审计学-一种整合的方法
审计学一种整合的方法课件
审计准则与审计标准
01 审计准则
审计准则是审计师在执行审计工作时必须遵循的 规范和原则，以确保审计质量和信誉。
02 审计标准
审计标准是衡量财务报表、内部控制和治理过程 可靠性的尺度，包括国际审计准则和国内审计准 则。
方法
采用生命周期评估方法， 从产品的设计、生产、使 用到废弃的整个过程进行 环境审计。
信息安全审计
定义
信息安全审计是一种对组织的信 息系统安全进行的审计，旨在评 估组织对信息安全的控制能力和
效果。
目的
确保组织的信息系统安全，防止信 息泄露、篡改或损坏，提高组织的 竞争力。
方法
采用风险评估方法，识别潜在的安 全风险，提出应对措施，并定期进 行安全审计。
国际化与本土化相结合
1 2 3
国际化趋势
随着经济全球化的不断发展，审计学逐渐走向国 际化，国际审计标准和准则逐渐成为各国审计的 基础。
本土化需求
各国在引进国际审计标准和准则的同时，也需要 根据本国实际情况进行适当的调整和修改，以适 应本土市场需求和发展。
国际化与本土化的平衡
各国在实现审计国际化的同时，要充分考虑本土 化需求，实现国际化和本土化的有机融合。
信息技术提高审计效率
随着信息技术的不断发展，审计学可以利用大数据、人工智能等 技术提高审计效率，减少人工操作，降低审计成本。
信息技术拓展审计范围
信息技术可以帮助审计学扩大数据来源和样本数量，从而更全面地 评估被审计单位的风险状况。
信息技术提高审计质量
通过信息技术，可以实现数据的实时监控和分析，及时发现潜在风 险，提高审计质量。
审计学一种整合的方法
statements and internal control
from the auditor’s responsibility
for verifying the financial
statements and effectiveness
of internal control.
PPT文档演模板
审计学一种整合的方法
审计学一种整合的方法
Transaction Flow Example
•Transactions •Sales
•Cash •receipts
•Journals •Sales •journal
•Cash receipts •journal
•Ledgers, •Trial Balance, •and Financial
➢ Material versus immaterial misstatements ➢ Reasonable assurance ➢ Errors versus fraud ➢ Professional skepticism ➢ Fraud resulting from fraudulent financial reporting versus misappropriation of assets
•Sales and •collection
•cycle
•Acquisition •and payment
•cycle
•Payroll and •personnel
•cycle
•Inventory and •warehousing
•cycle
PPT文档演模板
审计学一种整合的方法
Learning Objective 5
•Payroll •journal
审计学 一种整合的方法
审计学一种整合的方法
审计学是一种整合的方法，它涵盖了许多不同的领域，包括会计、财务、风险管理、法律和管理。
审计学的目标是通过评估一个组织或实体的财务报表和内部控制体系来提供可靠的信息，以帮助管理者和利益相关者做出决策。
审计学的整合方法包括对财务报表的审计，内部控制的评价和测试，风险管理的审计，以及合规性审计等。
通过这些方法，审计学能够帮助组织发现问题并提供解决方案，从而提高组织的运营效率和财务稳定性。
审计学也涉及到对法律法规的遵守情况的评估，以及对组织的治理结构和业务运作的审计。
通过整合不同领域的方法和技术，审计学能够提供全面的评估和建议，以帮助组织达到其经营和财务目标。
阿伦斯 审计学：一种整合方法 课后习题答案
Chapter 1The Demand for Audit and Other Assurance Services Review Questions1-1The relationship among audit services, attestation services, and assurance services is reflected in Figure 1-3 on page 13 of the text. An assurance service is an independent professional service to improve the quality of information for decision makers. An attestation service is a form of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party. Audit services are a form of attestation service in which the auditor expresses a written conclusion about the degree of correspondence between information and established criteria.The most common form of audit service is an audit of historical financial statements, in which the auditor expresses a conclusion as to whether the financial statements are presented in conformity with generally accepted accounting principles. An example of an attestation service is a report on the effe ctiveness of an entity’s internal control over financial reporting. There are many possible forms of assurance services, including services related to business performance measurement, health care performance, and information system reliability.1-2 An independent audit is a means of satisfying the need for reliable information on the part of decision makers. Factors of a complex society which contribute to this need are:1.Remoteness of informationa.Owners (stockholders) divorced from managementb.Directors not involved in day-to-day operations ordecisionsc.Dispersion of the business among numerous geographiclocations and complex corporate structures2.Biases and motives of providerrmation will be biased in favor of the providerwhen his or her goals are inconsistent with thedecision maker's goals.3.Voluminous dataa.Possibly millions of transactions processed daily viasophisticated computerized systemsb.Multiple product linesc.Multiple transaction locationsplex exchange transactionsa.New and changing business relationships lead toinnovative accounting and reporting problemsb.Potential impact of transactions not quantifiable,leading to increased disclosures1-3 1. Risk-free interest rate This is approximately the rate the bank could earn by investing in U.S. treasury notes for thesame length of time as the business loan.2.Business risk for the customer This risk reflects thepossibility that the business will not be able to repay itsloan because of economic or business conditions such as arecession, poor management decisions, or unexpectedcompetition in the industry.rmation risk This risk reflects the possibility thatthe information upon which the business risk decision wasmade was inaccurate. A likely cause of the information riskis the possibility of inaccurate financial statements.Auditing has no effect on either the risk-free interest rate or business risk. However, auditing can significantly reduce information risk.1-4The four primary causes of information risk are remoteness of information, biases and motives of the provider, voluminous data, and the existence of complex exchange transactions.The three main ways to reduce information risk are:er verifies the information.er shares the information risk with management.3.Audited financial statements are provided.The advantages and disadvantages of each are as follows:1-5 To do an audit, there must be information in a verifiable form and some standards (criteria) by which the auditor can evaluate the information. Examples of established criteria include generally accepted accounting principles and the Internal Revenue Code. Determining the degree of correspondence between information and established criteria is determining whether a given set of information is in accordance with the established criteria. The information for Jones Company's tax return is the federal tax returns filed by the company. The established criteria are found in the Internal Revenue Code and all interpretations. For the audit of Jones Company's financial statements the information is the financial statements being audited and the established criteria are generally accepted accounting principles.1-6The primary evidence the internal revenue agent will use in the audit of the Jones Company's tax return include all available documentation and other information available in Jones' office or from other sources. For example, when the internal revenue agent audits taxable income, a major source of information will be bank statements, the cash receipts journal and deposit slips. The internal revenue agent is likely to emphasize unrecorded receipts and revenues. For expenses, major sources of evidence are likely to be cancelled checks, vendors' invoices and other supporting documentation.1-7This apparent paradox arises from the distinction between the function of auditing and the function of accounting. The accounting function is the recording, classifying and summarizing of economic events to provide relevant information to decision makers. The rules of accounting are the criteria used by the auditor for evaluating the presentation of economic events for financial statements and he or she must therefore have an understanding of generally accepted accounting principles (GAAP), as well as auditing standards. The accountant need not, and frequently does not, understand what auditors do, unless he or she is involved in doing audits, or has been trained as an auditor.1-81-9Five examples of specific operational audits that could be conducted by an internal auditor in a manufacturing company are:1.Examine employee time cards and personnel records todetermine if sufficient information is available to maximizethe effective use of personnel.2.Review the processing of sales invoices to determine if itcould be done more efficiently.3.Review the acquisitions of goods, including costs, todetermine if they are being purchased at the lowest possiblecost considering the quality needed.4.Review and evaluate the efficiency of the manufacturingprocess.5.Review the processing of cash receipts to determine if theyare deposited as quickly as possible.1-10 When using a strategic systems auditing approach in an audit of historical financial statements, an auditor must have a thorough understanding of the client and its environment. This knowledge should include the client’s regulatory and operating environment, business strategies and processes, and measurement indicators. The strategic systems approach is also useful in other assurance or consulting engagements. For example, an auditor who is performing an assurance service on information technology would need to understand the client’s business strategies and processes related to information technology, including such things as purchases and sales via the Internet. Similarly, a practitioner performing a consulting engagement to evaluate the efficiency and effectiveness of a cli ent’s manufacturing process would likely start with an analysis of various measurement indicators, including ratio analysis and benchmarking against key competitors.1-11 The major differences in the scope of audit responsibilities are:1.CPAs perform audits in accordance with auditing standards ofpublished financial statements prepared in accordance withgenerally accepted accounting principles.2.GAO auditors perform compliance or operational audits inorder to assure the Congress of the expenditure of publicfunds in accordance with its directives and the law.3.IRS agents perform compliance audits to enforce the federaltax laws as defined by Congress, interpreted by the courts,and regulated by the IRS.4.Internal auditors perform compliance or operational auditsin order to assure management or the board of directors thatcontrols and policies are properly and consistentlydeveloped, applied and evaluated.1-12 The four parts of the Uniform CPA Examination are: Auditing and Attestation, Financial Accounting and Reporting, Regulation, and Business Environment and Concepts.1-13 It is important for CPAs to be knowledgeable about e-commerce technologies because more of their clients are rapidly expanding their use of e-commerce. Examples of commonly used e-commerce technologiesinclude purchases and sales of goods through the Internet, automatic inventory reordering via direct connection to inventory suppliers, and online banking. CPAs who perform audits or provide other assurance services about information generated with these technologies need a basic knowledge and understanding of information technology and e-commerce in order to identify and respond to risks in the financial and other information generated by these technologies.Multiple Choice Questions From CPA Examinations1-14 a. (3) b. (2) c. (2) d. (3)1-15 a. (2) b. (3) c. (4) d. (3)Discussion Questions And Problems1-16 a. The relationship among audit services, attestation services and assurance services is reflected in Figure 1-3 on page 13of the text. Audit services are a form of attestationservice, and attestation services are a form of assuranceservice. In a diagram, audit services are located within theattestation service area, and attestation services arelocated within the assurance service area.b. 1. (1) Audit of historical financial statements2.(2) An attestation service other than an auditservice; or(3) An assurance service that is not an attestationservice (WebTrust developed from the AICPASpecial Committee on Assurance Services, but theservice meets the criteria for an attestationservice.)3.(2) An attestation service other than an auditservice4.(2) An attestation service other than an auditservice5.(2) An attestation service other than an auditservice6.(2) An attestation service that is not an auditservice (Review services are a form ofattestation, but are performed according toStatements on Standards for Accounting andReview Services.)7.(2) An attestation service other than an auditservice8.(2) An attestation service other than an auditservice9.(3) An assurance service that is not an attestationservice1-17 a. The interest rate for the loan that requires a review report is lower than the loan that did not require a review becauseof lower information risk. A review report provides moderateassurance to financial statement users, which lowersinformation risk. An audit report provides further assuranceand lower information risk. As a result of reducedinformation risk, the interest rate is lowest for the loanwith the audit report.b.Given these circumstances, Vial-tek should select the loanfrom City First Bank that requires an annual audit. In thissituation, the additional cost of the audit is less than thereduction in interest due to lower information risk. Thefollowing is the calculation of total costs for each loan:1-17 (continued)c. Vial-tek may desire to have an audit because of the manyother positive benefits that an audit provides. The auditwill provide Vial-tek’s management with assurance aboutannual financial information used for decision-makingpurposes. The audit may detect errors or fraud, and providemanagement with information about the effectiveness ofcontrols. In addition, the audit may result inrecommendations to management that will improve efficiencyor effectiveness.d. Under a strategic systems audit approach, the auditor musthave a thorough understanding of the client and itsenvironment, including the client’s e-commerce technologies,industry, regulatory and operating environment, suppliers,customers, creditors, and business strategies and processes.This thorough analysis helps the auditor identify risksassociated with the client’s strategies that may affectwhether the financial statements are fairly stated. Whenapplying the strategic systems audit approach, the auditoroften discovers ways to help the client improve businessoperations, thereby providing added value to the auditfunction.1-18 a. The services provided by Consumers Union are very similar to assurance services provided by CPA firms. The servicesprovided by Consumers Union and assurance services providedby CPA firms are designed to improve the quality ofinformation for decision makers. CPAs are valued for theirindependence, and the reports provided by Consumers Unionare valued because Consumers Union is independent of theproducts tested.b.The concepts of information risk for the buyer of anautomobile and for the user of financial statements areessentially the same. They are both concerned with theproblem of unreliable information being provided. In thecase of the auditor, the user is concerned about unreliableinformation being provided in the financial statements. Thebuyer of an automobile is likely to be concerned about themanufacturer or dealer providing unreliable information.c.The four causes of information risk are essentially the samefor a buyer of an automobile and a user of financialstatements:(1)Remoteness of information It is difficult for a userto obtain much information about either an automobilemanufacturer or the automobile itself withoutincurring considerable cost. The automobile buyer doeshave the advantage of possibly knowing other users who are satisfied or dissatisfied with a similar automobile.(2)Biases and motives of provider There is a conflictbetween the automobile buyer and the manufacturer. The buyer wants to buy a high quality product at minimum cost whereas the seller wants to maximize the selling price and quantity sold.(3)Voluminous data There is a large amount of availableinformation about automobiles that users might like to have in order to evaluate an automobile. Either that information is not available or too costly to obtain.1-18 (continued)(4)Complex exchange transactions The acquisition of anautomobile is expensive and certainly a complexdecision because of all the components that go intomaking a good automobile and choosing between a largenumber of alternatives.d.The three ways users of financial statements and buyers ofautomobiles reduce information risk are also similar:(1)User verifies information him or herself That can beobtained by driving different automobiles, examiningthe specifications of the automobiles, talking toother users and doing research in various magazines.(2)User shares information risk with management Themanufacturer of a product has a responsibility to meetits warranties and to provide a reasonable product.The buyer of an automobile can return the automobilefor correction of defects. In some cases a refund maybe obtained.(3)Examine the information prepared by Consumer ReportsThis is similar to an audit in the sense thatindependent information is provided by an independentparty. The information provided by Consumer Reports iscomparable to that provided by a CPA firm that auditedfinancial statements.1-19 a. The following parts of the definition of auditing are related to the narrative:(1)Virms is being asked to issue a report aboutqualitative and quantitative information for trucks.The trucks are therefore the information with whichthe auditor is concerned.(2)There are four established criteria which must beevaluated and reported by Virms: existence of thetrucks on the night of June 30, 2005, ownership ofeach truck by Regional Delivery Service, physicalcondition of each truck and fair market value of eachtruck.(3)Susan Virms will accumulate and evaluate four types ofevidence:(a)Count the trucks to determine their existence.(b)Use registrations documents held by Oatley forcomparison to the serial number on each truck todetermine ownership.(c)Examine the trucks to determine each truck'sphysical condition.(d)Examine the blue book to determine the fairmarket value of each truck.(4)Susan Virms, CPA, appears qualified, as a competent,independent person. She is a CPA, and she spends most of her time auditing used automobile and truck dealerships and has extensive specialized knowledge about used trucks that is consistent with the nature of the engagement.1-19(continued)(5)The report results are to include:(a)which of the 35 trucks are parked in Regional'sparking lot the night of June 30.(b)whether all of the trucks are owned by RegionalDelivery Service.(c)the condition of each truck, using establishedguidelines.(d)fair market value of each truck using thecurrent blue book for trucks.b.The only parts of the audit that will be difficult for Virmsare:(1)Evaluating the condition, using the guidelines of poor,good, and excellent. It is highly subjective to do so.If she uses a different criterion than the "bluebook," the fair market value will not be meaningful.Her experience will be essential in using thisguideline.(2)Determining the fair market value, unless it isclearly defined in the blue book for each condition.1-20 a. The major advantages and disadvantages of a career as an IRS agent, CPA, GAO auditor, or an internal auditor are:1-20 (continued)EMPLOYMENT ADVANTAGES DISADVANTAGESINTERNAL AUDITOR 1.Extensive exposure to allsegments of theenterprise with whichemployed.2.Constant exposure to oneindustry presentingopportunity for expertisein that industry.3.Likely to have exposureto compliance, financialand operational auditing.1.Little exposure totaxation and the auditthereof.2.Experience is limited toone enterprise, usuallywithin one or a limitednumber of industries.(b)Other auditing careers that are available are:Auditors within many of the branches of the federalgovernment ., Atomic Energy Commission)Auditors for many state and local government units .,state insurance or bank auditors)1-21 The most likely type of auditor and the type of audit for each of the examples are:EXAMPLE TYPE OF AUDITOR TYPE OF AUDIT1.2.3.4.5.6.7.8.9.10.11.12.IRSGAOInternal auditor or CPACPA or Internal auditorGAOCPAGAOIRSCPAInternal auditor or CPAInternal auditor or CPAGAOComplianceOperationalOperationalFinancial statementsOperationalFinancial statementsFinancial statementsComplianceFinancial statementsComplianceFinancial statementsCompliance1-22 a. The conglomerate should either engage the management advisory services division of a CPA firm or its own internalauditors to conduct the operational audit.b.The auditors will encounter problems in establishingcriteria for evaluating the actual quantitative events andin setting the scope to include all operations in whichsignificant inefficiencies might exist. In writing thereport, the auditors must choose proper wording to statethat no financial audit was performed, that the procedureswere limited in scope and that the results reported do notnecessarily include all the inefficiencies that might exist.1-23 a. The CPA firm for the Internet company described in this problem could address these customer concerns by performinga WebTrust attestation engagement. The WebTrust assuranceservice was created by the profession to respond to thegrowing need for assurance resulting from the growth ofbusiness transacted over the Internet.b.The appropriate WebTrust principle for each of the customerconcerns noted in the problem is as follows:1.Accuracy of product descriptions and adherence tostated return policies: (3) Processing Integrity.2.Credit card and other personal information: (1) OnlinePrivacy and (2) Security.3.Selling information to other companies: (1) OnlinePrivacy and (2) Security.4.System failure: (4) Availability.Internet Problem Solution: Assurance Services1-1 This problem requires students to work with the AICPA assurance services Web site.1.Considering the assurance needs of customers and thecapabilities of CPAs, the Special Committee on AssuranceServices developed business plans for six assurance services.Chapter 1 of the textbook discussed several of theseservices. Go to the service description for the assuranceservice that most interests you (any one of the six). Whatare the major aspects or sections of the associated businessplan ., does the plan address market potential, competition,etc.?)Answer: Each business plan provides background information,describes the service, assesses market potential, discussesissues such as competition and why CPAs should offer theservice, identifies practice tools available and steps thatCPAs must take to begin offering the services.2.The Special Committee's report on Assurance Servicesdiscusses competencies needed by assurance providers todayand in the coming decade. Briefly describe the 5 generalcompetencies needed in the next decade (Hint: See the“About Assurance Services” link. Then follow the“Assurance Services and Academia” link.)Answer:The Committee identified the following five majorimperatives regarding future competencies, each of whichimplies increasing emphasis on the competencies noted:1-1 (continued)Customer focus.Assurance service providers need tounderstand user decision processes and how informationshould enter into those processes. Increased emphasis isneeded on: understanding user needs, communication skills,relationship management, responsiveness and timeliness.Migration to higher value-added information activities. Toprovide more value to client/decision makers and others,assurance service providers need to focus less on activitiesinvolved in the conversion of business events intoinformation ., collecting, classifying, and summarizingactivities) and more on activities involved in thetransformation of information into knowledge ., analyzing,interpreting, and evaluating activities) that effectivelydrives decision processes. This will require: analyticalskills, business advisory skills, business knowledge, modelbuilding (including sensitivity analysis), understanding theclient’s business processes, measurement theory(development of operational definitions of concepts, designof appropriate measurement techniques, etc.).Information technology (IT).Assurance services deal ininformation. Hence, the profound changes occurring ininformation technology will shape virtually all aspects ofassurance services. As information specialists, assuranceservice providers need to embrace information technology inall of its complex dimensions. Embracing IT meansunderstanding how it is transforming all aspects of business.It also means learning how to effectively use newdevelopments in hardware, software, communications, memory,encryption, etc., in everything assurance service providersdo as information specialists, not only in dealing withclients, but also in dealing with each other as individuals,teams, firms, state societies, and national professionalorganizations.Pace of change and complexity. Assurance services will takeplace in an environment of rapid change and increasingcomplexity. Assurance service providers need to investheavily in life-long learning in order to maintain up-to-date knowledge and skills. They will require: intellectualcapability, learning and rejuvenation.Competition.Growth in new assurance services will dependless on franchise/regulation and more on market forces.Assurance service providers need to develop their marketingskills —the ability to see clients’ latent informationand assurance needs and rapidly design and deploy cost-effective services to meet those needs —in order toeffectively compete for market-driven assurance services.Required skills include: marketing and selling,understanding customer needs, designing and deployingeffective solutions.1-1 (continued)(Note: Internet problems address current issues using Internet sources. Because Internet sites are subject to change, Internet problems and solutions are subject to change. Current information on Internet problems is available at。
审计学-一种整合的方法
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
3 - 16
Learning 5
Identify the types of audit reports that can be issued when an unqualified opinion is not justified.
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
3-4
Conditions for Standard Unqualified Audit Report
1. All financial statements are included. 2. The three general standards have been followed in all respects on the engagement. 3. Sufficient evidence has been accumulated to conclude that the three standards of field work have been met.
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
3 - 15
Reports Involving Other Auditors
1. Make no reference in the audit report 2. Make reference in the report (modified wording report) 3. Qualify the opinion
审计学：一种整合方法-阿伦斯-英文版-第12版RRChapter10课件
Existing sales transactions are recorded
Sales for goods shipped are correctly billed
审计学：一种整合方法-阿伦斯-英文版-第12版 RRChapter10
审计学：一种整合方法-阿伦斯-英文版-第12版 RRChapter10
Internal Control Objectives
1. Reliability of financial reporting 2. Efficiency and effectiveness of operations 3. Compliance with laws and regulations
➢ Auditor responsibilities for testing internal control
审计学：一种整合方法-阿伦斯-英文版-第12版 RRChapter10
Sales Transaction-related Audit Objectives
Transaction-related Audit Objective – General form
审计学：一种整合方法-阿伦斯-英文版-第12版 RRChapter10
Five Components of Internal Control
Risk assessment
审计学：一种整合方法-阿伦斯-英文版-第12版 RRChapter10
Learning Objective 2
• Contrast management’s • responsibilities for maintaining • and reporting on internal controls • with the auditor’s responsibilities • for understanding, testing, and • reporting on internal controls.
审计学：一种整合方法 阿伦斯 英文版 第12版 课后答案 Chapter 15 Solutions Manual
Chapter 15Audit Sampling for Tests of Controls andSubstantive Tests of TransactionsReview Questions15-1 A representative sample is one in which the characteristics of interest for the sample are approximately the same as for the population (that is, the sample accurately represents the total population). If the population contains significant misstatements, but the sample is practically free of misstatements, the sample is nonrepresentative, which is likely to result in an improper audit decision. The auditor can never know for sure whether he or she has a representative sample because the entire population is ordinarily not tested, but certain things, such as the use of random selection, can increase the likelihood of a representative sample.15-2Statistical sampling is the use of mathematical measurement techniques to calculate formal statistical results. The auditor therefore quantifies sampling risk when statistical sampling is used. In nonstatistical sampling, the auditor does not quantify sampling risk. Instead, conclusions are reached about populations on a more judgmental basis.For both statistical and nonstatistical methods, the three main parts are:1. Plan the sample2. Select the sample and perform the tests3. Evaluate the results15-3In replacement sampling, an element in the population can be included in the sample more than once if the random number corresponding to that element is selected more than once. In nonreplacement sampling, an element can be included only once. If the random number corresponding to an element is selected more than once, it is simply treated as a discard the second time. Although both selection approaches are consistent with sound statistical theory, auditors rarely use replacement sampling; it seems more intuitively satisfying to auditors to include an item only once.15-4 A simple random sample is one in which every possible combination of elements in the population has an equal chance of selection. Two methods of simple random selection are use of a random number table, and use of the computer to generate random numbers. Auditors most often use the computer to generate random numbers because it saves time, reduces the likelihood of error, and provides automatic documentation of the sample selected.15-5In systematic sampling, the auditor calculates an interval and then methodically selects the items for the sample based on the size of the interval. The interval is set by dividing the population size by the number of sample items desired.To select 35 numbers from a population of 1,750, the auditor divides 35 into 1,750 and gets an interval of 50. He or she then selects a random number between 0 and 49. Assume the auditor chooses 17. The first item is the number 17. The next is 67, then 117, 167, and so on.The advantage of systematic sampling is its ease of use. In most populations a systematic sample can be drawn quickly, the approach automatically puts the numbers in sequential order and documentation is easy.A major problem with the use of systematic sampling is the possibility of bias. Because of the way systematic samples are selected, once the first item in the sample is selected, other items are chosen automatically. This causes no problems if the characteristics of interest, such as control deviations, are distributed randomly throughout the population; however, in many cases they are not. If all items of a certain type are processed at certain times of the month or with the use of certain document numbers, a systematically drawn sample has a higher likelihood of failing to obtain a representative sample. This shortcoming is sufficiently serious that some CPA firms prohibit the use of systematic sampling. 15-6The purpose of using nonstatistical sampling for tests of controls and substantive tests of transactions is to estimate the proportion of items in a population containing a characteristic or attribute of interest. The auditor is ordinarily interested in determining internal control deviations or monetary misstatements for tests of controls and substantive tests of transactions.15-7 A block sample is the selection of several items in sequence. Once the first item in the block is selected, the remainder of the block is chosen automatically. Thus, to select 5 blocks of 20 sales invoices, one would select one invoice and the block would be that invoice plus the next 19 entries. This procedure would be repeated 4 other times.15-8 The terms below are defined as follows:15-8 (continued)15-9The sampling unit is the population item from which the auditor selects sample items. The major consideration in defining the sampling unit is making it consistent with the objectives of the audit tests. Thus, the definition of the population and the planned audit procedures usually dictate the appropriate sampling unit.The sampling unit for verifying the occurrence of recorded sales would be the entries in the sales journal since this is the document the auditor wishes to validate. The sampling unit for testing the possibility of omitted sales is the shipping document from which sales are recorded because the failure to bill a shipment is the exception condition of interest to the auditor.15-10 The tolerable exception rate (TER) represents the exception rate that the auditor will permit in the population and still be willing to use the assessed control risk and/or the amount of monetary misstatements in the transactions established during planning. TER is determined by choice of the auditor on the basis of his or her professional judgment.The computed upper exception rate (CUER) is the highest estimated exception rate in the population, at a given ARACR. For nonstatistical sampling, CUER is determined by adding an estimate of sampling error to the SER (sample exception rate). For statistical sampling, CUER is determined by using a statistical sampling table after the auditor has completed the audit testing and therefore knows the number of exceptions in the sample.15-11 Sampling error is an inherent part of sampling that results from testing less than the entire population. Sampling error simply means that the sample is not perfectly representative of the entire population.Nonsampling error occurs when audit tests do not uncover errors that exist in the sample. Nonsampling error can result from:1. The auditor's failure to recognize exceptions, or2. Inappropriate or ineffective audit procedures.There are two ways to reduce sampling risk:1. Increase sample size.2. Use an appropriate method of selecting sample items from thepopulation.Careful design of audit procedures and proper supervision and review are ways to reduce nonsampling risk.15-12 An attribute is the definition of the characteristic being tested and the exception conditions whenever audit sampling is used. The attributes of interest are determined directly from the audit program.15-13 An attribute is the characteristic being tested for in a population. An exception occurs when the attribute being tested for is absent. The exception for the audit procedure, the duplicate sales invoice has been initialed indicating the performance of internal verification, is the lack of initials on duplicate sales invoices.15-14 Tolerable exception rate is the result of an auditor's judgment. The suitable TER is a question of materiality and is therefore affected by both the definition and the importance of the attribute in the audit plan.The sample size for a TER of 6% would be smaller than that for a TER of 3%, all other factors being equal.15-15 The appropriate ARACR is a decision the auditor must make using professional judgment. The degree to which the auditor wishes to reduce assessed control risk below the maximum is the major factor determining the auditor's ARACR.The auditor will choose a smaller sample size for an ARACR of 10% than would be used if the risk were 5%, all other factors being equal.15-16 The relationship between sample size and the four factors determining sample size are as follows:a. As the ARACR increases, the required sample size decreases.b. As the population size increases, the required sample size isnormally unchanged, or may increase slightly.c. As the TER increases, the sample size decreases.d. As the EPER increases, the required sample size increases.15-17 In this situation, the SER is 3%, the sample size is 100 and the ARACR is 5%. From the 5% ARACR table (Table 15-9) then, the CUER is 7.6%. This means that the auditor can state with a 5% risk of being wrong that the true population exception rate does not exceed 7.6%.15-18 Analysis of exceptions is the investigation of individual exceptions to determine the cause of the breakdown in internal control. Such analysis is important because by discovering the nature and causes of individual exceptions, the auditor can more effectively evaluate the effectiveness of internal control. The analysis attempts to tell the "why" and "how" of the exceptions after the auditor already knows how many and what types of exceptions have occurred.15-19 When the CUER exceeds the TER, the auditor may do one or more of the following:1. Revise the TER or the ARACR. This alternative should be followed onlywhen the auditor has concluded that the original specifications weretoo conservative, and when he or she is willing to accept the riskassociated with the higher specifications.2. Expand the sample size. This alternative should be followed whenthe auditor expects the additional benefits to exceed the additionalcosts, that is, the auditor believes that the sample tested was notrepresentative of the population.3. Revise assessed control risk upward. This is likely to increasesubstantive procedures. Revising assessed control risk may bedone if 1 or 2 is not practical and additional substantive proceduresare possible.4. Write a letter to management. This action should be done inconjunction with each of the three alternatives above. Managementshould always be informed when its internal controls are notoperating effectively. If a deficiency in internal control is consideredto be a significant deficiency in the design or operation of internalcontrol, professional standards require the auditor to communicatethe significant deficiency to the audit committee or its equivalent inwriting. If the client is a publicly traded company, the auditor mustevaluate the deficiency to determine the impact on the auditor’sreport on internal control over financial reporting. If the deficiency isdeemed to be a material weakness, the auditor’s report on internalcontrol would contain an adverse opinion.15-20 Random (probabilistic) selection is a part of statistical sampling, but it is not, by itself, statistical measurement. To have statistical measurement, it is necessary to mathematically generalize from the sample to the population.Probabilistic selection must be used if the sample is to be evaluated statistically, although it is also acceptable to use probabilistic selection with a nonstatistical evaluation. If nonprobabilistic selection is used, nonstatistical evaluation must be used.15-21 The decisions the auditor must make in using attributes sampling are: What are the objectives of the audit test?Does audit sampling apply?What attributes are to be tested and what exception conditions are identified?What is the population?What is the sampling unit?What should the TER be?What should the ARACR be?What is the EPER?What generalizations can be made from the sample to thepopulation?What are the causes of the individual exceptions?Is the population acceptable?15-21 (continued)In making the above decisions, the following should be considered: The individual situation.Time and budget constraints.The availability of additional substantive procedures.The professional judgment of the auditor.Multiple Choice Questions From CPA Examinations15-22 a. (1) b. (3) c. (2) d. (4)15-23 a. (1) b. (3) c. (4) d. (4)15-24 a. (4) b. (3) c. (1) d. (2)Discussion Questions and Problems15-25a.An example random sampling plan prepared in Excel (P1525.xls) is available on the Companion Website and on the Instructor’s Resource CD-ROM, which is available upon request. The command for selecting the random number can be entered directly onto the spreadsheet, or can be selected from the function menu (math & trig) functions. It may be necessary to add the analysis tool pack to access the RANDBETWEEN function. Once the formula is entered, it can be copied down to select additional random numbers. When a pair of random numbers is required, the formula for the first random number can be entered in the first column, and the formula for the second random number can be entered in the second column.a. First five numbers using systematic selection:Using systematic selection, the definition of the sampling unit for determining the selection interval for population 3 is the total number of lines in the population. The length of the interval is rounded down to ensure that all line numbers selected are within the defined population.15-26a. To test whether shipments have been billed, a sample of warehouse removal slips should be selected and examined to see ifthey have the proper sales invoice attached. The sampling unit willtherefore be the warehouse removal slip.b. Attributes sampling method: Assuming the auditor is willing toaccept a TER of 3% at a 10% ARACR, expecting no exceptions inthe sample, the appropriate sample size would be 76, determinedfrom Table 15-8.Nonstatistical sampling method: There is no one right answer tothis question because the sample size is determined usingprofessional judgment. Due to the relatively small TER (3%), thesample size should not be small. It will most likely be similar in sizeto the sample chosen by the statistical method.c. Systematic sample selection:22839 = Population size of warehouse removal slips(37521-14682).76 = Sample size using statistical sampling (students’answers will vary if nonstatistical sampling wasused in part b.300 = Interval (22839/76) if statistical sampling is used(students’ answers will vary if nonstatisticalsampling was used in part b).14825 = Random starting point.Select warehouse removal slip 14825 and every 300th warehouseremoval slip after (15125, 15425, etc.)Computer generation of random numbers using Excel (P1526.xls):=RANDBETWEEN(14682,37521)The command for selecting the random number can be entereddirectly onto the spreadsheet, or can be selected from the functionmenu (math & trig) functions. It may be necessary to add theanalysis tool pack to access the RANDBETWEEN function. Oncethe formula is entered, it can be copied down to select additionalrandom numbers.d. Other audit procedures that could be performed are:1. Test extensions on attached sales invoices for clericalaccuracy. (Accuracy)2. Test time delay between warehouse removal slip date andbilling date for timeliness of billing. (Timing)3. Trace entries into perpetual inventory records to determinethat inventory is properly relieved for shipments. (Postingand summarization)15-26 (continued)e. The test performed in part c cannot be used to test for occurrenceof sales because the auditor already knows that inventory wasshipped for these sales. To test for occurrence of sales, the salesinvoice entry in the sales journal is the sampling unit. Since thesales invoice numbers are not identical to the warehouse removalslips it would be improper to use the same sample.15-27a. It would be appropriate to use attributes sampling for all audit procedures except audit procedure 1. Procedure 1 is an analyticalprocedure for which the auditor is doing a 100% review of the entirecash receipts journal.b. The appropriate sampling unit for audit procedures 2-5 is a line item,or the date the prelisting of cash receipts is prepared. The primaryemphasis in the test is the completeness objective and auditprocedure 2 indicates there is a prelisting of cash receipts. All otherprocedures can be performed efficiently and effectively by using theprelisting.c. The attributes for testing are as follows:d. The sample sizes for each attribute are as follows:15-28a. Because the sample sizes under nonstatistical sampling are determined using auditor judgment, students’ answers to thisquestion will vary. They will most likely be similar to the samplesizes chosen using attributes sampling in part b. The importantpoint to remember is that the sample sizes chosen should reflectthe changes in the four factors (ARACR, TER, EPER, andpopulation size). The sample sizes should have fairly predictablerelationships, given the changes in the four factors. The followingreflects some of the relationships that should exist in student’ssample size decisions:SAMPLE SIZE EXPLANATION1. 90 Given2. > Column 1 Decrease in ARACR3. > Column 2 Decrease in TER4. > Column 1 Decrease in ARACR (column 4 is thesame as column 2, with a smallerpopulation size)5. < Column 1 Increase in TER-EPER6. < Column 5 Decrease in EPER7. > Columns 3 & 4 Decrease in TER-EPERb. Using the attributes sampling table in Table 15-8, the sample sizesfor columns 1-7 are:1. 882. 1273. 1814. 1275. 256. 187. 149c.d. The difference in the sample size for columns 3 and 6 result fromthe larger ARACR and larger TER in column 6. The extremely largeTER is the major factor causing the difference.e. The greatest effect on the sample size is the difference betweenTER and EPER. For columns 3 and 7, the differences between theTER and EPER were 3% and 2% respectively. Those two also hadthe highest sample size. Where the difference between TER andEPER was great, such as columns 5 and 6, the required samplesize was extremely small.Population size had a relatively small effect on sample size.The difference in population size in columns 2 and 4 was 99,000items, but the increase in sample size for the larger population wasmarginal (actually the sample sizes were the same using theattributes sampling table).f. The sample size is referred to as the initial sample size because itis based on an estimate of the SER. The actual sample must beevaluated before it is possible to know whether the sample issufficiently large to achieve the objectives of the test.15-29 a.* Students’ answers as to whether the allowance for sampling error risk is sufficient will vary, depending on their judgment. However, they should recognize the effect that lower sample sizes have on the allowance for sampling risk in situations 3, 5 and 8.b. Using the attributes sampling table in Table 15-9, the CUERs forcolumns 1-8 are:1. 4.0%2. 4.6%3. 9.2%4. 4.6%5. 6.2%6. 16.4%7. 3.0%8. 11.3%c.d. The factor that appears to have the greatest effect is the number ofexceptions found in the sample compared to sample size. For example, in columns 5 and 6, the increase from 2% to 10% SER dramatically increased the CUER. Population size appears to have the least effect. For example, in columns 2 and 4, the CUER was the same using the attributes sampling table even though the population in column 4 was 10 times larger.e. The CUER represents the results of the actual sample whereas theTER represents what the auditor will allow. They must be compared to determine whether or not the population is acceptable.15-30a. and b. The sample sizes and CUERs are shown in the following table:a. The auditor selected a sample size smaller than that determinedfrom the tables in populations 1 and 3. The effect of selecting asmaller sample size than the initial sample size required from thetable is the increased likelihood of having the CUER exceed theTER. If a larger sample size is selected, the result may be a samplesize larger than needed to satisfy TER. That results in excess auditcost. Ultimately, however, the comparison of CUER to TERdetermines whether the sample size was too large or too small.b. The SER and CUER are shown in columns 4 and 5 in thepreceding table.c. The population results are unacceptable for populations 1, 4, and 6.In each of those cases, the CUER exceeds TER.The auditor's options are to change TER or ARACR, increase the sample size, or perform other substantive tests todetermine whether there are actually material misstatements in thepopulation. An increase in sample size may be worthwhile inpopulation 1 because the CUER exceeds TER by only a smallamount. Increasing sample size would not likely result in improvedresults for either population 4 or 6 because the CUER exceedsTER by a large amount.d. Analysis of exceptions is necessary even when the population isacceptable because the auditor wants to determine the nature andcause of all exceptions. If, for example, the auditor determines thata misstatement was intentional, additional action would be requiredeven if the CUER were less than TER.15-30 (Continued)e.15-31 a. The actual allowance for sampling risk is shown in the following table:b. The CUER is higher for attribute 1 than attribute 2 because the sample sizeis smaller for attribute 1, resulting in a larger allowance for sampling risk.c. The CUER is higher for attribute 3 than attribute 1 because the auditorselected a lower ARACR. This resulted in a larger allowance for sampling risk to achieve the lower ARACR.d. If the auditor increases the sample size for attribute 4 by 50 items and findsno additional exceptions, the CUER is 5.1% (sample size of 150 and three exceptions). If the auditor finds one exception in the additional items, the CUER is 6.0% (sample size of 150, four exceptions). With a TER of 6%, the sample results will be acceptable if one or no exceptions are found in the additional 50 items. This would require a lower SER in the additional sample than the SER in the original sample of 3.0 percent. Whether a lower rate of exception is likely in the additional sample depends on the rate of exception the auditor expected in designing the sample, and whether the auditor believe the original sample to be representative.15-32a. The following shows which are exceptions and why:b. It is inappropriate to set a single acceptable tolerable exception rateand estimated population exception rate for the combinedexceptions because each attribute has a different significance tothe auditor and should be considered separately in analyzing theresults of the test.c. The CUER assuming a 5% ARACR for each attribute and a samplesize of 150 is as follows:15-32 (continued)d.*Students’ answers will most likely vary for this attribute.e. For each exception, the auditor should check with the controller todetermine an explanation for the cause. In addition, the appropriateanalysis for each type of exception is as follows:15-33a. Attributes sampling approach: The test of control attribute had a 6% SER and a CUER of 12.9%. The substantive test of transactionsattribute has SER of 0% and a CUER of 4.6%.Nonstatistical sampling approach: As in the attributes samplingapproach, the SERs for the test of control and the substantive testof transactions are 6% and 0%, respectively. Students’ estimates ofthe CUERs for the two tests will vary, but will probably be similar tothe CUERs calculated under the attributes sampling approach.b. Attributes sampling approach: TER is 5%. CUERs are 12.9% and4.6%. Therefore, only the substantive test of transactions resultsare satisfactory.Nonstatistical sampling approach: Because the SER for the test ofcontrol is greater than the TER of 5%, the results are clearly notacceptable. Students’ estimates for CUER for the test of controlshould be greater than the SER of 6%. For the substantive test oftransactions, the SER is 0%. It is unlikely that students will estimateCUER for this test greater than 5%, so the results are acceptablefor the substantive test of transactions.c. If the CUER exceeds the TER, the auditor may:1. Revise the TER if he or she thinks the original specificationswere too conservative.2. Expand the sample size if cost permits.3. Alter the substantive procedures if possible.4. Write a letter to management in conjunction with each of theabove to inform management of a deficiency in their internalcontrols. If the client is a publicly traded company, theauditor must evaluate the deficiency to determine the impacton the auditor’s report on internal control over financialreporting. If the deficiency is deemed to be a materialweakness, the auditor’s report on internal control wouldcontain an adverse opinion.In this case, the auditor has evidence that the test of control procedures are not effective, but no exceptions in the sampleresulted because of the breakdown. An expansion of the attributestest does not seem advisable and therefore, the auditor shouldprobably expand confirmation of accounts receivable tests. Inaddition, he or she should write a letter to management to informthem of the control breakdown.d. Although misstatements are more likely when controls are noteffective, control deviations do not necessarily result in actualmisstatements. These control deviations involved a lack ofindication of internal verification of pricing, extensions and footingsof invoices. The deviations will not result in actual errors if pricing,extensions and footings were initially correctly calculated, or if theindividual responsible for internal verification performed theprocedure but did not document that it was performed.e. In this case, we want to find out why some invoices are notinternally verified. Possible reasons are incompetence,carelessness, regular clerk on vacation, etc. It is desirable to isolatethe exceptions to certain clerks, time periods or types of invoices.Case15-34a. Audit sampling could be conveniently used for procedures 3 and 4 since each is to be performed on a sample of the population.b. The most appropriate sampling unit for conducting most of the auditsampling tests is the shipping document because most of the testsare related to procedure 4. Following the instructions of the auditprogram, however, the auditor would use sales journal entries asthe sampling unit for step 3 and shipping document numbers forstep 4. Using shipping document numbers, rather than thedocuments themselves, allows the auditor to test the numericalcontrol over shipping documents, as well as to test for unrecordedsales. The selection of numbers will lead to a sample of actualshipping documents upon which tests will be performed.c. Note: The sampling data sheet that follows assumes an attributessampling approach. The only difference between the sampling datasheet for attributes sampling and for nonstatistical sampling is theactual determination of sample size. For nonstatistical sampling,students’ answers will vary, but will most likely be comparable tothe sample sizes determined under attributes sampling.。
阿伦斯审计学：一种整合方法课后习题答案ch01
Chapter 1The Demand for Audit and Other Assurance Services Review Questions1-1 The relationship among audit services, attestation services, and assurance services is reflected in Figure 1-3 on page 13 of the text. An assurance service is an independent professional service to improve the quality of information for decision makers. An attestation service is a form of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party. Audit services are a form of attestation service in which the auditor expresses a written conclusion about the degree of correspondence between information and established criteria.The most common form of audit service is an audit of historical financial statements, in which the auditor expresses a conclusion as to whether the financial statements arepresented in conformity with generally accepted accounting principles. An example of an attestation service is a report on the effe ctiveness of an entity’s internal control over financial reporting. There are many possible forms of assurance services, including services related to business performance measurement, health care performance, and information system reliability.1-2 An independent audit is a means of satisfying the need for reliable information on the part of decision makers. Factors of a complex society which contribute to this need are:1.Remoteness of informationa.Owners (stockholders) divorcedfrom managementb.Directors not involved in day-to-day operations or decisionsc.Dispersion of the business amongnumerous geographic locationsand complex corporate structures2.Biases and motives of providerrmation will be biased infavor of the provider when his orher goals are inconsistent withthe decision maker's goals.3.Voluminous dataa.Possibly millions of transactionsprocessed daily via sophisticatedcomputerized systemsb.Multiple product linesc.Multiple transaction locationsplex exchange transactionsa.New and changing businessrelationships lead to innovativeaccounting and reportingproblemsb.Potential impact of transactionsnot quantifiable, leading toincreased disclosures1-3 1. Risk-free interest rate This is approximately the rate the bankcould earn by investing in U.S.treasury notes for the same length oftime as the business loan.2.Business risk for the customer Thisrisk reflects the possibility that thebusiness will not be able to repay itsloan because of economic or businessconditions such as a recession, poormanagement decisions, orunexpected competition in theindustry.rmation risk This risk reflects thepossibility that the information uponwhich the business risk decision wasmade was inaccurate. A likely causeof the information risk is thepossibility of inaccurate financialstatements.Auditing has no effect on either the risk-free interest rate or business risk. However, auditing can significantly reduce information risk.1-4 The four primary causes of information risk are remoteness of information, biases and motives of the provider, voluminous data, and the existence of complex exchange transactions.The three main ways to reduce information risk are:er verifies the information.er shares the information risk withmanagement.3.Audited financial statements areprovided.The advantages and disadvantages of each are as follows:1-5 To do an audit, there must be information in a verifiable form and some standards (criteria) by which the auditor can evaluate the information. Examples of established criteria include generally accepted accounting principles and the Internal Revenue Code. Determining the degree of correspondence between information and established criteria is determining whether a given set of information is in accordance with the established criteria. The information for Jones Company's tax return is the federal tax returns filed by the company. The established criteria are found in the Internal Revenue Code and all interpretations. For the audit of Jones Company's financial statements the information is the financial statements being audited and the established criteria are generally accepted accounting principles.1-6 The primary evidence the internal revenue agent will use in the audit of the Jones Company's tax return include allavailable documentation and other information available in Jones' office or from other sources. For example, when the internal revenue agent audits taxable income, a major source of information will be bank statements, the cash receipts journal and deposit slips. The internal revenue agent is likely to emphasize unrecorded receipts and revenues. For expenses, major sources of evidence are likely to be cancelled checks, vendors' invoices and other supporting documentation.1-7 This apparent paradox arises from the distinction between the function of auditing and the function of accounting. The accounting function is the recording, classifying and summarizing of economic events to provide relevant information to decision makers. The rules of accounting are the criteria used by the auditor for evaluating the presentation of economic events for financial statements and he or she must therefore have an understanding ofgenerally accepted accounting principles (GAAP), as well as auditing standards. The accountant need not, and frequently does not, understand what auditors do, unless he or she is involved in doing audits, or has been trained as an auditor.1-81-9 Five examples of specific operational audits that could be conducted by an internal auditor in a manufacturing company are:1.Examine employee time cards andpersonnel records to determine ifsufficient information is available tomaximize the effective use ofpersonnel.2.Review the processing of salesinvoices to determine if it could bedone more efficiently.3.Review the acquisitions of goods,including costs, to determine if theyare being purchased at the lowestpossible cost considering the qualityneeded.4.Review and evaluate the efficiency ofthe manufacturing process.5.Review the processing of cashreceipts to determine if they aredeposited as quickly as possible.1-10 When using a strategic systems auditing approach in an audit of historical financial statements, an auditor must have a thorough understanding of the client and its environment. This knowledge should include the client’s regulatory and operating environment, business strategies and processes, and measurement indicators. The strategic systems approach is also useful in other assurance or consulting engagements. For example, an auditor who is performing an assurance service on information technology would need to understand the client’s business strategies and processes related to information technology, including such things as purchases and sales via the Internet. Similarly, a practitioner performinga consulting engagement to evaluate the efficiency and effectiveness of a cli ent’s manufacturing process would likely start with an analysis of various measurement indicators, including ratio analysis and benchmarking against key competitors.1-11 The major differences in the scope of audit responsibilities are:1.CPAs perform audits in accordancewith auditing standards of publishedfinancial statements prepared inaccordance with generally acceptedaccounting principles.2.GAO auditors perform compliance oroperational audits in order to assurethe Congress of the expenditure ofpublic funds in accordance with itsdirectives and the law.3.IRS agents perform complianceaudits to enforce the federal tax lawsas defined by Congress, interpretedby the courts, and regulated by theIRS.4.Internal auditors perform complianceor operational audits in order toassure management or the board ofdirectors that controls and policiesare properly and consistentlydeveloped, applied and evaluated.1-12 The four parts of the Uniform CPA Examination are: Auditing and Attestation, Financial Accounting and Reporting, Regulation, and Business Environment and Concepts.1-13 It is important for CPAs to be knowledgeable about e-commerce technologies because more of their clients are rapidly expanding their use of e-commerce. Examples of commonly used e-commerce technologies include purchases and sales of goods through the Internet, automatic inventory reordering via direct connection to inventory suppliers, and online banking. CPAs who perform audits or provide other assurance services about information generated with thesetechnologies need a basic knowledge and understanding of information technology and e-commerce in order to identify and respond to risks in the financial and other information generated by these technologies. Multiple Choice Questions From CPA Examinations1-14 a. (3) b. (2) c. (2) d. (3)1-15 a. (2) b. (3) c. (4) d. (3)Discussion Questions And Problems1-16 a. The relationship among audit services, attestation services andassurance services is reflected inFigure 1-3 on page 13 of the text.Audit services are a form ofattestation service, and attestationservices are a form of assuranceservice. In a diagram, audit servicesare located within the attestationservice area, and attestation services are located within the assurance service area.b. 1. (1) Audit of historical financial statements2.(2) An attestation service otherthan an audit service; or(3) An assurance service that isnot an attestation service(WebTrust developed fromthe AICPA Special Committeeon Assurance Services, butthe service meets the criteriafor an attestation service.)3.(2) An attestation service otherthan an audit service4.(2) An attestation service otherthan an audit service5.(2) An attestation service otherthan an audit service6.(2) An attestation service that isnot an audit service (Reviewservices are a form ofattestation, but areperformed according toStatements on Standards forAccounting and ReviewServices.)7.(2) An attestation service otherthan an audit service8.(2) An attestation service otherthan an audit service9.(3) An assurance service that isnot an attestation service1-17 a. The interest rate for the loan that requires a review report is lowerthan the loan that did not require areview because of lower informationrisk. A review report providesmoderate assurance to financialstatement users, which lowersinformation risk. An audit reportprovides further assurance and lowerinformation risk. As a result ofreduced information risk, the interestrate is lowest for the loan with theaudit report.b.Given these circumstances, Vial-tekshould select the loan from City FirstBank that requires an annual audit. In this situation, the additional cost of the audit is less than the reduction in interest due to lower information risk. The following is the calculation of total costs for each loan:1-17 (continued)c. Vial-tek may desire to have an auditbecause of the many other positivebenefits that an audit provides. Theaudit will provide Vial-tek’smanagement with assurance aboutannual financial information used fordecision-making purposes. The auditmay detect errors or fraud, andprovide management withinformation about the effectivenessof controls. In addition, the auditmay result in recommendations tomanagement that will improveefficiency or effectiveness.d. Under a strategic systems auditapproach, the auditor must have athorough understanding of the clientand its environment, including theclient’s e-commerce technologies,industry, regulatory and operatingenvironment, suppliers, customers,creditors, and business strategies andprocesses. This thorough analysishelps the auditor identify risksassociated with the client’s strategiesthat may affect whether the financialstatements are fairly stated. Whenapplying the strategic systems auditapproach, the auditor often discoversways to help the client improvebusiness operations, therebyproviding added value to the auditfunction.1-18 a. The services provided by Consumers Union are very similar toassurance services provided by CPAfirms. The services provided byConsumers Union and assuranceservices provided by CPA firms aredesigned to improve the quality ofinformation for decision makers.CPAs are valued for theirindependence, and the reportsprovided by Consumers Union arevalued because Consumers Union isindependent of the products tested.b.The concepts of information risk forthe buyer of an automobile and forthe user of financial statements areessentially the same. They are both concerned with the problem of unreliable information being provided. In the case of the auditor, the user is concerned about unreliable information being provided in the financial statements.The buyer of an automobile is likely to be concerned about the manufacturer or dealer providing unreliable information.c.The four causes of information riskare essentially the same for a buyer of an automobile and a user of financial statements:(1)Remoteness of information It isdifficult for a user to obtain muchinformation about either anautomobile manufacturer or theautomobile itself withoutincurring considerable cost. Theautomobile buyer does have theadvantage of possibly knowingother users who are satisfied ordissatisfied with a similar automobile.(2)Biases and motives of providerThere is a conflict between the automobile buyer and the manufacturer. The buyer wants to buy a high quality product at minimum cost whereas the seller wants to maximize the selling price and quantity sold.(3)Voluminous data There is a largeamount of available information about automobiles that users might like to have in order to evaluate an automobile. Either that information is not available or too costly to obtain.1-18 (continued)(4)Complex exchange transactionsThe acquisition of an automobileis expensive and certainly acomplex decision because of allthe components that go intomaking a good automobile andchoosing between a largenumber of alternatives.d.The three ways users of financialstatements and buyers of automobilesreduce information risk are also similar:(1)User verifies information him orherself That can be obtained bydriving different automobiles,examining the specifications ofthe automobiles, talking to otherusers and doing research invarious magazines.(2)User shares information risk withmanagement The manufacturerof a product has a responsibilityto meet its warranties and toprovide a reasonable product.The buyer of an automobile canreturn the automobile forcorrection of defects. In somecases a refund may be obtained.(3)Examine the informationprepared by Consumer ReportsThis is similar to an audit in thesense that independentinformation is provided by anindependent party. Theinformation provided byConsumer Reports is comparableto that provided by a CPA firmthat audited financial statements. 1-19a. T he following parts of the definition of auditing are related to the narrative:(1)Virms is being asked to issue areport about qualitative andquantitative information fortrucks. The trucks are thereforethe information with which theauditor is concerned.(2)There are four establishedcriteria which must be evaluatedand reported by Virms: existenceof the trucks on the night of June 30, 2005, ownership of each truck by Regional Delivery Service, physical condition of each truck and fair market value of each truck.(3)Susan Virms will accumulate andevaluate four types of evidence:(a)Count the trucks todetermine their existence.(b)Use registrations documentsheld by Oatley forcomparison to the serialnumber on each truck todetermine ownership.(c)Examine the trucks todetermine each truck'sphysical condition.(d)Examine the blue book todetermine the fair marketvalue of each truck.(4)Susan Virms, CPA, appearsqualified, as a competent, independent person. She is a CPA, and she spends most of her timeauditing used automobile and truck dealerships and has extensive specialized knowledge about used trucks that is consistent with the nature of the engagement.1-19(continued)(5)The report results are to include:(a)which of the 35 trucks areparked in Regional's parkinglot the night of June 30.(b)whether all of the trucks areowned by Regional DeliveryService.(c)the condition of each truck,using established guidelines.(d)fair market value of eachtruck using the current bluebook for trucks.b.The only parts of the audit that willbe difficult for Virms are:(1)Evaluating the condition, usingthe guidelines of poor, good, andexcellent. It is highly subjective todo so. If she uses a differentcriterion than the "blue book,"the fair market value will not bemeaningful. Her experience willbe essential in using thisguideline.(2)Determining the fair marketvalue, unless it is clearly definedin the blue book for eachcondition.1-20a. T he major advantages and disadvantages of a career as an IRSagent, CPA, GAO auditor, or an internalauditor are:1-20 (continued)EMPLOYMENT ADVANTAGES DISADVANTAGESINTERNAL AUDITOR 1.Extensive exposure to allsegments of the enterprisewith which employed.2.Constant exposure to oneindustry presentingopportunity for expertise inthat industry.3.Likely to have exposure tocompliance, financial andoperational auditing.1.Little exposure to taxationand the audit thereof.2.Experience is limited to oneenterprise, usually withinone or a limited number ofindustries.(b)Other auditing careers that areavailable are:Auditors within many of thebranches of the federalgovernment ., Atomic EnergyCommission)Auditors for many state and localgovernment units ., stateinsurance or bank auditors)1-21 The most likely type of auditor and the type of audit for each of the examples are:1-22 a. The conglomerate should either engage the management advisoryservices division of a CPA firm or itsown internal auditors to conduct theoperational audit.b.The auditors will encounter problemsin establishing criteria for evaluatingthe actual quantitative events and insetting the scope to include alloperations in which significantinefficiencies might exist. In writingthe report, the auditors must chooseproper wording to state that nofinancial audit was performed, thatthe procedures were limited in scopeand that the results reported do notnecessarily include all theinefficiencies that might exist.1-23 a. The CPA firm for the Internet company described in this problemcould address these customerconcerns by performing a WebTrustattestation engagement. TheWebTrust assurance service wascreated by the profession to respondto the growing need for assuranceresulting from the growth of businesstransacted over the Internet.b.The appropriate WebTrust principlefor each of the customer concernsnoted in the problem is as follows:1.Accuracy of product descriptionsand adherence to stated returnpolicies: (3) Processing Integrity.2.Credit card and other personalinformation: (1) Online Privacyand (2) Security.3.Selling information to othercompanies: (1) Online Privacyand (2) Security.4.System failure: (4) Availability.Internet Problem Solution: Assurance Services1-1 This problem requires students to work with the AICPA assurance services Web site.1.Considering the assurance needs ofcustomers and the capabilities ofCPAs, the Special Committee onAssurance Services developedbusiness plans for six assuranceservices. Chapter 1 of the textbookdiscussed several of these services.Go to the service description for theassurance service that most interestsyou (any one of the six). What arethe major aspects or sections of theassociated business plan ., does theplan address market potential,competition, etc.)Answer:Each business plan providesbackground information, describesthe service, assesses marketpotential, discusses issues such ascompetition and why CPAs shouldoffer the service, identifies practice tools available and steps that CPAs must take to begin offering the services.2.The Special Committee's report onAssurance Services discusses competencies needed by assurance providers today and in the coming decade. Briefly describe the 5 general competencies needed in the next decade (Hint: See the “About Assurance Services” link. Then follow the “Assurance Services and Academia” link.)Answer:The Committee identified the following five major imperatives regarding future competencies, each of which implies increasing emphasis on the competencies noted:1-1 (continued)Customer focus.Assurance serviceproviders need to understand userdecision processes and howinformation should enter into thoseprocesses. Increased emphasis isneeded on: understanding userneeds, communication skills,relationship management,responsiveness and timeliness.Migration to higher value-addedinformation activities. To providemore value to client/decision makersand others, assurance serviceproviders need to focus less onactivities involved in the conversionof business events into information .,collecting, classifying, andsummarizing activities) and more onactivities involved in thetransformation of information intoknowledge ., analyzing, interpreting,and evaluating activities) thateffectively drives decision processes.This will require: analytical skills,business advisory skills, business knowledge, model building (including sensitivity analysis), understanding the client’s business processes, measurement theory (development of operational definitions of concepts, design of appropriate measurement techniques, etc.).Information technology (IT). Assurance services deal in information. Hence, the profound changes occurring in information technology will shape virtually all aspects of assurance services. As information specialists, assurance service providers need to embrace information technology in all of its complex dimensions. Embracing IT means understanding how it is transforming all aspects of business. It also means learning how to effectively use new developments in hardware, software, communications, memory, encryption, etc., ineverything assurance service providers do as information specialists, not only in dealing with clients, but also in dealing with each other as individuals, teams, firms, state societies, and national professional organizations.Pace of change and complexity. Assurance services will take place in an environment of rapid change and increasing complexity. Assurance service providers need to invest heavily in life-long learning in order to maintain up-to-date knowledge and skills. They will require: intellectual capability, learning and rejuvenation.Competition.Growth in new assurance services will depend less on franchise/regulation and more on market forces. Assurance service providers need to develop their marketing skills —the ability to seeclients’ latent information andassurance needs and rapidly designand deploy cost-effective services tomeet those needs —in order toeffectively compete for market-driven assurance services. Requiredskills include: marketing and selling,understanding customer needs,designing and deploying effectivesolutions.1-1 (continued)(Note: Internet problems address current issues using Internet sources. Because Internet sites are subject to change, Internet problems and solutions are subject to change. Current information on Internet problems is available at。
审计学：一种整合方法(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-一种整合的方法-文档资料
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-6
Learning Objective 2
Distinguish management’s
responsibility for the financial
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Management’s Responsibilities
Management is responsible for the financial statements and for internal control.
The Sarbanes-Oxley Act increases management’s responsibility for the financial statements.
➢ Actions when the auditor knows of an illegal act
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Learning Objective 4
Learning Objective 1
Explain the objective of conducting an audit of financial statements and an audit of internal controls.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
审计学-一种整合的方法
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6 - 12
Learning Objective 4
6 - 15
Transaction Flow Example
Transactions
Cash disbursements
Payroll services and disbursements
Journals Cash
disbursements journal
Payroll journal
Ledgers, Trial Balance, and Financial
General ledger and subsidiary
records
General ledger trial balance
Acquisition of goods
and services
Acquisitions journal
Financial statements
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-6
Management’s Responsibilities
Management is responsible for the financial statements and for internal control.
The Sarbanes-Oxley Act increases management’s responsibility for the financial statements.
审计学-一种整合的方法
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
5 - 16
Auditor's Deck of duty to perform Nonnegligent performance Contributory negligence Absence of causal connection
5 - 21
Learning Objective 6
Describe accountants' civil liability under the federal securities laws and related defenses.
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
5 - 13
Four Major Sources of Auditors' Legal Liability
Liability to clients Liability to third parties Federal securities laws Criminal liability
2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
5-6
Business Failure, Audit Failure, and Audit Risk
阿伦斯-审计学：一种整合的方法-课后习题答案ch02
阿伦斯-审计学：⼀种整合的⽅法-课后习题答案ch02 Chapter 2The CPA ProfessionReview Questions2-1The four major services that CPAs provide are:1. Assurance services Assurance services are independentprofessional services that improve the quality of information fordecision makers. Assurance services include attestation services,which are any services in which the CPA firm issues a report thatexpresses a conclusion about the reliability of an assertion that isthe responsibility of another party. The four categories of attestationservices are audits of historical financial statements, attestation onthe effectiveness of internal control over financial reporting, reviewsof historical financial statements, and other attestation services.2. Accounting and bookkeeping services Accounting services involvepreparing the client's financial statements from the client's records.Bookkeeping services include the preparation of the client'sjournals and ledgers as well as financial statements.3. Tax services Tax services include preparation of corporate,individual, and estate returns as well as tax planning assistance.4. Management consulting services These services range fromsuggestions to improve the client's accounting system to computerinstallations.2-2The major characteristics of CPA firms that permit them to fulfill their social function competently and independently are: 1. Organizational form A CPA firm exists as a separate entity to avoidan employer-employee relationship with its clients. The CPA firmemploys a professional staff of sufficient size to prevent one clientfrom constituting a significant portion of total income and therebyendangering the firm's independence.2. Conduct A CPA firm employs a professional staff of sufficient sizeto provide a broad range of expertise, continuing education, andpromotion of a professional independent attitude and competence.3. Peer review This practice evaluates the performance of CPA firmsin an attempt to keep competence high.2-3The Public Company Accounting Oversight Board provides oversight for auditors of public companies, includingestablishing auditing and quality control standards for public company audits, and performing inspections of the quality controls at audit firms performing those audits.2-4The purpose of the Securities and Exchange Commission is to assist in providing investors with reliable information upon which to make investment decisions. Since most reasonably large CPA firms have clients that must with the SEC each year (all companies filing registration statements under the securities acts of l933 and l934 must financial statements and other reports with the SEC at least once each year), the profession is highly involved with the SEC requirements.The SEC has considerable influence in setting generally accepted accounting principles and disclosure requirements for financial statements because of its authority for specifying reporting requirements considered necessary for fair disclosure to investors. In addition, the SEC has power to establish rules for any CPA associated with audited financial statements submitted to the Commission.2-5The AICPA is the organization that sets professional requirements for CPAs. The AICPA also conducts research and publishes materials on many different subjects related to accounting, auditing, management advisory services, and taxes. The organization also prepares and grades the CPA examinations, provides continuing education to its members, and develops specialty designations to help market and assure the quality of services in specialized practice areas.2-6Statement on Standards for Attestation Engagements was first issued in 1986 and its purposes were to provide a framework for attest engagements and to develop standards for those engagements. In 2001, the Auditing Standards Board issued SSAE 10 in response to the need for more detailed standards for specific types of attestation services. SSAE 10 supercedes the previously issued standards and its main purpose is to improve the usefulness of the attestation standards and provide greater flexibility to practitioners in providing assurance services.2-7 The PCAOB now has responsibility for establishing auditing standards for public companies, while the Auditing Standards Board (ASB) of the AICPA establishes auditing standards for private companies. The ASB previously had responsibility for establishing auditing standards for both public and private companies. Existing auditing standards were adopted by the PCAOB as interim auditing standards for public company audits.2-8 Generally accepted auditing standards are ten general guidelines to aid auditors in fulfilling their professional responsibilities. These guidelines include three general standards concerned with competence, independence, and due professional care; three standards of field work including planning and supervision, study and evaluation of internal control, and the gathering of competent evidential matter; and four standards of reporting which require a statement as to presentation in accordance with generally accepted accounting principles, inconsistency observed in the current period in relation to the preceding period, adequate disclosure, and the expression of an opinion as to the fairness of the presentation of the financial statements.2-8 (continued)Generally accepted accounting principles are specific rules for accounting for transactions occurring in a business enterprise. Examples may be any of the opinions of the FASB.2-9Auditors can obtain adequate technical training and proficiency through formal education in auditing and accounting, adequate practical experience, and continuing professional education. Auditors can demonstrate their proficiency by becoming licensed to practice as CPAs, which requires successful completion of the Uniform CPA Examination. The specific requirements for licensure vary from state to state.2-10For the most part, generally accepted auditing standards are general rather than specific. Many practitioners along with critics of the profession believe the standards should provide more clearly defined guidelines as an aid in determining the extent of evidence to be accumulated. This would eliminate some of the difficult audit decisions and provide a source of defense if the CPA is charged with conducting an inadequate audit. On the other hand, highly specific requirements could turn auditing into mechanical evidence gathering, void of professional judgment. From the point of view of both the profession and the users of auditing services, there is probably a greater harm from defining authoritative guidelines too specifically than too broadly.2-11International Standards on Auditing (ISAs) are issued by the International Auditing Practices Committee (IAPC) of the International Federation of Accountants (IFAC). ISAs are designed to improve the uniformity of auditing practices and related services throughout the world by issuing pronouncements on a variety of audit and attest functions and promoting their acceptance worldwide. A CPA who conducts an audit in accordance with GAAS may not comply with ISAs because there may be additional ISA requirements that extend beyond GAAS requirements.2-12 Quality controls are the procedures used by a CPA firm that help it meet its professional responsibilities to clients. Quality controls are therefore established for the entire CPA firm as opposed to individual engagements.2-13The element of quality control is personnel management. The purpose of the requirement is to help assure CPA firmsthat all new personnel should be qualified to perform their work competently. A CPA firm must have competent employees conducting the audits if quality audits are to occur.2-14 A peer review is a review, by CPAs, of a CPA firm's compliance with its quality control system. A mandatory peer review means that such a review is required periodically. AICPA member firms are required to have a peer review every three years. Registered firms with the PCAOB are subject to quality inspections. These are different than peer reviews because they are performed by independent inspection teams rather than another CPA firm.2-14 (continued)Peer reviews can be beneficial to the profession and to individual firms. By helping firms meet quality control standards, the profession gains if reviews result in practitioners doing higher quality audits. A firm having a peer review can also gain if it improves the firm's practices and thereby enhances its reputation and effectiveness, and reduces the likelihood of lawsuits. Of course peer reviews are costly. There is always a trade off between cost and benefits. A CPA firm also gives up some independence of activities when it is reviewed by another CPA firm.2-15The two divisions of practice that a CPA firm may belong to are the SEC Practice Section (renamed the Center for Public Company Audit Firms)and the Private Companies Practice Section. A firm may belong to one section, both sections, or neither. Many of the self-regulatory activities of the SECPS have been taken over by the PCAOB.Proponents of this division believe that this will improve the quality of practice by CPA firms and that it will improve self-regulation. Critics state that it establishes two classes of CPAs and implies a lower performance quality for firms that are not members of the SEC Practice Section.Multiple Choice Questions From CPA Examinations2-16 a. (1) b. (2) c. (3) d. (3)2-17 a. (2) b. (2) c. (3)Discussion Questions And Problems2-18a.The comments summarize the beliefs of many practitioners about theSarbanes–Oxley Act and the PCAOB. The arguments against the Act can be summarized as four arguments:1. Costs of complying with the Act are excessively high, especially therequirement to report on internal control over financial reporting,and will discourage companies from becoming public companies.2. Relative cost for local audit firms is excessively high.3. Additional oversight is not needed because sufficient qualitycontrols have already been implemented by most audit firms.4. Three other things already provide assurance of adequate quality:a competitive economic environment, legal liability, and auditingstandards.To support these comments, it can be argued that the profession has generally functioned well with relatively little controversy and criticism.2-18 (continued)The arguments against these comments are primarily as follows:1. Reporting on the effectiveness of internal control over financialreporting will provide benefits in improved controls, resulting inhigher quality financial reporting and reduced losses from fraud.2. The increased confidence in financial reporting will increase accessto capital and lower the cost of capital by reducing information risk.3. Changes in the scope of CPA practices and other threats to auditquality required government regulation.4. Regulation of public company audits will not affect most audit firmsthat do not have public company audit clients.b. There is no correct answer to this question. Different people reachdifferent conclusions, depending on the weights put on the various arguments. Time is needed to effectively assess both the costs and benefits of the Act.2-19 a. Engagement performanceb. Personnel managementc. Engagement performanced. Engagement performancee. Independence, integrity, and objectivityf. Monitoringg. Acceptance and continuation of clients and engagementsh. Personnel managementi. Personnel management2-20 a. Rossi and Montgomery's primary ethical consideration is their professional competence to perform all of the audit work for filingwith the SEC. In addition, if Rossi and Montgomery have performedbookkeeping services or certain consulting services for MobileHome, they will not be independent under PCAOB and SECindependence requirements. The firm must also be a registeredfirm with the PCAOB.b. The filing with the SEC, in addition to normal audited financialstatements, will require completion and registration with the SEC ofForm S-1 which includes an audited summary of operations for thelast five fiscal years as well as many additional schedules anddescriptions of the business. Each quarter subsequent to the filing,Form 10-Q must be filed; and within 90 days of the end of eachfiscal year Form 10-K must be filed with the SEC.In addition, Form 8-K must be filed whenever significant events have occurred which are of interest to public investors. These forms must be filed in conformity with Regulation S-X, whichrequires considerable disclosures in addition to those normallyrequired in audited financial statements.2-212-22 a. CPAs can provide the following information and Web links on their firm Web sites: Office locations or affiliationsLines of service the firm provides (audit, tax, management consulting, etc.)Industry specialization information for the firmOnline software tools and databasesLatest tax law developments applicable to clientsCalculators for retirement account decisionsOnline privacy management softwareb. CPA firms invest their resources to develop sophisticated Web siteslargely because of a desire to maintain a client-service approach.Increased competition motivates CPA firms to improve thetraditional paths of providing information to their clients. A CPA firmcan reach clients more quickly and efficiently with vital informationvia the firm’s Web site than through more traditional forms ofcommunication, such as a monthly or quarterly newsletter. Also, asmore clients become sophisticated in the area of technology, theyexpect their CPA firms to do the same by providing a useful Website that has links to other helpful tools and resources.c. The Internet is a useful tool for a CPA firm’s accounting andauditing practice in many ways. A firm’s Web site can be used tomarket the firm’s accounting and auditing practice. The Internetalso connects the firm’s global professional staff, making it easierfor staff from all over the world to provide client service on a timelybasis without having to be physically present at the client’s location.CPAs also use online resources and databases to remain currenton emerging business and standards-setting issues. Examplesinclude Standard and Poor’s Net Advantage Database andGoldman Sachs Research Database. These two databases provideextensive industry-specific information and coverage of companiesthat CPAs use on a subscription basis to stay current on industrydevelopments and to obtain industry data useful for auditing andconsulting.Internet Problem Solution: CPA Vision Project2-1 The CPA Vision Project [] is all about helping the “CPA profession stay on top of the change curve.”With input from CPAs across the nation, the CPA Vision process created a comprehensive and integrated vision of the profession’s future.1. What characteristics and professional services come to mind whenyou hear the term CPA? What is your impression of the public’sstereotype of CPAs?Answer: Student responses will vary.2. Fill in the missing words in the following Vision Statement:Answer:“CPAs are the trusted professionals who enable people and organizations to shape their future. Combining insight with integrity, CPAs deliver value by …Communicating the total picture with clarity and objectivity,Translating complex information into critical knowledge,Anticipating and creating opportunities, andDesigning pathways that transform vision into reality.3. Briefly describe the eight forces that will impact the profession.Answer: The eight forces are:1. Non-CPA Competitors - The number of new, non-CPA competitors, not bound by the profession's code of standardsand ethics is increasing at an alarming rate.2. Decline of new CPAs - The number of students and young people electing to join the CPA profession has dramatically declined.3. Technology Displacement - Many of the traditional, essential skills of CPAs are being replaced by new technologies thatare increasing in number and being rapidly developed, oftenfrom unexpected sources.4. Borderless World- As the world becomes borderless, the marketplace is demanding more complex, real-time adviceand services, presenting unlimited opportunities for CPAs to expand their skills, competencies, and services.5. Leadership Imperative - Corporations are conductingbusiness in a world of commerce that is global, technological, instantaneous, and increasingly virtual. The leadership they require from both internal and external advisors requires new insights, new skills, and extraordinary agility.6. Technological Advances - Technology will continue to challenge and reshape our lifestyles, work patterns,educational experiences, and communication styles and techniques. Technology will rewrite the "rules of business," leaving those who will not harness it and effectively integrateit far behind.7. Market Value Shifts- The perceived value of some of the profession's cornerstone services-accounting, auditing, andtax preparation-is declining in the marketplace.8. Pressure to Transform Finance from Scorekeeper toBusiness Partner - The CPA in business is being challengedto deliver value to the organization and help create asustainable competitive advantage.4. The CPA Vision Project suggests that “the increasing complexities of the global environment and the commodity characteristics of traditional services mandate that the CPA profession migrate up theeconomic value chain.” What is meant by “moving up the economicvalue chain,”and how are CPAs going to accomplish this? (Hint:See the “Final Report.”)Answer: Moving up the economic value chain means moving fromproviding low value products and services to providing higher valueproducts and services (i.e., services that will permit the professionto thrive in a knowledge-based, global economy). The higher on theeconomic value chain, the higher the revenue. “The more a productor service is refined and defined, the less market value it will have.For example: tax preparation services have been commoditizedand automated to the point that they can largely be preparedelectronically. Tax form preparation is a Platform 1 service - afoundation service. The higher economic value of this informationlies in understanding what the foundation service implies-the“where do we go from here”and the “so whats”of business andfinance. Higher Platform services, such as estate and financialplanning are where higher economic benefits exist for the future ofthe profession. Higher Platform services are, and will increasinglybe, the most valued services and functions, and therefore willcommand higher fees and salaries. Traditional services are thefoundation from which CPAs can leverage to higher valueservices.” The report describes 7 platforms.Obviously to move up the value chain CPAs need to develop expertise for and market higher value services. For some this mayrepresent “thinking out of the box.”(Note: Internet problems address current issues using Internet sources. Because Internet sites are subject to change, Internet problems and solutions are subject to change. Current information on Internet problems is available at ).。
审计学：一种整合方法-第12版-英文版Chapter14课件
Sales Transaction
Accounts
Sales Accounts
receivable
Business Functions Documents and Records
Processing customer orders
Granting credit Shipping goods Billing customers
Sales on Sales returns account and allowances
Ending balance
Write-off of uncollectible accounts
Allowance for Uncollectible Accounts
Write-off of uncollectible accounts
审计学：一种整合方法-第12版-英文版Chapter14
Cash in Bank Cash Discounts
Taken Sales Returns and Allowances
Bad Debt Expense
Accounts in the Sales and Collection Cycle
Accounts Receivable Beginning Cash receipts balance
Beginning balance
Estimate of bad debt expense
Bad Debt Expense
Ending balance
审计学：一种整合方法-第12版-英文版Chapter14
Learning Objective 2
• Describe the business functions • and the related documents and • records in the sales and • collection cycle.
审计学：一种整合方法 阿伦斯 英文版 第12版 课后答案 Chapter 11 Solutions Manual
Chapter 11Fraud AuditingReview Questions11-1Fraudulent financial reporting is an intentional misstatement or omission of amounts or disclosures with the intent to deceive users. Two examples of fraudulent financial reporting are accelerating the timing of recording sales revenue to increased reported sales and earnings, and recording expenses as fixed assets to increase earnings.11-2Misappropriation of assets is fraud that involves theft of an entity’s assets. Two examples are an accounts payable clerk issuing payments to a fictitious company controlled by the clerk, and a sales clerk failing to record a sale and pocketing the cash receipts.11-3 Fraudulent financial reporting is an intentional misstatement or omission of amounts or disclosures with the intent to deceive users, while misappropriation of assets is fraud that involves theft of an entity’s assets. Frauds involving financial reporting are usually larger than frauds involving misappropriation of assets, usually involve top management, and do not directly involve theft of company assets.11-4 The three conditions of fraud referred to as the ―fraud triangle‖ are (1) Incentives/Pressures; (2) Opportunities; and (3) Attitudes/Rationalization. Incentives/Pressures are incentives of management or other employees to commit fraud. Opportunities are circumstances that allow management or employees to commit fraud. Attitudes/Rationalization are indications that an attitude, character, or set of ethical values exist that allow management or employees to commit a dishonest act or they are in an environment that imposes sufficient pressure that causes them to rationalize committing a dishonest act.11-5 The following are example of risk factors for fraudulent financial reporting for each of the three fraud conditions:Incentives/Pressures- The company is under pressure to meet debt covenants or obtain additional financing.Opportunities –Ineffective oversight of financial reporting by the board of directors allows management to exercise discretion overreporting.Attitudes/Rationalization –Management is overly aggressive. For example, the company may issue aggressive earnings forecasts, ormake extensive acquisitions using company stock.11-6 The following are example of risk factors for misappropriation of assets for each of the three fraud conditions:Incentives/Pressures- The individual is unable to meet personal financial obligations.Opportunities –There is insufficient segregation of duties that allows the individual to handle cash receipts and related accountingrecords.Attitudes/Rationalization –Management has disregarded the inadequate separation of duties that allows the potential theft ofcash receipts.11-7 Auditors use several sources to gather information about fraud risks, including:Information obtained from communications among audit team members about their knowledge of the company and its industry,including how and where the company might be susceptible tomaterial misstatements due to fraud.Responses to auditor inquiries of management about their views of the risks of fraud and about existing programs and controls toaddress specific identified fraud risks.Specific risk factors for fraudulent financial reporting and misappropriations of assets.Analytical procedures results obtained during planning that indicate possible implausible or unexpected analytical relationships.Knowledge obtained through other procedures such as client acceptance and retention decisions, interim review of financialstatements, and consideration of inherent or control risks.11-8 SAS 99 requires the audit team to conduct discussions to share insights from more experienced audit team members and to ―brainstorm‖ ideas that address the following:1. How and where they believe the entity’s financial statements mightbe susceptible to material misstatement due to fraud. This shouldinclude consideration of known external and internal factorsaffecting the entity that mightcreate an incentive or pressure for management to commit fraud.provide the opportunity for fraud to be perpetrated.indicate a culture or environment that enables management to rationalize fraudulent acts.2. How management could perpetrate and conceal fraudulent financialreporting.3. How assets of the entity could be misappropriated.4. How the auditor might respond to the susceptibility of materialmisstatements due to fraud.11-9 Auditors must inquire whether management has knowledge of any fraud or suspected fraud within the company. SAS 99 also requires auditors to inquire of the audit committee about its views of the risks of fraud and whether the audit committee has knowledge of any fraud or suspected fraud. If the entity has an internal audit function, the auditor should inquire about internal audit’s views of fraud risks and whether they have performed any procedures to identify or detect fraud during the year. SAS 99 further requires the auditor to make inquiries of others within the entity whose duties lie outside the normal financial reporting lines of responsibility about the existence or suspicion of fraud.11-10The corporate code of conduct establishes the ―tone at the top‖ of the importance of honesty and integrity and can also provide more specific guidance about permitted and prohibited behavior. Examples of items typically addressed in a code of conduct include expectations of general employee conduct, restrictions on conflicts of interest, and limitations on relationships with clients and suppliers.11-11 Management and the board of directors are responsible for setting the ―tone at the top‖ for ethical behavior in the company. It is important for management to behave with honesty and integrity because this reinforces the importance of these values to employees throughout the organization.11-12 Management has primary responsibility to design and implement antifraud programs and controls to prevent, deter, and detect fraud.The audit committee has primary responsibility to oversee the organization’s financial reporting and internal control processes and to p rovide oversight of management’s fraud risk assessment process and antifraud programs and controls.11-13The three auditor responses to fraud are: (1) change the overall conduct of the audit to respond to identified fraud risks; (2) design and perform audit procedures to address identified risks; and (3) perform procedures to address the risk of management override of controls.11-14Auditors are required to take three actions to address potential management override of controls: (1) examine journal entries and other adjustments for evidence of possible misstatements due to fraud; (2) review accounting estimates for biases; and (3) evaluate the business rationale for significant unusual transactions.11-15 Three main techniques use to manipulate revenue include: (1) recording of fictitious revenue; (2) premature revenue recognition including techniques such as bill-and-hold sales and channel stuffing; and (3) manipulation of adjustments to revenue such as sales returns and allowance and other contra accounts.11-16 Cash register receipts are particularly susceptible to theft. The notice ―your meal is free if we fail to give you a receipt‖ is designed to ensure that everycustomer is given a receipt and all sales are entered into the register, establish accountability for the sale.11-17 The three types of inquiry are informational, assessment, and interrogative. Auditors use informational inquiry to obtain information about facts and details that the auditor does not have.For example, if the auditor suspects financial statement fraud involving improper revenue recognition, the auditor may inquire of management as to revenue recognition policies. The auditor uses assessment inquiry to corroborate or contradict prior information. In the previous example, the auditor may attempt to corroborate the information obtained from management by making assessment inquiries of individuals in accounts receivable and shipping. Interrogative inquiry is used to determine if the interviewee is being deceptive or purposefully omitting disclosure of key knowledge of facts, events, or circumstances. For example, a senior member of the audit team might make interrogative inquiries of management or other personnel about key elements of the fraud where earlier responses were contradictory or evasive.11-18 When making inquiries of a deceitful individual, three examples of verbal cues are frequent rephrasing of the question, filler terms such as ―well‖ or ―to tell the truth,‖ and forgetfulness or acknowledgements of nervousne ss. Three examples of nonverbal cues by the individual are creating physical barriers by blocking their mouth, leaning away from the auditor, and signs of stress such as sweating or fidgeting.11-19When the auditor suspects that fraud may be present, SAS 99 requires the auditor to obtain additional evidence to determine whether material fraud has occurred. SAS 99 also requires the auditor to consider the implications for other aspects of the audit. When the auditor determines that fraud may be present, SAS 99 requires the auditor to discuss the matter and audit approach for further investigation with an appropriate level of management that is at least one level above those involved, and with senior management and the audit committee, even if the matter might be considered inconsequential. For public company auditors, the discovery of fraud of any magnitude by senior management is at least a significant deficiency and may be a material weakness in internal control over financial reporting. This includes fraud by senior management that results in even immaterial misstatements. If the public company auditor decides the fraud is a material weakness, the auditor’s report on internal control over financial reporting will contain an adverse opinion.■Multiple Choice Questions From CPA Examinations11-20 a. (3) b. (4) c. (1) d. (2)11-21 a. (1) b. (4)11-22 a. (1) b. (1) c. (1)■Discussion Questions and Problems11-2311-24a. Management fraud is often called fraudulent financial reporting, andis the intentional misstatement or omission of amounts ordisclosures by management with the intent to deceive users. Incontrast, defalcations, which are also called misappropriation ofassets, involve theft of an entity’s assets, and normally involveemployees and others below the management level.b. The auditor’s responsibility to detect management fraud is thesame as for other errors that affect the financial statement. Theauditor should design the audit to obtain reasonable assurance thatmaterial misstatements in the financial statements due to errors orfraud are detected.c. The auditor should evaluate the potential for management fraudusing the fraud triangle of incentives/pressures, opportunities, andattitudes/ rationalizations.Incentives/pressures –Auditors should evaluate incentives and pressures that management or other employees mayhave to misstate financial statements, including:1. Declines in the financial stability or profitability of thecompany due to economic, industry, or companyoperating conditions.2. Pressure to meet debt repayment or debt covenantterms.3. Net worth of managers or directors is materiallythreatened by financial performance.Opportunities –Circumstances provide an opportunity for management to misstate financial statements, such as:1. Financial statements include significant accountingestimates that are difficult to verify.2. Ineffective board of director or audit committeeoversight.3. High turnover in accounting personnel or ineffectiveaccounting, internal auditing, or IT staff.Attitudes/Rationalizations –An attitude, character, or set of values exist that allows management to rationalizecommitting a dishonest act.1. Inappropriate or ineffective communication of entityvalues.2. History of violations of securities laws or other lawsand regulations.3. Aggressive or unrealistic management goals orforecasts.d. There are potentially many factor s that should heighten an auditor’sconcern about the existence of management fraud. The factors (1) of an intended public placement of securities, and (2) management compensation dependent on operating results are both factors that affect incentives to manipulate financial statements. The auditor should be alert for other incentives, such as the existence of debt covenants or planned use of stock to acquire another company that may provide incentives to manipulate the financial statements.The third factor of deficient internal control reflects both an opportunity to misstatement financial statements, and an attitude that allows rationalization of actions to misstate the financial statements. As additional examples, the auditor should be alert to the potential to use accounting estimates or discretion over the timing of revenues to misstate financial statements. The auditor should also consider the attitude of management, and whether they are overly aggressive or have previously violated securities laws or other regulations.In addition to the risk factors from the fraud triangle, the auditor should consider other signals of the potential existence of management fraud. These signals may include unusual changes inratios or other performance measures, as well as inquiries ofmanagement and communication amount the audit team.11-25a.b. All of the deficiencies increase the likelihood of misappropriation of assets,by allowing individuals access to cash receipts or failing to maintain adequate records to establish accountability for cash receipts.c. The deficiencies have less of an effect on the likelihood of fraudulentfinancial reporting than they do for misappropriation of assets. The first four deficiencies increase the likelihood of fraudulent financial reporting forreported revenues due to the lack of adequate records to establish the number of patrons.11-261. a. Errorb. Internal verification of invoice preparation and posting by anindependent person.c. Test clerical accuracy of sales invoices.2. a. Fraud.b. The prelisting of cash receipts should be compared to thepostings in the accounts receivable master file and to thevalidated bank deposit slip.c. Trace cash received from prelisting to cash receipts journal.Confirm accounts receivable.3. a. Error.b. Use of prenumbered bills of lading that are periodicallyaccounted for.c. Trace a sequence of prenumbered bills of lading to recordedsales transactions. Confirm accounts receivable at year-end.4. a. Error.b. No merchandise may leave the plant without the preparationof a prenumbered bill of lading.c. Trace credit entries in the perpetual inventory records to billsof lading and the sales journal. Confirm accounts receivableat year-end.5. a. Error.b. Internal review and verification by an independent person.c. Test accuracy of invoice classification.6. a. Errorb. Online sales are supported by shipping documents andapproved online customer orders.c. Trace sales journal or listing entries to supporting documentsfor online sales, including sales invoices, shippingdocuments, sale orders, and customer orders.7. a. Errorb. Sales invoices are prenumbered, properly accounted for inthe sales journal, and a notation on the invoice is made ofentry into the sales journal.c. Account for numerical sequence of invoices recorded in thesales journal, watching for duplicates. Confirm accountsreceivable at year-end.8. a. Fraud.b. All payments from customers should be in the form of acheck payable to the company. Monthly statements shouldbe sent to all customers.c. Trace from recorded sales transactions to cash receipts forthose sales; confirm accounts receivable balances at year-end.11-27a. The lack of separation of duties was the major deficiency thatpermitted the fraud for Appliance Repair and Service Company.Gyders has responsibility for opening mail, prelisting cash, updatingaccounts receivable, and authorizing sales allowances and write-offs for uncollectible accounts. It is easy for Gyders to take the cashbefore it is prelisted and to charge off an accounts receivable as asales allowance or as a bad debt.b. The benefit of prelisting cash is to immediately document cashreceipts at the time that they are received by the company.Assuming all cash is included on the prelisting, it is then easy forsomeone to trace from the prelisting to the cash receipts journaland deposits. Furthermore, if a dispute arises with a customer, it iseasy to trace to the prelisting and determine when the cash wasactually received. The prelisting should be prepared by acompetent person who has no significant responsibilities foraccounting functions. The person should not be in a position towithhold the recording of sales, adjust accounts receivable or salesfor credits, or adjust accounts receivable for sales returns andallowances or bad debts.c. Subsequent to the prelisting of cash, it is desirable for anindependent person to trace from the prelisting to the bankstatement to verify that all amounts were deposited. This can bedone by anyone independent of whoever does the prelisting, orprepares or makes the deposit.d. A general rule that should be followed for depositing cash is that itshould be deposited as quickly as possible after it is received, andhandled by as few people as possible. It is, ideally, the personreceiving the cash that should prepare the prelisting and preparethe deposit immediately afterward. That person should then depositthe cash in the bank. Any unintentional errors in the preparation ofthe bank statement should be discovered by the bank. Theauthenticated duplicate deposit slip should be given to theaccounting department who would subsequently compare the totalto the prelisting. When an independent person prepares the bankreconciliation, there should also be a comparison of the prelisting tothe totals deposited in the bank.Any money taken before the prelisting should be uncovered by the accounting department when they send out monthlystatements to customers. Customers are likely to complain if theyare billed for sales for which they have already paid.11-28b. Deficiencies 1, 2, 4, 5, and 6 increase the likelihood of fraudinvolving misappropriation of assets. Fraud involvingmisappropriation of assets is relatively common for payroll,although the amounts are often not material. Fraudulent financialreporting involving payroll is less likely.11-29a. The auditor must conduct the audit to detect errors and fraud,including embezzlement, that are material to the financialstatements. It is more difficult to discover embezzlements thanmost types of errors, but the auditor still has significantresponsibility. In this situation, the deficiencies in internal controlare such that it should alert the auditor to the potential for fraud. Onthe other hand, the fraud may be immaterial and therefore not be ofmajor concern. The auditor of a public company must also considerthe impact of noted deficiencies when issuing the auditor’s reporton internal control over financial reporting. When noted deficienciesare considered to be material weaknesses, whether individually orcombined with other deficiencies, the auditor’s r eport must bemodified to reflect the presence of material weaknesses.b. The following deficiencies in internal control exist:1. The person who reconciles the bank account does notcompare payees on checks to the cash disbursementsjournal.2. The president signs blank checks, thus providing no controlover expenditures.3. No one checks invoices to determine that they are cancelledwhen paid.c. To uncover the fraud, the auditor could perform the following procedures:1. Comparison of payee on checks to cash disbursementsjournal.2. Follow up all outstanding checks that did not clear the bankduring the engagement until they clear the bank. Comparepayee to cash disbursements journal.11-30a.* Fraud involves intent. The circumstances suggest that there wasno intent on the part of Franklin to be deceptive. If the purpose ofomitting the footnote was to deceive the bank, then this casewould represent fraudulent financial reporting.11-311. a. There may be unrecorded cash disbursement transactions.b. Because the transactions relate to cash disbursements, thecash account will be affected. The accounts payableaccount may be misstated if the disbursement is thepayment on an account. If the disbursement is for the directpayment of an expense or is related to the purchase ofassets, then expense or asset accounts will be affected.Payments on other liability accounts would impact thoseliability accounts.c. Existing transactions are recorded (completeness).2. a. There may be fictitious accounts receivable accountsincluded in the master file.b. Accounts receivable and sales are likely to be affected byfictitious receivables.c. Amounts included exist (existence).3. a. Management may have manipulated key assumptionsso that pension expense and pension liability amounts wouldbe lower.b. Pension expense and pension liability accounts are likely tobe affected.c. Amounts included are stated at the correct values(Accuracy).4. a. The client may have shipped and recorded largeamounts of goods close to year end to third parties who mayhold the goods on consignment or who have full rights ofreturn. These shipments were made to record a fictitioussale and related receivable.b. Accounts receivable and sales and the related costs ofgoods sold and ending inventory would be affected by thisactivity.c. Recorded amounts existed (occurrence).5. a. Assets that were misappropriated may be concealedby recording purchase transactions using non-standard,fictitious vendor numbers.b. Accounts payable would be overstated and the related assetaccount would be increased by the unauthorized transaction.c. Recorded amounts existed (occurrence).6. a. Sales may be fictitiously recorded before any goodswere shipped.b. Sales and accounts receivable.c. Recorded amounts existed (occurrence).■Case11-32a. There are many fraud risk factors indicated in the dialogue. Among thefraud risk factors are the following:A significant portion of Mint’s compensation is represented bybonuses and stock options. Although this arrangement has beenapp roved by SCS’s Board of Directors, this may be a motivation forMint, the new CEO, to engage in fraudulent financial reporting.Mint’s statement to the stock analysts that SCS’s earnings would increase by 30% next year may be both an unduly aggressive andunrealistic forecast. That forecast may tempt Mint to intentionallymisstate certain ending balances this year that would increase theprofitability of the next year.SCS’s audit committee may not be sufficiently objective because Green, the chair of the audit committee, hired Mint, the new CEO,and they have been best friends for years.One individual, Mint, appears to dominate management without any compensating controls. Mint seems to be making all the importantdecisions without any apparent input from other members ofmanagement or resistance from the Board of Directors.There were frequent disputes between Brown, the prior CEO, who like Mint apparently dominated management and the Board ofDirectors, and Jones, the predecessor auditor. This fact mayindicate that an environment exists in which management will bereluctant to make any changes that Kent suggests.Management seems satisfied with an understaffed and ineffective internal audit department. This situation displays an inappropriateattitude regarding the internal control environment.Management has failed to properly monitor and correct a significant deficiency in its internal control—the lack of segregation of duties incash disbursements. This disregard for the control environment isalso a risk factor.Information about anticipated future layoffs has spread among the employees. This information may cause an increase in the risk ofmaterial misstatement arising from the misappropriation of assetsby dissatisfied employees.b. Kent has many misconceptions regarding the consideration of fraud in theaudit of SCS’s financial statements that are contained in the dialogue.Among Kent’s misconceptions are the following:Kent states that the auditor does not have specific duties regarding fraud. In fact, an auditor has a responsibility to specifically assessthe risk of material misstatement due to fraud and to consider thatassessment in designing the audit procedures to be performed.Kent is not concerned about Mint’s employment contract. Kent shou ld be concerned about a CEO’s contract that is based primarilyon bonuses and stock options because such an arrangement mayindicate a motivation for management to engage in fraudulentfinancial reporting.Kent does not think that Mint’s forecast for 2006 has an effect on the financial statement audit for 2005. However, Kent shouldconsider the possibility that Mint may intentionally misstate the2005 ending balances to increase the reported profit in 2006.Kent believes the audit programs are fine as is. Actually, Kent should modify the audit programs because of the many risk factorsthat are present in the SCS audit.Kent is not concerned that the internal audit department is ineffective and understaffed. In fact, Kent should be concerned thatSCS has permitted this situation to continue because it representsa risk factor relating to misstatements arising from fraudulentfinancial reporting and/or the misappropriation of assets.Kent states that an auditor provides no assurances about fraud because that is management’s job. In fact, an auditor has aresponsibility to plan and perform an audit to obtain reasonableassurance about whether the financial statements are free ofmaterial misstatement, whether caused by error or fraud.Kent is not concerned that t he prior year’s material weakness in internal control has not been corrected. However, Kent should beconcerned that the lack of segregation of duties in the cashdisbursements department represents a risk factor relating tomisstatements arising from the misappropriation of assets. If theclient was a publicly traded company, the presence of anuncorrected material weakness would significantly affect theauditor’s report on internal control over financial reporting.Kent does not believe the rumors about big layoffs in the next month have an effect on audit planning. In planning the audit, Kentshould consider this a risk factor because it may cause an increasein the risk of material misstatement arising from misappropriation ofassets by dissatisfied employees.c. SAS 99 requires that auditors document the following matters related tothe auditor’s consideration of material misstatements due to fraud:The discussion among engagement team personnel in planning the audit about the susceptibility of the enti ty’s financial statements tomaterial fraud.Procedures performed to obtain information necessary to identify and assess the risks of material fraud.Specific risks of material fraud that were identified, and a description of the auditor’s response to tho se risks.Reasons supporting a conclusion that there is not a significant risk of material improper revenue recognition.。
审计学一种整合方法--Chapter11课件
The Fraud Triangle
Incentives/Pressures
Opportunities
Attitudes/Rationalization
审计学一种整合方法--Chapter11
Examples of Risk Factors for Fraudulent Reporting
审计学一种整合方法--Chapter11
Learning Objective 3
• Understand the auditor’s • responsibility for assessing • the risk of fraud and detecting • material misstatements due to • fraud.
审计学一种整合方法--Chapter11
Assessing the Risk of Fraud
SAS 99 provides guidance to auditors in assessing the risk of fraud.
SAS 1 states that, in exercising professional skepticism, an auditor “neither assumes that management is dishonest nor assumes unquestioned honesty.”
审计学一种整合方法--Chapter11
Examples of Risk Factors for Fraudulent Reporting
Attitudes/Rationalization: ➢ Inappropriate or inefficient communication
审计学-一种整合的方法PPT精品文档43页
6-3
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
Learning Objective 1
Explain the objective of conducting an audit of financial statements and an audit of internal controls.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
reporting versus misappropriation of assets
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-9
阿伦斯审计学：一种整合方法课后习题答案.docx
Chapter 1The Demand for Audit and Other Assurance ServicesReview Questions1-1The relationship among audit services,attestation services,and assurance services is reflected in Figure 1-3 on page 13 of the text. Anassurance service is an independent professional service to improve thequality of information for decision makers. An attestation service is aform of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party.Audit services are a form of attestation service in which the auditor expresses a written conclusion about the degree of correspondence between information and established criteria.The most commonform of audit service is an audit of historical financial statements, in which the auditor expresses a conclusion as towhether the financial statements are presented in conformity with generally accepted accounting principles.An example of an attestation service is a report on the effe ctiveness of an entity’s internal control over financial reporting.There are many possible forms of assurance services,including services related to business performance measurement, health care performance, and information system reliability.1-2An independent audit is a means of satisfying the need for reliable information on the part of decision makers.Factors of a complex society which contribute to this need are:1.Remoteness of informationa.Owners (stockholders) divorced from managementb.Directors not involved in day-to-day operations or decisionsc.Dispersion of the business among numerous geographiclocations and complex corporate structures2.Biases and motives of providerrmation will be biased in favor of the providerwhen his or her goals are inconsistent with thedecision maker's goals.3.Voluminous dataa.Possibly millions of transactions processed dailyvia sophisticated computerized systemsb.Multiple product linesc.Multiple transaction locationsplex exchange transactionsa.New and changing business relationships leadto innovative accounting and reporting problemsb.Potential impact of transactions not quantifiable, leading toincreased disclosures1-3 1. Risk-free interest rate This is approximately the rate the bank couldearn by investing in U.S. treasury notes for the same length of time asthe business loan.2.Business risk for the customer This risk reflects the possibility that thebusiness will not be able to repay itsloan because of economic or business conditions such as arecession,poor management decisions,or unexpectedcompetition in the industry.rmation risk This risk reflects the possibility thatthe information upon which the business risk decision was made wasinaccurate. A likely cause of the information risk is the possibility ofinaccurate financial statements.Auditing has no effect on either the risk-free interest rate or business risk.However, auditing can significantly reduce informationrisk.1-4The four primary causes of information risk are remoteness of information,biases and motives of the provider,voluminous data,and the existence of complex exchange transactions.The three main ways to reduce information risk are:er verifies the information.er shares the information risk with management.3.Audited financial statements are provided.The advantages and disadvantages of each are as follows:ADVANTAGES DISADVANTAGESUSER VERIFIES 1. User obtains information 1.High cost ofINFORMATION desired.obtaining2. User can be more information.confident of the 2.Inconvenience toqualifications and the personactivities of the person providing thegetting the rmation becauselarge number ofusers would be onpremises.USER SHARES 1.No audit costs incurred. INFORMATIONRISK WITHMANAGEMENT er may not beable to collecton losses.AUDITED 1.Multiple users obtain 1. May not meet needs FINANCIAL the information.of certain users. STATEMENTS ARE rmation risk can 2. Cost may be higher PROVIDED usually be reduced than the benefitssufficiently to satisfy in some situations,users at reasonable such as for a smallpany.3.Minimal inconvenience tomanagement by havingonly one auditor.1-5To do an audit, there must be information in a verifiable form and some standards( criteria)by which the auditor can evaluate the information. Examples of established criteria include generally acceptedaccounting principles and the Internal Revenue Code.Determining the degree of correspondence between information and established criteria is determining whether a given set of information is in accordance with theestablished criteria. The information for Jones Company's tax return isthe federal tax returns filed by the company. The established criteriaare found in the Internal Revenue Code and all interpretations. For theaudit of Jones Company's financial statements the information is the financial statements being audited and the established criteria are generally accepted accounting principles.1-6The primary evidence the internal revenue agent will use in the audit of the Jones Company's tax return include all available documentation and other information available in Jones' office or fromother sources.For example,when the internal revenue agent audits taxable income, a major source of information will be bank statements,the cash receipts journal and deposit slips. The internal revenue agentis likely to emphasize unrecorded receipts and revenues. For expenses,major sources of evidence are likely to be cancelled checks,vendors' invoices and other supporting documentation.1-7This apparent paradox arises from the distinction between the function of auditing and the function of accounting.The accounting function is the recording,classifying and summarizing of economic events to provide relevant information to decision makers. The rules ofaccounting are the criteria used by the auditor for evaluating the presentation of economic events for financial statements and he or shemust therefore have an understanding of generally accepted accounting principles(GAAP), as well as auditing standards.The accountant need not, and frequently does not, understand what auditors do, unless he orshe is involved in doing audits, or has been trained as an auditor.1-8OPERATIONAL COMPLIANCE AUDITS OF FINANCIALAUDITS AUDITS STATEMENTSPURPOSE To evaluate To determine To determinewhether whether the client whether theoperating is following overallprocedures are specific procedures financialefficient and set by higher statements areeffective authority presented inaccordance withspecifiedcriteria(usually GAAP) USERS OF Management of Authority setting Different groups AUDIT REPORT organization down procedures,for differentinternal or purposes — manyexternal outside entities NATURE Highly Not standardized,Highlynonstandard;but specific and standardizedoften usually objectivesubjectivePERFORMED BY:CPAsFrequently Occasionally AlmostuniversallyGAOFrequently Frequently Occasionally AUDITORSIRSNever Universally NeverAUDITORSINTERNALFrequently Frequently Frequently AUDITORS1-9 Five examples of specific operational audits that could be conducted by an internal auditor in a manufacturing company are:1.Examine employee time cards and personnel records to determine ifsufficient information is available to maximizethe effective use of personnel.2.Review the processing of sales invoices to determine ifit could be done more efficiently.3.Review the acquisitions of goods,including costs,todetermine if they are being purchased at the lowest possiblecost considering the quality needed.4.Review and evaluate the efficiency of the manufacturingprocess.5.Review the processing of cash receipts to determine ifthey are deposited as quickly as possible.1-10 When using a strategic systems auditing approach in an audit of historical financial statements,an auditor must have a thorough understanding of the client and its environment. This knowledge shouldinclude the client ’s regulatory and operating environment,business strategies and processes,and measurement indicators.The strategic systems approach is also useful in other assurance or consulting engagements. For example, an auditor who is performing an assurance service on information technology would need to understand the client’s business strategies and processes related to information technology, including such things as purchases and sales via the Internet. Similarly,a practitioner performing a consulting engagement to evaluate the efficiency and effectiveness of a cli ent ’s manufacturing process would likely start with an analysis of various measurement indicators, including ratio analysis and benchmarking against key competitors.1-11The major differences in the scope of audit responsibilities are:1.CPAs perform audits in accordance with auditing standards ofpublished financial statements prepared in accordance withgenerally accepted accounting principles.2.GAO auditors perform compliance or operational audits inorder to assure the Congress of the expenditure of publicfunds in accordance with its directives and the law.3.IRS agents perform compliance audits to enforce thefederal tax laws as defined by Congress, interpreted by thecourts, and regulated by the IRS.4.Internal auditors perform compliance or operational auditsin order to assure management or the board of directors thatcontrols and policies are properly and consistentlydeveloped, applied and evaluated.1-12 The four parts of the Uniform Attestation, Financial Accounting CPA Examinationand Reporting,are: AuditingRegulation,andandBusiness Environment and Concepts.1-13 It is important for CPAs to be knowledgeable about e-commerce technologies because more of their clients are rapidly expanding theiruse of e-commerce. Examples of commonly used e-commerce technologiesinclude purchases and sales of goods through the Internet,automatic inventory reordering via direct connection to inventory suppliers,and online banking.CPAs who perform audits or provide other assurance services about information generated with these technologies need a basic knowledge and understanding of information technology and e-commerce in order to identify and respond to risks in the financialand other information generated by these technologies.Multiple Choice Questions From CPA Examinations1-14 a.(3) b.(2) c.(2) d.(3)1-15 a.(2) b.(3) c.(4) d.(3)Discussion Questions And Problems1-16 a.The relationship among audit services, attestation servicesand assurance services is reflected in Figure 1-3 on page 13of the text.Audit services are a form of attestationservice,and attestation services are a form of assuranceservice. In a diagram, audit services are located within theattestation service area, and attestation services arelocated within the assurance service area.b. 1.(1)Audit of historical financial statements2.(2)An attestation service other than an auditservice; or(3)An assurance service that is not an attestationservice ( WebTrust developed from the AICPASpecial Committee on Assurance Services, but theservice meets the criteria for an attestation service.)3.(2)An attestation service other than an auditservice4.(2)An attestation service other than an auditservice5.(2)An attestation service other than an auditservice6.(2)An attestation service that is not an auditservice(Review services are a form ofattestation,but are performed according toStatements on Standards for Accounting andReview Services.)7.(2)An attestation service other than an auditservice8.(2)An attestation service other than an auditservice9.(3) An assurance service that is not an attestationservice1-17 a.The interest rate for the loan that requires a review reportis lower than the loan that did not require a review becauseof lower information risk. A review report provides moderateassurance to financial statement users,which lowersinformation risk. An audit report provides further assuranceand lower information risk.As a result of reducedinformation risk, the interest rate is lowest for the loanwith the audit report.b.Given these circumstances,Vial-tek should select the loanfrom City First Bank that requires an annual audit. In thissituation, the additional cost of the audit is less than thereduction in interest due to lower information risk.Thefollowing is the calculation of total costs for each loan:LENDERCPA COST OF CPA ANNUAL ANNUAL SERVICE SERVICES INTEREST LOAN COSTExisting loan None0$ 142,500$ 142,500 First National Review$ 12,000$ 127,500$ 139,500 BankCity First Bank Audit$ 20,000$ 112,500$ 132,5001-17 (continued)c.Vial-tek may desire to have an audit because of the manyother positive benefits that an audit provides.The auditwill provide Vial-tek ’s management with assurance aboutannual financial information used for decision-makingpurposes. The audit may detect errors or fraud, and providemanagement with information about the effectiveness ofcontrols.In addition,the audit may result inrecommendations to management that will improve efficiencyor effectiveness.d.Under a strategic systems audit approach,the auditor musthave a thorough understanding of the client and itsenvironment, including the client’s e -commerce technologies,industry,regulatory and operating environment,suppliers,customers, creditors, and business strategies and processes.This thorough analysis helps the auditor identify risksassociated with the client ’s strategies that may affectwhether the financial statements are fairly stated.Whenapplying the strategic systems audit approach,the auditoroften discovers ways to help the client improve businessoperations,thereby providing added value to the auditfunction.1-18 a.The services provided by Consumers Union are very similar toassurance services provided by CPA firms.The servicesprovided by Consumers Union and assurance services providedby CPA firms are designed to improve the quality ofinformation for decision makers.CPAs are valued for theirindependence,and the reports provided by Consumers Unionare valued because Consumers Union is independent of theproducts tested.b.The concepts of information risk for the buyer of anautomobile and for the user of financial statements areessentially the same.They are both concerned with theproblem of unreliable information being provided.In thecase of the auditor, the user is concerned about unreliableinformation being provided in the financial statements. Thebuyer of an automobile is likely to be concerned about themanufacturer or dealer providing unreliable information.c.The four causes of information risk are essentially the samefor a buyer of an automobile and a user of financialstatements:(1)Remoteness of information It is difficult for a userto obtain much information about either an automobilemanufacturer or the automobile itself withoutincurring considerable cost. The automobile buyer doeshave the advantage of possibly knowing other users whoare satisfied or dissatisfied with a similar automobile.(2)Biases and motives of provider There is a conflictbetween the automobile buyer and the manufacturer. Thebuyer wants to buy a high quality product at minimumcost whereas the seller wants to maximize the sellingprice and quantity sold.(3)Voluminous data There is a large amount of availableinformation about automobiles that users might like tohave in order to evaluate an automobile.Either that information is not available or too costly to obtain.1-18(continued)(4)Complex exchange transactions The acquisition of anautomobile is expensive and certainly a complexdecision because of all the components that go intomaking a good automobile and choosing between a largenumber of alternatives.d. The three ways users of financial statements and buyers ofautomobiles reduce information risk are also similar:(1)User verifies information him or herself That can beobtained by driving different automobiles,examiningthe specifications of the automobiles,talking toother users and doing research in various magazines.(2)User shares information risk with management The manufacturerof a product has a responsibility to meetits warranties and to provide a reasonable product.The buyer of an automobile can return the automobilefor correction of defects. In some cases a refund maybe obtained.(3)Examine the information prepared by Consumer ReportsThis is similar to an audit in the sense thatindependent information is provided by an independentparty. The information provided by Consumer Reports iscomparable to that provided by a CPA firm that auditedfinancial statements.1-19 a. The following parts of the definition of auditing are relatedto the narrative:(1)Virms is being asked to issue a report aboutqualitative and quantitative information for trucks.The trucks are therefore the information with whichthe auditor is concerned.(2)There are four established criteria which must beevaluated and reported by Virms:existence of thetrucks on the night of June30, 2005,ownership ofeach truck by Regional Delivery Service,physicalcondition of each truck and fair market value of eachtruck.(3)Susan Virms will four types ofaccumulate and evaluateevidence :(a)Count the trucks to determine their existence.(b)Use registrations documents held by Oatley forcomparison to the serial number on each truck todetermine ownership.(c)Examine the trucks to determine each truck's physicalcondition.(d)Examine the blue book to determine the fair marketvalue of each truck.(4)Susan Virms,CPA, appears qualified,as a competent,independent person. She is a CPA, and she spends mostof her time auditing used automobile and truck dealerships and has extensive specialized knowledge about used trucks that is consistent with the nature of the engagement.1-19(continued)(5)The report results are to include:(a)which of the 35 trucks are parked in Regional'sparking lot the night of June 30.(b)whether all of the trucks are owned byRegional Delivery Service.(c)the condition of each truck, using establishedguidelines.(d)fair market value of each truck using the current bluebook for trucks.b.The only parts of the audit that will be difficult forVirms are:(1)Evaluating the condition, using the guidelines of poor,good, and excellent. It is highly subjective to do so.If she uses a different criterion than the"bluebook,"the fair market value will not be meaningful.Her experience will be essential in using thisguideline.(2)Determining the fair market value,unless it isclearly defined in the blue book for each condition.1-20 a. The major advantages and disadvantages of a career as an IRS agent, CPA, GAO auditor, or an internal auditor are:EMPLOYMENT ADVANTAGES DISADVANTAGESINTERNAL 1.Extensive training in 1.Experience limited to REVENUE individual, corporate,taxes.AGENT gift, trust and other 2.No experience withtaxes is available with operational or financialconcentration in area statement auditing.chosen. 3.Training is not2.Hands-on experience with extensive with anysophisticated selection business enterprise.techniques.CPA 1.Extensive training in 1. Exposure to taxes and toaudit of financial the business enterprisestatements, compliance may not be as in-depthauditing and operational as the internal revenueauditing.agent or the internal2.Opportunity for auditor.experience in auditing, 2. Likely to be lesstax consulting, and exposed to operationalmanagement consulting auditing than is likelypractices.for internal auditors.3.Experience in a diversityof enterprises andindustries with theopportunity to specializein a specific industry.GAO AUDITOR 1.Increasing opportunity 1.Little exposure tofor experience in diversity of enterprisesoperational auditing.and industries.2.Exposure to highly 2.Bureaucracy of federalsophisticated statistical government.sampling and computerauditing techniques.1-20(continued)EMPLOYMENT ADVANTAGESINTERNAL 1.Extensive exposure to all AUDITOR segments of theenterprise with whichemployed.2.Constant exposure to oneindustry presentingopportunity for expertisein that industry.3.Likely to have exposureto compliance, financialand operational auditing.DISADVANTAGES1.Little exposure totaxation and theaudit thereof.2.Experience is limited toone enterprise, usuallywithin one or a limitednumber of industries.(b)Other auditing careers that are available are:Auditors within many of the branches of the federalgovernment ., Atomic Energy Commission)Auditors for many state and local government units .,state insurance or bank auditors)1-21 The most likely type of auditor and the type of audit for each ofthe examples are:EXAMPLE TYPE OF AUDITOR TYPE OF AUDITIRS Compliance1.GAO OperationalInternal auditor or CPA Operational2.CPA or Internal auditor Financial statementsGAO Operational3.CPA Financial statementsGAO Financial statements4.IRS ComplianceCPA Financial statements5.Internal auditor or CPA ComplianceInternal auditor or CPA Financial statements6.GAO Compliance7.8.9.10.11.12.1-22 a.The conglomerate should either engage the management advisory services division of a CPA firm or its own internalauditors to conduct the operational audit.b.The auditors will encounter problems in establishingcriteria for evaluating the actual quantitative events andin setting the scope to include all operations in whichsignificant inefficiencies might exist.In writing thereport,the auditors must choose proper wording to statethat no financial audit was performed,that the procedureswere limited in scope and that the results reported do notnecessarily include all the inefficiencies that might exist.1-23 a.The CPA firm for the Internet company described in this problem could address these customer concerns by performinga WebTrust attestation engagement.The WebTrust assuranceservice was created by the profession to respond to thegrowing need for assurance resulting from the growth ofbusiness transacted over the Internet.b.The appropriate WebTrust principle for each of the customerconcerns noted in the problem is as follows:1.Accuracy of product descriptions and adherence tostated return policies: (3) Processing Integrity.2.Credit card and other personal information: (1)Online Privacy and (2) Security.3.Selling information to other companies: (1) Online Privacy and(2) Security.4.System failure: (4) Availability.Internet Problem Solution: Assurance Services1-1 This problem requires students to work with the AICPA assurance services Web site.1.Considering the assurance needs of customers and thecapabilities of CPAs, the Special Committee on AssuranceServices developed business plans for six assurance services.Chapter 1of the textbook discussed several of theseservices.Go to the service description for the assuranceservice that most interests you (any one of the six). Whatare the major aspects or sections of the associatedbusiness plan ., does the plan address market potential,competition, etc.?)Answer: Each business plan provides background information,describes the service, assesses market potential, discussesissues such as competition and why CPAs should offer the service,identifies practice tools available and steps that CPAs must take tobegin offering the services.2.The Special Committee's report on Assurance Services discussescompetencies needed by assurance providers todayand in the coming decade.Briefly describe the 5 generalcompetencies needed in the next decade (Hint:See the“About Assurance Services ”link.Then follow the“Assurance Services and Academia” link.)Answer: The Committee identified the following five imperatives regarding future competencies, each of implies increasing emphasis on the competencies noted:major which1-1(continued)Customer focus .Assurance service providers need tounderstand user decision processes and how informationshould enter into those processes.Increased emphasis isneeded on:understanding user needs,communication skills,relationship management, responsiveness and timeliness.Migration to higher value-added information activities.Toprovide more value to client/decision makers and others,assurance service providers need to focus less on activitiesinvolved in the conversion of business events intoinformation.,collecting,classifying,and summarizingactivities)and more on activities involved in thetransformation of information into knowledge .,analyzing,interpreting,and evaluating activities)that effectivelydrives decision processes.This will require:analyticalskills, business advisory skills, business knowledge, modelbuilding (including sensitivity analysis), understanding theclient’s business processes,measurement theory(development of operational definitions of concepts, designof appropriate measurement techniques, etc.).Information technology(IT).Assurance services deal ininformation.Hence,the profound changes occurring ininformation technology will shape virtually all aspects ofassurance services.As information specialists,assuranceservice providers need to embrace information technology inall of its complex dimensions.Embracing IT meansunderstanding how it is transforming all aspects of business.It also means learning how to effectively use newdevelopments in hardware, software, communications, memory,encryption, etc., in everything assurance service providersdo as information specialists,not only in dealing withclients, but also in dealing with each other as individuals,teams,firms,state societies,and national professionalorganizations.Pace of change and complexity.Assurance services will takeplace in an environment of rapid change and increasingcomplexity.Assurance service providers need to investheavily in life-long learning in order to maintain up-to-date knowledge and skills.They will require:intellectualcapability, learning and rejuvenation.Competition.Growth in new assurance services will dependless on franchise/regulation and more on market forces.Assurance service providers need to develop their marketingskills—the ability to see clients ’ latent informationand assurance needs and rapidly design and deploy cost-effective services to meet those needs—in order toeffectively compete for market-driven assurance services.Required skills include:marketing and selling,understanding customer needs,designing and deployingeffective solutions.1-1(continued)( Note: Internet problems address current issues using Internet Because Internet sites are subject to change, Internet problems and solutionsare subject to change.Current information on Internet problems is atsources. available。
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©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-3
Steps to Develop Audit Objectives
1. Understand objectives and responsibilities for the audit.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-5
Learning Objective 2
Distinguish management’s
responsibility for the financial
6-4Βιβλιοθήκη Steps to Develop Audit Objectives
4. Know general audit objectives for classes of transactions and accounts.
5. Know specific audit objectives for classes of transactions and accounts.
statements and internal control
from the auditor’s responsibility
for verifying the financial
statements and effectiveness
of internal control.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
2. Divide financial statements into cycles.
3. Know management assertions about accounts.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-6
Management’s Responsibilities
Management is responsible for the financial statements and for internal control.
The Sarbanes-Oxley Act increases management’s responsibility for the financial statements.
6-8
Learning Objective 3
Explain the auditor’s responsibility for discovering material misstatements.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-9
Auditor’s Responsibilities
➢ Material versus immaterial misstatements ➢ Reasonable assurance ➢ Errors versus fraud ➢ Professional skepticism ➢ Fraud resulting from fraudulent financial
6-7
Management’s Responsibilities
The Sarbanes-Oxley Act provides for criminal penalties for anyone who knowingly falsely certifies the statements.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
It requires the CEO and the CFO of public companies to certify the quarterly and annual financial statements submitted to the SEC.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-2
Objective of Conducting an Audit of 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.
Audit Responsibilities and Objectives
Chapter 6
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
6-1
Learning Objective 1
Explain the objective of conducting an audit of financial statements and an audit of internal controls.