Part 1: The Auditing Profession

Chapter 1: The Demand for Audit and Other Assurance Services

· Nature of Auditing

· Distinction Between Auditing and Accounting

· Economic Demand for Auditing

· Assurance Services

· Types of Audits

· Types of Auditors

· Certified Public Accountant

Chapter 2: The CPA Profession

· Certified Public Accounting Firms

· Structure of CPA Firms

· Sarbanes—Oxley Act and Public Company Accounting Oversight Board

· Securities and Exchange Commission

· American Institute of Certified Public Accountants (AICPA)

· International and U.S. Auditing Standards

· Organization of U.S. Auditing Standards

· Quality Control

Chapter 3: Audit Reports

· Standard Unmodified Opinion Audit Report for Nonpublic Entities

· Conditions for Standard Unmodified Opinion Audit Report

· Standard Audit Report and Report on Internal Control Over Financial Reporting Under PCAOB Auditing Standards

· Unmodified Opinion Audit Report with Emphasis-of-Matter Explanatory Paragraph or Nonstandard Report Wording

· Modifications to the Opinion in the Audit Report

· Materiality

· Discussion of Conditions Requiring a Modification of Opinion

· Auditor’s Decision Process for Audit Reports

· International Accounting and Auditing Standards

Chapter 4: Professional Ethics

· What Are Ethics?

· Ethical Dilemmas

· Special Need for Ethical Conduct in Professions

· Code of Professional Conduct

· Independence Rule

· Sarbanes—Oxley and Related Independence Requirements

· Other Rules of Conduct

· Enforcement

Chapter 5: Legal Liability

· Changed Legal Environment

· Distinguishing Business Failure, Audit Failure, and Audit Risk

· Legal Concepts Affecting Liability

· Liability to Clients

· Liability to Third Parties Under Common Law

· Civil Liability Under the Federal Securities Laws

· Criminal Liability

· The Profession’s Response to Legal Liability

Part 2: The Audit Process

Chapter 6: Audit Responsibilities and Objectives

· Objective of Conducting an Audit of Financial Statements

· Management’s Responsibilities

· Auditor’s Responsibilities

· Professional Skepticism

· Professional Judgment

· Financial Statement Cycles

· Setting Audit Objectives

· Management Assertions

· Transaction-Related Audit Objectives

· Balance-Related and Presentation and Disclosure-Related Audit Objectives

· How Audit Objectives Are Met

Chapter 7: Audit Evidence

· Nature of Evidence

· Audit Evidence Decisions

· Persuasiveness of Evidence

· Types of Audit Evidence

· Analytical Procedures

· Common Financial Ratios

· Audit Documentation

Chapter 8: Audit Planning and Materiality

· Planning

· Accept Client and Perform Initial Audit Planning

· Understand the Client’s Business and Industry

· Perform Preliminary Analytical Procedures

· Materiality

· Materiality for Financial Statements as a Whole

· Determine Performance Materiality

· Estimate Misstatement and Compare with Preliminary Judgment

Chapter 9: Assessing the Risk of Material Misstatement

· Audit Risk

· Risk Assessment Procedures

· Considering Fraud Risk

· Identification of Significant Risks

· Audit Risk Model

· Assessing Acceptable Audit Risk

· Assessing Inherent Risk

· Relationship of Risks to Evidence and Factors Influencing Risks

· Relationship of Risk and Materiality to Audit Evidence

Chapter 10: Assessing and Responding to Fraud Risks

· Types of Fraud

· Conditions for Fraud

· Assessing the Risk of Fraud

· Corporate Governance Oversight to Reduce Fraud Risks

· Responding to the Risk of Fraud

· Specific Fraud Risk Areas

· Responsibilities When Fraud Is Suspected

· Documenting the Fraud Assessment

Chapter 11: Internal Control and Coso Framework

· Internal Control Objectives

· Management and Auditor Responsibilities for Internal Control

· COSO Components of Internal Control

· Internal Controls Specific to Information Technology

· Impact of IT Infrastructure on Internal Control

Chapter 12: Assessing Control Risk and Reporting on Internal Controls

· Obtain and Document Understanding of Internal Control

· Assess Control Risk

· Tests of Controls

· Decide Planned Detection Risk and Design Substantive Tests

· Auditor Reporting on Internal Control

· Evaluating, Reporting, and Testing Internal Control for Nonpublic and Smaller Public Companies

· Impact of IT Environment on Control Risk Assessment and Testing

Chapter 13: Overall Audit Strategy and Audit Program

· Types of Tests

· Selecting Which Types of Tests to Perform

· Evidence Mix

· Design of the Audit Program

· Summary of Key Evidence-Related Terms

· Summary of the Audit Process

Part 3: Application of the Audit Process to the Sales and Collection Cycle

Chapter 14: Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transaction

· Accounts and Classes of Transactions in the Sales and Collection Cycle

· Business Functions in the Cycle and Related Documents and Records

· Methodology for Designing Tests of Controls and Substantive Tests of Transactions for Sales

· Sales Returns and Allowances

· Methodology for Designing Tests of Controls and Substantive Tests of Transactions for Cash Receipts

· Audit Tests for Uncollectible Accounts

· Effect of Results of Tests of Controls and Substantive Tests of Transactions

Chapter 15: Audit Sampling for Tests of Controls and Substantive Tests of Transactions

· Representative Samples

· Statistical Versus Nonstatistical Sampling and Probabilistic Versus Nonprobabilistic Sample Selection

· Sample Selection Methods

· Sampling for Exception Rates

· Application of Nonstatistical Audit Sampling

· Statistical Audit Sampling

· Application of Attributes Sampling

Chapter 16: Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

· Methodology for Designing Tests of Details of Balances

· Designing Tests of Details of Balances

· Confirmation of Accounts Receivable

· Developing Tests of Details Audit Program

Chapter 17: Audit Sampling for Tests of Details of Balances

· Comparisons of Audit Sampling for Tests of Details of Balances and for Tests of Controls and Substantive Tests of Transactions

· Nonstatistical Sampling

· Monetary Unit Sampling

· Variables Sampling

· Illustration Using Difference Estimation

Part 4: Application of the Audit Process to Other Cycles

Chapter 18: Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

· Accounts and Classes of Transactions in the Acquisition and Payment Cycle

· Business Functions in the Cycle and Related Documents and Records

· Methodology for Designing Tests of Controls and Substantive Tests of Transactions

· Methodology for Designing Tests of Details of Balances for Accounts Payable

Chapter 19: Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

· Types of Other Accounts in the Acquisition and Payment Cycle

· Audit of Property, Plant, and Equipment

· Audit of Prepaid Expenses

· Audit of Accrued Liabilities

· Audit of Income and Expense Accounts

Chapter 20: Audit of the Payroll and Personnel Cycle

· Accounts and Transactions in the Payroll and Personnel Cycle

· Business Functions in the Cycle and Related Documents and Records

· Methodology for Designing Tests of Controls and Substantive Tests of Transactions

· Methodology for Designing Substantive Analytical Procedures and Tests of Details of Balances

Chapter 21: Audit of the Inventory and Warehouse Cycle

· Business Functions in the Cycle and Related Documents and Records

· Parts of the Audit of Inventory

· Audit of Cost Accounting

· Substantive Analytical Procedures

· Physical Observation of Inventory

· Audit of Pricing and Compilation

· Integration of the Tests

Chapter 22: Audit of the Capital Acquisition and Repayment Cycle

· Accounts in the Cycle

· Notes Payable

· Owners’ Equity

Chapter 23: Audit of Cash and Financial Instruments

· Types of Cash and Financial Instruments Accounts

· Cash in the Bank and Transaction Cycles

· Audit of the General Cash Account

· Fraud-Oriented Procedures

· Audit of Financial Instruments Accounts

Part 5: Completing the Audit

Chapter 24: Completing the Audit

· Perform Additional Tests for Presentation and Disclosure

· Review for Contingent Liabilities and Commitments

· Review for Subsequent Events

· Final Evidence Accumulation

· Evaluate Results

· Issue the Audit Report

· Communicate with the Audit Committee and Management

· Subsequent Discovery of Facts

Part 6: Other Assurance and Nonassurance Services

Chapter 25: Other Assurance Services

· Review, Compilation, and Preparation Services

· Review of Interim Financial Information for Public Companies

· Attestation Engagements

· Reports on Controls at Service Organizations (SOC Reports)

· Prospective Financial Statements

· Agreed-Upon Procedures Engagements

· Other Audits or Limited Assurance Engagements

Chapter 26: Internal and Governmental Financial Auditing and Operational Auditing

· Internal Financial Auditing

· Governmental Financial Auditing

Operational Auditing

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