances
Inquiries of the Client Reperformance Analytical Procedures Recalculation
Further Audit Procedures
Tests of controls Substantive tests of transactions Analytical procedures Tests of details of balances
Role of All Audit Tests in the Sales and Collection Cycle
审计学：一种整合方法_第12版_英文版Chapter01
1 - 11
Learning Objective 3
Explain the importance of auditing in reducing information risk.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
The competence of the individual performing the audit is of little value if he or she is biased in the accumulation and evaluation of evidence.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
1 - 16
Learning Objective 5
Describe assurance services and distinguish audit services from other assurance and nonassurance services provided by CPAs.
1 - 18
Attestation Services
An attestation service is a type of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party.
审计学：一种整合方法_第12版_英文版Chapter01-46页PPT资料
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
1-1
Learning Objective 1
Describe auditing.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
1-2
Nature of Auditing
Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria.
1-7
Audit of a Tax Return Example
Competent, independent
person
Information
Federal tax returns filed by taxpayer
Internal Revenue
Chapter14 - final
CHAPTER 14Multiple-Choice Questions1. Which of the following is not an account affected by the sales and collection cycle? easy a. Cashd b. Accounts receivablec. Allowance for doubtful accountsd. Gross margin2. easy Which of the following is not one of the five classes of transactions included in the sales and collection cycle?d a. Sales returns and allowancesb. Charge-off of uncollectible accountsc. Bad debt expensed. Depreciation expense3. What event initiates a transaction in the sales and collection cycle?easy a. Receipt of cash.d b. Delivery of product to a customer.c. Identification of a new customer.d. Customer request for goods.4. A _________ is a document that indicates a request for merchandise by a customer. easy a. sales invoicec b. vendor invoicec. customer orderd. sales order5. easy A _________ is a document that communicates the description, quantity, and related information for goods ordered by a customer.a a. sales orderb. customer orderc. vendor invoiced. sales invoice6. What critical event must take place before goods can be shipped?easy a. Determination of correct delivery addressb b. Credit approvalc. Receipt of cashd. Receipt of sales order from the customer7. Before goods are shipped on account, a properly authorized person must: easy a. prepare the sales invoice.c b. approve the journal entry.c. approve the customer’s credit.d. verify that the unit price is accurate.8. A document prepared to initiate shipment of the goods sold is the:easy a. sales order.b b. bill of lading.c. sales invoice.d. customer order.9. The document used to indicate to the customer the amount of a sale and payment due date is the: easy a. sales invoice.a b. bill of lading.c. purchase order.d. sales order.10. At what point in the sales and collection cycle does the company first give up assets?easy a. Sales approvald b. Credit approvalc. Cash collectiond. Shipment of goods11. Most companies recognize sales revenue when:easy a. sales are invoiced.c b. customer orders are received.c. goods are shipped.d. customer orders are approved.12. Which of the following is not a business function within the “Sales” class of transactions?easy a. Processing customer orders.c b. Granting credit.c. Processing and recording sales returns and allowances.d. Shipping goods.13. The total of the individual account balances in the accounts receivable master file equals the: easy a. total sales for the period.d b. balance of the sales account in the general ledger.c. total sales less the total cash received for the period.d. balance of the accounts receivable account in the general ledger.14. easy A listing of amounts owed by customer which shows how long each component part has been due is the:d a. trial balance.b. working trial balance.c. accounts receivable trial balance.d. aged accounts receivable trial balance.15. easy b A document sent to each customer showing his or her beginning accounts receivable balance and the amount and date of each sale, cash payment received, any debit or credit memo issued, and the ending balance is the:a. accounts receivable subsidiary ledger.b. monthly statement.c. remittance advice.d. sales invoice.16. The document that accompanies the customer’s payment is the: easy a. credit memo.b b. remittance advice.c. vendor invoice.d. monthly statement.17. The document that supports reductions in accounts receivable is the: easy a. bill of lading.c b. sales invoice.c. credit memo.d. monthly statement.18. easy A document that initiates shipment of goods and indicates the description of the merchandise, the quantity shipped, and customer name and address is the:a a. bill of lading.b. sales invoice.c. picking ticket.d. vendor invoice.19. When designing audit procedures, the direction of tests is a crucial step in satisfying the: easy a. valuation objective.c b. cutoff objective.c. completeness objective.d. classification objective.20. easy Which of the following documents is not commonly associated with the “cash receipts” class of transactions?b a. Remittance advice.b. Sales order.c. Prelisting of cash receipts.d. Cash receipts journal or listing.21. easy The process which postpones entries for the collection of receivables to conceal an existing cash shortage is referred to as:b a. kiting.b. lapping.c. floating.d. shorting.22. easy When sales invoices are automatically calculated and posted by a computer, the auditor may be able to reduce substantive tests of transactions for which, if any, objective?a a. Accuracyb. Existencec. Completenessd. None of the above23. easy The ____________ is a contract between a carrier (e.g., a trucking company) and the seller of goods that dictates the details surrounding the shipment of goods.a a. bill of ladingb. sales invoicec. picking ticketd. remittance advice24. easy Some companies have customers send payments directly to an address maintained by a bank. This is called a(n) _______ system.c a. direct depositb. funds transferc. lockboxd. interbank transfer25. medium In many audits, no substantive tests of transactions are made for the ________ objective on the grounds that understatement of sales is not a concern.c a. accuracyb. existencec. completenessd. none of the above26. The most important aspects of the billing function include all but which of the following? medium a. Making sure that all shipments have been billed.b b. Making sure that no shipment has been billed more than twice.c. Making sure that each shipment is billed at the correct amount.d. All of the above are correct.27. For the most part, the audit of the sales and collection cycle:medium a. cannot be performed until the audit of cash is completed.c b. must be performed first so that the audit of the other cycles can rely on the data.c. can be performed independently of the audit of other cycles.d. must be performed simultaneously with the audit of the purchases and disbursements cycle.28. medium b An audit procedure that compares the name, amount, and dates shown on remittance advices with cash receipts journal entries and with related duplicate deposit slips would be effective in detecting:a. kiting.b. lapping.c. illicit write-offs of customers as uncollectible accounts.d. sales without proper credit authorization.29. In which of the following will sales return and allowances not be recorded? medium a. Sales returns and allowances transaction filec b. Accounts receivable master filec. Cash receipts journald. Sales returns and allowances will be recorded in all of the above30. For most firms, the function of indicating credit approval is recorded on the: medium a. sales order.a b. sales invoice.c. customer order.d. remittance advice.31. medium The document used as the basis for recording sales transactions and updating the accounts receivable master file is the:d a. sales order.b. bill of lading.c. sales journal.d. sales invoice.32. medium When posting the sales journal, details of the journal are posted to “x” and journal totals are posted to “y.”c a. x = the sales account. y = the general ledger.b. x = the sales account. y = the accounts receivable subsidiary ledger.c. x = the accounts receivable master file. y = the general ledger.d. x = the accounts receivable account in the general ledger. y = the sales account in thegeneral ledger.33. Credit memos are normally issued for what purpose(s)?medium a. To maintain control of returned merchandise.d b. To facilitate record keeping.c. To reduce customer frustration and sales losses.d. Both a and b.34. Proper auditing requires that an account receivable must be charged off by the client when: medium a. the customer files for bankruptcy.d b. the account is at least six months old.c. a collection agency cannot inspire customer to pay the debt.d. the client company concludes that an amount is no longer collectible.35. medium Who is generally responsible for opening receipts when a company uses a lockbox to speed the handling of cash receipts?c a. Company personnel.b. Temporary employees in the town where the lockbox is located.c. Bank employees.d. None of the above.36. A document used to indicate authority to write an account receivable off as uncollectible is the: medium a. credit memo.b b. uncollectible account authorization form.c. debit memo.d. none of the above.37. medium After the auditor has identified the key internal controls and deficiencies and assessed control risk for a private company, it is appropriate to decide whether:a a. substantive tests will be reduced sufficiently to justify costs of performing tests of controls.b. substantive tests will be increased sufficiently to justify costs of performing tests ofcontrols.c. tests of controls will be increased sufficiently to justify costs of performing substantivetests.d. tests of controls will be reduced sufficiently to justify costs of performing substantive tests.38. medium Management’s assertions for sales and co llection activities are _____ when sales are generated via e-commerce activities.a a. unchangedb. expandedc. mitigatedd. decreased39. To prevent fraud, management should deny cash access to anyone responsible for:medium a. entering sales transactions.c b. entering cash receipts transactions.c. both a and b.d. neither a nor b.40. One key internal control to prevent fictitious transactions in the sales and collection cycle is: medium a. to include a list of customer numbers in the computer files.a b. to account for the integrity of the numerical sequence of sales orders.c. to include the sales price list of all products in the computer files.d. having bank reconciliations prepared by one who is independent of the treasury function.41. The credit-granting function should be separated from which of the following?medium a. Purchasing functionc b. Manufacturing functionc. Sales functiond. None of the above42. Which one of the following statements is true? In deciding on substantive tests of transactions: medium a. some procedures are commonly employed on every audit regardless of the circumstances.a b. all procedures are dependent on the adequacy of the controls and the results of the tests ofcontrols.c. results obtained in the prior year’s audit will not affect the procedures used this year.d. the materiality of the item will not influence the choice of procedures used.43. To test for recorded sales for which there were no actual shipments, the auditor traces from the: medium a. bill of lading to the sales journal.b b. sales journal to the bill of lading.c. sales journal to the accounts receivable subsidiary ledger.d. bill of lading to the supporting customer order and sales order.44. An effective procedure to test for unbilled shipments is to trace from the:medium a. sales journal to the shipping documents.b b. shipping documents to the sales journal.c. sales journal to the accounts receivable ledger.d. sales journal to the general ledger sales account.45. The auditor traces items from the source documents to the journals to satisfy the:medium a. existence objective.b b. completeness objective.c. ownership objective.d. valuation objective.46. medium In many audits of sales transactions, no substantive tests of transactions are performed for the completeness objective because:b a. understatements of assets and income are a greater concern than overstatements.b. overstatements of assets and income are a greater concern than understatements.c. it doesn’t matter if income is understated because the savings on income tax offsets thereduced revenue and net income is correct.d. the unrecorded sales cause a reduction of accounts receivable; therefore, the ratios of thetwo financial statements will not be misleading.47. medium To determine that sales are accurately recorded, the unit prices on the duplicate sales invoices are normally compared with:b a. the original invoices.b. an approved price list.c. the amounts recorded in the sales journal for that transaction.d. the amounts posted to the customer’s account in the accounts receivable master file.48. Which of the following is not a point at which the auditor deems authorization to be critical? medium a. Authorization of credit.d b. Price authorization.c. Shipment of goods.d. Each of the above is an important point for authorization.49. With respect to sales, prenumbered documents are intended to:medium a. prevent the failure to bill or record sales.c b. prevent duplicate billings or recordings of sales.c. both a and b.d. neither a nor b.50. Prenumbered documents will only be useful for control purposes if:medium a. a different numerical sequence is used for each company.b b. the sequence is accounted for periodically.c. employees do not have access to the complete sequence.d. all of the above are true.51. It is important that sales be billed and recorded in the journal as soon as possible after: medium a. the order is received.d b. the order is received and credit is approved.c. credit is approved and it is verified that there is enough inventory to fill the order.d. the shipment takes place.52. _______ tests for omitted transactions, while _____ tests for nonexistent transactions. medium a. Tracing, vouchinga b. Vouching, tracingc. Verifying, trackingd. Tracking, verifying53. The audit procedure referred to as proof of cash receipts is useful to test:medium a. time lags in making deposits.b b. whether all recorded cash receipts have been deposited in the bank.c. whether there are cash receipts that have not been recorded in the journals.d. all three of the above.54. Which of the following procedures would ordinarily be best expected to find unrecorded sales? medium a. Compare shipping documents with sales records.a b. Apply gross profit rates to inventory disposed of during the period.c. Trace payments received subsequent to the balance sheet date.d. Send accounts receivable confirmation requests.55. medium At which point in an ordinary sales transaction would a lack of specific authorization be of least concern to the auditor?d a. Granting of credit.b. Shipment of goods.c. Determination of discounts.d. Selling of goods for cash.56. medium b Smith Manufacturing Company’s accounts receivable clerk has a friend who is also a Smith’s customer. The accounts receivable clerk has issued fictitious credit memos to his friend for goods supposedly returned. The most effective procedure for preventing this activity is to:a. prenumber and account for all credit memorandums.b. require receiving reports to support all credit memorandums before they are approved.c. have independent sales and accounts receivable departments.d. mail monthly statements to customers.57. challenging Generally, audit evidence gathered from the sales and collection cycle is combined with evidence from other parts of the audit:a a. as the evidence accumulation process proceeds.b. only when all fieldwork processes of the engagement are completed.c. only after the audit of the sales and collection cycle is concluded.d. after the conclusion of both the cash cycle and the sales and collection cycle.58. challenging Proper separation of duties is useful to prevent various types of misstatements. Which of the following is not an essential separation of duties?a a. Persons having access to cash should not have access to marketable securities.b. Separate the credit-granting function from the sales function.c. Personnel doing internal comparisons should be independent of those entering the originaldata.d. Anyone responsible for inputting sales and cash receipts transactions information into thecomputer should be denied access to cash.59. challenging Which one of the following is not an auditor’s concern about a key authorization point in the sales/collection cycle?a a. The receiving room must have authorization before releasing items to inventory control.b. Credit must be authorized before the sale.c. Goods must be shipped after the authorization.d. Prices must be authorized.60. challenging Transaction-related audit objectives are essentially the same for processing credit memos as for sales with certain differences. Which of the following are two key differences?d a. Risk and emphasis on the completeness objective.b. Materiality and emphasis on the accuracy objective.c. Risk and emphasis on the classification objective.d. Materiality and emphasis on the occurrence objective.61. challenging Cash receipts from sales on account have been misappropriated. Which of the following acts would conceal this defalcation and be least likely to be detected by an auditor?a a. Understating the sales journal.b. Overstating the accounts receivable control account.c. Overstating the accounts receivable subsidiary ledger.d. Understating the cash receipts journal.62. challenging Which of the following would be the best protection for a company that wishes to prevent the “lapping” of trade accounts receivable?c a. Segregate duties so that the bookkeeper in charge of the general ledger has no access toincoming mail.b. Segregate duties so that no employee has access to both checks from customers andcurrency from daily cash receipts.c. Have customers send payments directly to the company’s depository bank.d. Request that customer’s payment checks be made payable to the company and ad dressed tothe treasurer.63. challenging A proof of cash is not useful in discovering differences in the actual and reported cash balances due to:c a. deposits in transit.b. collections on the company’s behalf by the bank which are deposited dire ctly to thecompany’s account.c. cash receipts that were not recorded in the relevant journals.d. any of the above reasons.64. challenging b When designing substantive tests of transactions for sales, the auditor is concerned with the possibility of several types of misstatements. Which of the following is not one of the types of these misstatements?a. Sales being included in the journal for which no shipment was made.b. Sales to related parties, such as officers and subsidiaries.c. Sales recorded more than once.d. Shipments being made to nonexistent customers and recorded as sales.65. challenging An auditor needs to determine whether all customers of an electric utility company are being billed. The auditor should test from the:d a. sales register to the accounts receivable ledger.b. sales register to the meter department records.c. accounts receivable ledger to the sales register.d. meter department records to the sales register.66. challenging Which one of the following would the auditor consider to be an incompatible operation if the cashier receives remittances from the mailroom?c a. The cashier prepares the daily deposit.b. The cashier makes the daily deposit at a local bank.c. The cashier posts the receipts to the accounts receivable subsidiary ledger cards.d. The cashier endorses the checks.Essay Questions67. easy Explain each of the following types of documents and indicate the class of transactions in which they are commonly used.1.Customer order2.Shipping document3.Remittance advice4.Sales returns and allowance journal5.Uncollectible account authorization formAnswer:1.Customer order – request for merchandise by a customer. Appears in the Sales class oftransactions.2.Shipping document – document prepared to initiate shipment of goods, indicating thedescription of the merchandise, the quantity shipped, and other relevant data. Appears in the Sales class of transactions.3.Remittance advice –document that accompanies the sales invoice mailed to thecustomer and can be returned to the seller with payment. Appears in the Cash receipts class of transactions.4.Sales returns and allowance journal –journal used to record all sales returns andallowances, analogous to the sales journal. Appears in the Sales returns and allowance class of transactions.5.Uncollectible account authorization form –document used internally to indicateauthority to write off an account receivable. Appears in the charge off of Uncollectible accounts class of transactions.68.mediumState the five classes of transactions that comprise the sales and collection cycle.Answer:The five classes of transactions that comprise the sales and collection cycle are:•Sales (cash and sales on account)•Cash receipts•Sales returns and allowances•Charge-off of uncollectible accounts•Bad debt expense.69. medium Customer billing is a critical process which auditors must understand. What are the most important aspects of billing and what are the related objectives?Answer:The most important aspects of billing are:•To make sure that all shipments made have been billed (completeness),•That no shipment has been billed more than once (occurrence), and•That each shipment is billed for the proper amount (accuracy).70. medium When assessing planned control risk for sales, the auditor is concerned about proper authorization at three key points. Discuss each of these three points.Answer:Credit should be properly authorized before a sale takes place; goods should be shipped only after proper authorization; and prices, base terms, freight, and discounts must be properly authorized.71. medium When testing the occurrence objective for sales, the auditor is concerned with the possibility of three types of misstatements. One type is sales being included in the journal for which no shipment was made. Discuss the other two types of misstatements.Answer:The auditor is also concerned with the possibility of (1) shipments being made to nonexistent customers and recorded as sales, and (2) sales being recorded more than once.72. medium Explain what lapping means, and discuss the internal control deficiency that allows it to occur. Also discuss the procedures the auditor can perform to detect lapping.Answer:Lapping, which is a common type of defalcation, is the postponement of entries for the collection of receivables to conceal an existing cash shortage. It involves deferring recording the cash receipts from one customer and covering the shortages with subsequent receipts from another customer. Improper segregation of duties in which a person who handles cash receipts is allowed to enter those receipts into the accounting records allows lapping to occur. The auditor can detect lapping by comparing the name, amount, and dates shown on remittance advices with cash receipts journal entries and related deposit slips.73. challenging Discuss the four business functions that result in sales transactions in a typical sales and collection cycle and, for each function, state the key documents and records involved. Answer:The four business functions that result in sales transactions, and related documents and records, are:•Processing customer orders. Key documents include customer order and sales order.•Granting credit. Customer order or sales order.•Shipping goods. Shipping document (bill of lading).•Billing customers and recording sales. Sales invoice, sales journal, summary sales report, accounts receivable master file, accounts receivable trial balance, and monthlystatements.74. challenging When designing substantive tests of transaction for Sales, the auditor is concerned with several types of misstatements. What are these types of misstatements and are they intentional or unintentional?Answer:The auditor is concerned with sales being included in the journals for which no shipment was made, sales recorded more than once, and shipments being made to nonexistent customers and recorded as sales. The first two types of misstatements can be intentional or unintentional, but the third type is always intentional.75. challenging For each of the following potential misstatements, provide one potential audit test that could be used to detect the misstatement.•Recorded sale for which there was no shipment•Sale recorded more than once•Shipment made to nonexistent customersAnswer:The potential audit tests include the following:•Recorded sale for which there was no shipment. Vouch selected entries in the sales journal to related copies of shipping and other supporting documents.•Sale recorded more than once. Review a numerically sorted list of recorded sales transactions for duplicate numbers. The auditor may also test for proper cancellationof shipping documents.•Shipment made to nonexistent customers. Trace customer information on sales invoices to the customer master file.76. challenging If sales invoices are automatically calculated and posted by a company’s computer system, can the auditor reduce substantive tests of transactions for the accuracy objective?Answer:If the auditor determines that the computer is programmed accurately and the price list master file is authorized and correct, detailed invoice computations can be reduced or eliminated. The auditor would then focus on determining that effective computer controls exist to ensure that the computer system is properly programmed and has not been altered since it was last tested by the auditor.77. challenging The transaction-related audit objectives and the client’s methods of controlling misstateme nts are essentially the same for credit memos as for sales with the exception of two differences. What are the two differences from the auditor’s perspective?Answer:The first difference is materiality. In many instances, sales returns and allowances are so immaterial that auditors ignore them. The second difference is the emphasis on the occurrence objective. For sales returns and allowances, auditors usually emphasize testing recorded transactions to uncovering any theft of cash from the collection of accounts receivable that was covered up by fictitious sales returns and allowances.78. challenging Describe the three basic steps an auditor should follow when designing tests of controls and substantive tests of transactions.Answer:The three basic steps in designing tests of controls and substantive tests of transactions are: •Determine key internal controls for each audit objective.•Design tests of controls for each control used to support a reduced control risk.•Design substantive tests of transactions to test for monetary misstatements for each objective.Other Objective Answer Format Questions79. medium Match seven of the terms for documents and records (a-k) with the descriptions provided below (1-7):a. Customer order formb. Sales orderc. Bill of ladingd. Sales invoicee. Summary sales reportf. Accounts receivable master fileg. Monthly statementh. Remittance advicei. Prelisting of cash receiptsj. Credit memok. Uncollectible account authorization formi 1. A schedule prepared by an independent person when cash is received. It is usedto verify whether cash received was recorded and deposited at the correctamounts and on a timely basis.j 2. A document indicating a reduction in the amount due from a customer becauseof returned goods or an allowance granted.c 3. A document prepared to initiate shipment of goods, indicating the description ofthe merchandise, the quantity shipped, and other relevant data. It is a writtencontract between the carrier and seller of the receipt and shipment of goods.b 4. An internal document for communicating the description, quantity, and relatedinformation for goods ordered by a customer. This is frequently used to indicatecredit approval and authorization for shipment.h 5. A document that accompanies the sales invoice mailed to the customer andwhich can be returned to the seller with the cash payment.k 6. A document used internally to indicate authority to write-off an accountreceivable as uncollectible.d 7. A document indicating the description and quantity of goods sold, the price,freight charges, insurance, terms, and other relevant data.。
审计学：一种整合方法 阿伦斯 英文版 第12版 课后答案 Chapter 10 Solutions Manual
Chapter 10Section 404 Audits of Internal Controland Control RiskReview Questions10-1Management typically has three broad objectives in designing an effective internal control system.1. Reliability of Financial Reporting Management is responsible forpreparing financial statements for investors, creditors, and other users.Management has both a legal and professional responsibility to be sure that the information is fairly presented in accordance with reporting requirements such as GAAP. The objective of effective internal control over financial reporting is to fulfill these financial reporting responsibilities.2. Efficiency and Effectiveness of Operations Controls within anorganization are meant to encourage efficient and effective use of its resources to optimize the company’s goals. An important objective of these controls is accurate financial and non-financial information about the entity’s operations for decision making.3. Compliance with Laws and Regulations Section 404 of the Sarbanes-Oxley Act requires all public companies to issue a report about the operating effectiveness of internal control over financial reporting. In addition to the legal provisions of Section 404, public, nonpublic, and not-for-profit organizations are required to follow many laws and regulations. Some relate to accounting only indirectly, such as environmental protection and civil rights laws. Others are closely related to accounting, such as income tax regulations and fraud.10-2Management designs systems of internal control to accomplish three categories of objectives: financial reporting, operations, and compliance with laws and regulations. The auditor’s focus in both the audit of financial statements and the audit of internal controls is on those controls related to the reliability of financial reporting plus those controls related to operations and to compliance with laws and regulations objectives that could materially affect financial reporting. 10-3Section 404 requires management of all public companies to issue an internal control report that includes the following:▪ A statement that management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting and▪An assessment of the effectiveness of the internal control structure and procedures for financial reporting as of the end of the company’s fiscal year.10-4Management’s assessment of internal control over financial reporting consists of two key components. First, management must evaluate the design of internal control over financial reporting. Second, management must test the operating effectiveness of those controls.When evaluating the design of internal control over financial reporting, management evaluates whether the controls are designed to prevent or detect material misstatements in the financial statements. When testing the operating effectiveness of those controls, the objective is to determine whether the control is operating as designed and whether the person performing the control possesses the necessary authority and qualifications to perform the control effectively.10-5There are eight parts of the planning phase of audits: accept client and perform initial planning, understand the client’s business and industry, assess client business risk, perform preliminary analytical procedures, set materiality and assess acceptable audit risk and inherent risk, understand internal control and assess control risk, gather information to assess fraud risks, and develop an overall audit plan and audit program. Understanding internal control and assessing control risk is therefore part six of planning. Only gathering information to assess fraud risk and developing an overall audit plan and audit program follow understanding internal control and assessing control risk.10-6The second GAAS field work standard states “The auditor must obtain a sufficient understanding of the entity and its environment, including its internal controls, to assess the risk of material misstatement of the financial statements whether due to error or fraud and to design the nature, timing, and extent of further audit procedures.” The auditor obtains the understanding of internal control to assess control risk in every audit and that responsibility is the same for audits of both public and nonpublic companies. Auditors are primarily concerned about controls related to the reliability of financial reporting and controls over classes of transactions.10-7Section 404 requires that the auditor attest to and issue a report on management’s assessment of internal control over financial reporting. To express an opinion on internal controls, the auditor obtains an understanding of and performs tests of controls related to all significant account balances, classes of transactions, and disclosures and related assertions in the financial statements. PCAOB Standard 2 requires that the audit report on internal control over financial reporting under Sarbanes-Oxley include the auditor’s opinion as to whether management’s assessment of the design and operating effectiveness of internal control over financial reporting is fairly stated in all material respects. This involves both evaluating management’s assessment process and arriving at the auditor’s independen t assessment of the internal controls’ design and operating effectiveness.10-8The six transaction-related audit objectives are:1. Recorded transactions exist (occurrence).2. Existing transactions are recorded (completeness).3. Recorded transactions are stated at the correct amounts (accuracy).4. Recorded transactions are properly included in the master files andcorrectly summarized (posting and summarization)._5. Transactions are properly classified (classification).6. Transactions are recorded on the correct dates (timing).10-9COSO’s Internal Control Integrated Framew ork is the most widely accepted internal control framework in the U.S. The COSO framework describes internal control as consisting of five components that management designs and implements to provide reasonable assurance that its control objectives will be met. Each component contains many controls, but auditors concentrate on those designed to prevent or detect material misstatements in the financial statements. 10-10 The COSO Internal Control –Integrated Framework consists of the following five components:1. Control environment2. Risk assessment3. Control activities4. Information and communication5. MonitoringThe control environment serves as the umbrella for the other four components. Without an effective control environment, the other four are unlikely to result in effective internal control, regardless of their quality.10-11The control environment consists of the actions, policies, and procedures that reflect the overall attitudes of top management, directors, and owners of an entity about internal control and its importance to the entity. The following are the most important subcomponents the control environment:Integrity and ethical valuesCommitment to competenceBoard of directors or audit committee participationManagement's philosophy and operating styleOrganizational structureAssignment of authority and responsibilityHuman resource policies and practices10-12Internal control includes five categories of controls that management designs and implements to provide reasonable assurance that its control objectives will be met. These are called the components internal control, and are: The control environmentRisk assessmentControl activitiesInformation and communicationMonitoringThe control environment is the broadest of the five and deals primarily with the way management implements its attitude about internal controls. The other four components are closely related to the control environment. Risk assessment is management's identification and analysis of risks relevant to the preparation of financial statements in accordance with GAAP. To respond to this risk assessment, management implements control activities and creates the accounting information and communication system to meet its objectives for financial reporting. Finally, management periodically assesses the quality of internal control performance to determine that controls are operating as intended and that they are modified as appropriate for changes in conditions (monitoring). All five components are necessary for effectively designed and implemented internal control.10-13The five categories of control activities are:Adequate separation of dutiesExample: The following two functions are performed bydifferent people: processing customer orders and billing ofcustomers.Proper authorization of transactions and activitiesExample: The granting of credit is authorized beforeshipment takes place.Adequate documents and recordsExample: Recording of sales is supported by authorizedshipping documents and approved customer orders.Physical control over assets and recordsExample: A password is required before entry into thecomputerized accounts receivable master file can be made.Independent checks on performanceExample: Accounts receivable master file contents areindependently verified.10-14Separation of operational responsibility from record keeping is intended to reduce the likelihood of operational personnel biasing the results of their performance by incorrectly recording information.Separation of the custody of assets from accounting for these assets is intended to prevent misappropriation of assets. When one person performs both functions, the possibility of that person's disposal of the asset for personal gain and adjustment of the records to relieve himself or herself of responsibility for the asset without detection increases.10-15An example of a physical control the client can use to protect each of the following assets or records is:1. Petty cash should be kept locked in a fireproof safe.2. Cash received by retail clerks should be entered into a cashregister to record all cash received.3. Accounts receivable records should be stored in a locked, fireproofsafe. Adequate backup copies of computerized records should bemaintained and access to the master files should be restricted viapasswords.4. Raw material inventory should be retained in a locked storeroomwith a reliable and competent employee controlling access.5. Perishable tools should be stored in a locked storeroom undercontrol of a reliable employee.6. Manufacturing equipment should be kept in an area protected byburglar alarms and fire alarms and kept locked when not in use.7. Marketable securities should be stored in a safety deposit vault.10-16Independent checks on performance are internal control activities designed for the continuous internal verification of other controls. Examples of independent checks include:Preparation of the monthly bank reconciliation by an individual with no responsibility for recording transactions or handling cash.Recomputing inventory extensions for a listing of inventory by someone who did not originally do the extensions.The preparation of the sales journal by one person and the accounts receivable master file by a different person, and areconciliation of the control account to the master file.The counting of inventory by two different count teams.The existence of an effective internal audit staff.10-17As illustrated by Figure 10-3, there are four phases in the process of understanding internal control and assessing control risk. In the first phase the auditor obtains an understanding of internal controls, which includes an understanding of their design and whether they have been implemented. Next the auditor must make a preliminary assessment control risk (phase 2) and perform tests of controls in every audit as part of their integrated audits (phase 3). The auditor uses the results of tests of controls for both the audit report on internal control over financial reporting and to assess control risk and to ultimately decide planned detection risk and substantive tests for the audit of financial statements, which is phase 4.10-18Section 404 of the Sarbanes-Oxley Act requires management to document its processes for assessing the effectiveness of the company’s internal control over financial reporting. Management must document the design of controls, including all five control components and also the results of its testing and evaluation. The types of information gathered by management to assess and document internal control effectiveness can take many forms, including policy manuals, flowcharts, narratives, documents, questionnaires and other forms that are in either paper or electronic formats. PCAOB Standard 2 requires the auditor10-18 (continued)to evaluate the client’s documentation when auditing internal control over financial reporting. The lack of management documentation of internal control over financial reporting may prevent the auditor from concluding that the controls are adequately designed or operating effectively. When documentation is inadequate, the auditor may decide to withdraw from the engagement or to issue a disclaimer of opinion on internal control over financial reporting.10-19When obtaining an understanding of internal control, the auditor must assess two aspects about those controls. First, the auditor must gather evidence about the design of internal controls. Second, the auditor must gather evidence about whether those controls have been implemented.10-20In a walkthrough of internal control, the auditor selects one or a few documents for the initiation of a transaction type and traces them through the entire accounting process. At each stage of processing, the auditor makes inquiries and observes current activities, in addition to examining completed documentation for the transaction or transactions selected. Thus, the auditor combines observation, documentation, and inquiry to conduct a walkthrough of internal control. PCAOB Standard 2 requires the auditor to perform at least one walkthrough for each major class of transactions.10-21A key control is a control that is expected to have the greatest effect on meeting the transaction-related audit objectives. A control deficiency represents a deficiency in the design or operation of controls that does not permit company personnel to prevent or detect misstatements on a timely basis. A design deficiency exists if a necessary control is missing or not properly designed. An operation deficiency exists if a well designed control does not operate as designed or when the person performing the control is insufficiently qualified or authorized.10-22A significant deficiency exists if one or more control deficiencies exist that, more than remotely,adversely affect a company’s ability to initiate, authorize, record, process, or report external financial statements reliably. A material weakness exists if a significant deficiency, by itself, or in combination with other significant deficiencies, results in a more than remote likelihood that internal control will not prevent or detect material financial statement misstatements. The presence of one significant deficiency that is not deemed to be a material weakness may not affect the auditor’s report. In that instance, the auditor’s report on internal control over financial reporting would contain an unqualified opinion. However, if the deficiency is deemed to be a material weakness, the auditor must express an adverse opinion on the effectiveness of internal control over financial reporting.10-23The most important internal control deficiency which permitted the defalcation to occur was the failure to adequately segregate the accounting responsibility of recording billings in the sales journal from the custodial responsibility of receiving the cash. Regardless of how trustworthy James appeared, no employee should be given the combined duties of custody of assets and accounting for those assets.10-24Maier is correct in her belief that internal controls frequently do not function in the manner they are supposed to. However, regardless of this, her approach ignores the value of beginning the understanding of internal control by preparing or reviewing a rough flowchart. Obtaining an early understanding of the client's internal control will provide Maier with a basis for a decision about further audit procedures and sample sizes based on assessed control risk. By not obtaining an understanding of internal control until later in the engagement, Maier risks performing either too much or too little work, or emphasizing the wrong areas during her audit.10-25The extent of controls tested by auditors to express an opinion on internal controls for a public company is significantly greater than that tested solely to express an opinion on the financial statements. To express an opinion on internal controls for a public company, the auditor obtains an understanding of and performs tests of controls for all significant account balances, classes of transactions, and disclosures and related assertions in the financial statements. In contrast, the extent of controls tested by an auditor of a nonpublic company is dependent on the auditor’s assessment of control risk. Whenever the auditor assesses control risk below maximum, the auditor must perform tests of controls to support that control risk assessment. The auditor w ill not perform tests of controls when the auditor assesses control risk at maximum. When control risk is assessed below the maximum, the auditor designs and performs a combination of tests of controls and substantive procedures. Thus, for a nonpublic company, the tests of controls vary based on the auditor’s assessment of control risk.10-26There is a significant overlap between tests of controls and procedures to obtain an understanding of internal control. Both include inquiry, documentation, and observation. There are two primary differences in the application of these common procedures. First, in obtaining an understanding of internal control, the procedures to obtain an understanding are applied to all controls identified during that phase. Tests of controls, on the other hand, are applied only when the assessed control risk has not been satisfied by the procedures to obtain an understanding. Second, procedures to obtain an understanding are performed only on one or a few transactions or, in the case of observations, at a single point in time. Tests of controls are performed on larger samples of transactions (perhaps 20 to 100), and often observations are made at more than one point in time.10-27PCAOB Standard 2 requires a public company auditor to test controls each year for all relevant assertions for significant accounts and transactions. Howe ver, if evidence was obtained in the prior year’s audit that indicates that a key control was operating effectively, and the auditor determines that the control is still in place, the extent of the tests of that control may be reduced somewhat in the current year.10-28 When the auditor’s risk assessment procedures identify significant risks, the auditor is required to test the operating effectiveness of controls that mitigate these risks in the current year audit, if the auditor plans to rely on those controls to support a control risk assessment below 100%. Thus, tests of controls are required in the current year audit for those controls the auditor plans to rely on to reduce control risk. The greater the risk, the more the audit evidence the auditor should obtain that controls are operating effectively.10-29 PCAOB Standard 2 requires that t he auditor’s report on internal control include two auditor opinions:1. The auditor’s opinion on whether management’s assessment of theeffectiveness of internal control over financial reporting as of the end of the fiscal period is fairly stated, in all material respects. In practice it is unlikely for the auditor to issue anything other than an unqualified report on this opinion. If the auditor concludes that management has not identified and reported all significant deficiencies and material weaknesses, it will be in management’s best interests to revise its report to conform to the auditor’s conclusions.2. The auditor’s opinion on whether the company maintained, in al l materialrespects, effective internal control over financial reporting as of the specified date. There is likely to be more variety in these reports.10-30The auditor may issue an unqualified opinion on internal control over financial reporting when two conditions are present:▪there are no identified material weaknesses; and▪there have been no restrictions on the scope of the auditor’s work.A scope limitation is the condition that would cause the auditor to express a qualified opinion or a disclaimer of opinion on internal control over financial reporting. This type of opinion is issued when the auditor is unable to determine if there are material weaknesses, due to a restriction on the scope of the audit of internal control over financial reporting or other circumstances where the auditor is unable to obtain sufficient evidence.10-31PCAOB Standard 2 requires that the audit of the financial statements and the audit of internal control over financial reporting be integrated. In an integrated audit, the auditor must consider the results of audit procedures performed to issue the audit report on the financial statements when issuing the audit report on internal control. For example, if the auditor identifies a material misstatement in the financial stat ements that was not initially identified by the company’s internal controls, the auditor should consider this as at least a significant deficiency, if not a material weakness for purposes of reporting on internal control. In such circumstances, the auditor’s report on the financial statements may be unqualified as long as management corrected the misstatement before issuing the financial statements. In contrast, however, the auditor’s report on internal control must include an adverse opinion if the auditor concludes it is a material weakness.Multiple Choice Questions From CPA Examinations10-32 a. (3) b. (3) c. (4) d. (4)10-33 a. (3) b. (2) c. (4) d. (2)10-34 a. (3) b. (4) c. (4) d. (2)Discussion Questions and Problems10-351. a. Adequate segregation of duties and proper authorization of transactions and activities.b. Recorded transactions exist.c. An unauthorized or invalid time card turned in by an existingemployee. The time card may be for an employee whoformerly worked for the company or one who is temporarilylaid off.d. An employee could be claiming too many hours by having afriend punch him or her in early, or by making manualchanges on time cards.e. Check to see that all employees that are punched in one dayare physically present..2. a. Adequate documents and records.b. Existing transactions are recorded.c. A missing time card number never could be identified beforepreparation of payroll starts.d. An employee would not be paid for a time period. (Theemployee is almost certain to bring this to management'sattention.) The primary benefit of the control would be toprevent misstatements for a short period of time and toprevent employee dissatisfaction from failure to pay them.e. Obtain a list of company employees and make sure thateach one has received a paycheck for the time period inquestion.3. a. Proper authorization of transactions and activities.b. Recorded transactions exist.c. A paycheck cannot be processed for an invalid employeenumber.d. A fictitious payroll check could be processed for a fictitiousemployee if invalid employee numbers are included in theemployee master file.e. Include test data transactions with invalid employee numbersin the data to be inputted into the payroll accounting systemand determine that all invalid transactions are automaticallyrejected by the software application.4. a. Adequate separation of duties.b. Recorded transactions exist.c. A fictitious payroll check that is originated by the person bothpreparing the payroll checks and distributing the payrollchecks.d. If one person kept a record of time, prepared the payroll, anddistributed the checks, that person could add a nonexistentemployee to the payroll, process the information for theemployee and deposit the paycheck in his or her own bankaccount without detection.10-35 (continued)e. Perform a surprise payoff in which the auditor accounts forall paychecks and distributes them to the employees, whomust provide identification in order to receive their checks.5. a. Independent check on performance.b. Recorded transactions are stated at the correct amounts.c. Mechanical errors of adding up the number of hours,calculating the gross payroll incorrectly, or calculatingwithholding incorrectly.d. Payroll checks incorrectly calculated could be paid toemployees.e. Recheck the amounts for gross payroll, withholding and netpayroll.6. a. Adequate documents and records.b. Existing transactions are recorded.c. Preparation of a check for an inappropriate person, thedistribution of that check to that person, and the recording ofthat check in the cash disbursements journal as a voidedcheck.d. An employee who is supposed to void a check could recordit as voided on the books and cash the check. At month-endthe amount of the check could be covered by adjusting thebank reconciliation.e. Test month-end bank reconciliations in detail to determinethat the account reconciles properly, that all supportingdocuments are proper, looking especially for a check thatcleared and was supposed to be voided, and that noalterations have been made to the bank statement.7. a. Proper authorization of transactions and activities.b. Recorded transactions exist and recorded transactions arestated at the correct amounts.c. Both errors and fraud are likely to be prevented if competenttrustworthy employees are hired. Hiring honest employeesminimizes a likelihood of fraud. Hiring competent employeesminimizes the likelihood of unintentional errors.d. Several types of intentional misstatements could occur if adishonest person is hired. Similarly, several types ofunintentional errors could occur if an incompetent person ishired.e. An examination of cancelled checks and supportingdocuments, including time cards and personnel records, is atest of the possibility of fraud. A test of the calculation ofpayroll is a test for an unintentional error caused byemployees who are not competent.10-35(continued)8. a. Proper authorization of transactions and activities, andadequate documents and records.b. Recorded transactions exist.c. The preparation of an inappropriate payroll check for aformer employee is prevented.d. A terminated employee could be continued on the payrollwith someone else obtaining the paycheck.e. Perform a surprise payoff in which the auditor accounts forall paychecks and distributes them to the employees, whomust provide identification to receive their checks.9. a. Physical control over assets and records, and adequatesegregation of duties.b. Recorded transactions exist.c. Checks prepared for nonexistent employees or employeeson vacation, or absent for other reasons are controlled andsafeguarded.d. Checks could be lost which are intended for absentemployees or a check could be taken by the personresponsible for distributing the checks.e. Examine cancelled checks to make certain that each checkis properly endorsed, supported by a time card, and theperson for whom the check is made out is still working forthe company.10. a. Proper authorization of transactions and activities andadequate separation of duties.b. Recorded transactions exist and recorded transactions arestated at the correct amounts.c. Preparation of a check for a fictitious employee orpreparation of checks using an unapproved pay rate areprevented.d. A fictitious payroll check could be processed for a fictitiousemployee if those with record keeping responsibilities areallowed to enter new employee numbers into the master file.Also, paychecks to valid employees could be overstated ifunauthorized personnel have the ability to make changes tothe pay rates in the master files.e. Attempt to access the on-line payroll master file using apassword that is not allowed access to that master file.。
审计学一种整合方式讲义
Learning Objective 2
Describe the fraud triangle and identify conditions for fraud.
The Fraud Triangle
Incentives/Pressures
Opportunities
Attitudes/Rationalization
A history of violations of laws is known
Management has a practice of making
overly aggressive or unrealistic forecasts
Examples of Risk Factors for Misappropriation of Assets
11
by directors
6
Ineffective or
10
nonexistent ethics or
8
compliance program
7
2003
1998
1994
Learning Objective 5
Develop responses to identified fraud risks.
Responding to the Risk of Fraud
11
11
Kickbacks
9
6
Financial reporting
7
fraud
3
2003
1998
Specific Fraud Risk Areas
Revenue and accounts receivable fraud risks Inventory fraud risks Purchases and accounts payable fraud risks Other areas of fraud risk
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。
审计学一种整合方法英文版第十四版课程设计
Integrated Audit Practice Case (IAPC) English Version - Course Design for 14th Edition of Audit Practice IntroductionIntegrated Audit Practice Case (IAPC) is a comprehensive practical case that combines the knowledge and skills needed from accounting, auditing, financial reporting, and related fields. The IAPC has been revised over the years to reflect the changing accounting and finance standards and regulations. The 14th edition reflects the current environment and standards in which auditing and accounting takes place. This course design focuses on the 14th edition and provides an outline for instructors and students to use while working through this comprehensive audit practice case.Course ObjectivesThe objectives of this course are:1.To give students a comprehensive understanding of auditingand accounting practices in a practical setting.2.To develop students’ auditing competence, financialanalysis, and accounting skills through practical exercises.3.To develop students’ analytical and communication skills byrequiring them to present their findings and conclusions regarding the IAPC cases.Pre-requisitesStudents of this course should ideally have completed coursework in the following areas prior to taking this course:1.Accounting Principles2.Cost Accounting3.Financial Accounting4.Managerial Accounting5.Auditing6.TaxationCourse Content and StructureThe IAPC is organized into three mn parts:1.Case Introduction and BackgroundThis first section provides context for students by providing them with the background information necessary for the IAPC case. Thisincludes the client profile, industry analysis, and other relevant information.2.Test of Controls and Balance Sheet AuditingIn this section, students will perform an audit of the balancesheet and an alyze the client’s internal controls. The examination involves selecting and testing the various balances, transactions, and procedures for the various accounts on the balance sheet.3.Income Statement Auditing and Audit CompletionThe third and final section involves auditing the income statement, cash flow statement, and other key financial statements. Uponcompletion, an audit report will be required, which will detl the findings and recommendations of the audit team.Grading and EvaluationThe grading will be based on the following criteria:1.Participation and attendance (20%)2.Group presentations and discussion (30%)3.Case presentations and analysis (50%)ConclusionThe Integrated Audit Practice Case (IAPC) English Version is a practical and comprehensive case that allows students to apply their knowledge gned through their coursework to a real-world example. By completing this course, students will develop analytical, communication, and practical skills needed for a successful career in accounting or auditing. This course design for the 14th edition of the IAPC offers instructors and students with the necessary framework and structure to ensure that all students successfully absorb and apply the material.。
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Accounts in the Sales and Collection Cycle
Accounts Receivable Beginning Cash receipts balance
Sales on account Ending balance Sales returns and allowances Write-off of uncollectible accounts Allowance for Uncollectible Accounts Write-off of Beginning uncollectible balance accounts Estimate of bad debt expense Ending balance
Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions
Chapter 14
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Sales Returns and Allowances Transaction
Accounts Business Functions Documents and Records
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Sales Transaction
Accounts Business Functions Documents and Records
Sales Accounts receivable
Accounts receivable trial balance
Monthly statement
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Processing and Recording Cash Receipts
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Processing and Recording Sales Returns and Allowances
Credit memo
Sales returns and allowances journal
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
Processing customer orders
Granting credit Shipping goods Billing customers and recording sales
Customer order Sales order Customer order or sales order Shipping document Sales invoice Sales transaction file Sales journal or listing Accounts receivable master file Accounts receivable trial balance Monthly statements
14 - 2
Accounts in the Sales and Collection Cycle
Sales Cash sales
Sales on account Accounts Receivable Beginning Cash receipts balance Sales on account Ending balance Sales returns and allowances Write-off of uncollectible accounts
Cash in bank Processing and (debits from recording cash cash receipts) receipts Accounts receivable
Remittance advice Prelisting of cash receipts Cash receipts transaction file Cash receipts journal or listing
Sales returns and allowances Accounts receivable
Processing and recording sales returns and allowances
Credit memo Sales and returns and allowances journal
Remittance advice
Prelisting of cash receipts
Cash receipts transaction file Cash receipts journal or listing
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Granting Credit
Before goods are shipped, a properly authorized person must approve credit to the customer for sales on account
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Billing Customers and Recording Sales
Sales invoice Sales transaction file Sales journal or listing Accounts receivable master file
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Bad Debt Expense Transaction
Accounts Business Functions Documents and Records
Cash in Bank
Cash Discounts Taken
Sales Returns and Allowances
Bad Debt Expense
14 - 3
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Processing Customer Orders
Customer Order: A request for merchandise by a customer Sales Order: A document describing the goods ordered by a customer
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Learning Objective 3
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Writing Off Uncollectible Accounts Receivable
Uncollectible account authorization form This is a document used internally to indicate authority to write an account receivable off as uncollectible
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
14 - 8
Write-off of Uncollectible Accounts Transaction
Accounts Business Functions Documents and Records
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
14 - 17
Providing for Bad Debts
This provision represents a residual, resulting from management’s end-of-period adjustment of the allowance for uncollectible accounts
14 - 6
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
Cash Receipts Transaction
Accounts Business Functions Documents and Records