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
Activities of CPA 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
Generally Accepted Auditing Standards
Statements on Auditing Standards
Quality Control
Chapter 3: Audit Reports
Standard Unqualified Audit Report for Non-Public Entities
Unqualified Audit Report and Report on Internal Control Over Financial Reporting Under PCAOB Auditing Standards
Unqualified Audit Report with Emphasis-Of-Matter Explanatory Paragraph or Modified Wording
Departures from an Unqualified Audit Report
Materiality
Discussion of Conditions Requiring a Departure
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
Independence Rule of Conduct and Interpretations
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
Financial Statement Cycles
Setting Audit Objectives
Management Assertions
Transaction-Related Audit Objectives
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
Audit Documentation
Chapter 8: Audit Planning and Analytical Procedures
Planning
Accept Client and Perform Initial Audit Planning
Understand the Client’s Business and Industry
Assess Client Business Risk
Perform Preliminary Analytical Procedures
Summary of the Parts of Audit Planning
Analytical Procedures
Five Types of Analytical Procedures
Common Financial Ratios
Chapter 9: Materiality and Risk
Materiality
Materiality for Financial Statements as a Whole
Determine Performance Materiality
Estimate Misstatement and Compare with Preliminary Judgement
Audit Risk
Audit Risk Model Components
Assessing Acceptable Audit Risk
Assessing Inherent Risk
Relationship of Risks to Evidence and Factors Influencing Risks
Chapter 10: Internal Control, Control Risk, and Section 404 Audits
Internal Control Objectives
Management and Auditor Responsibilities for Internal Control
COSO Components of Internal Control
Obtain and Document Understanding of Internal Control
Assess Control Risk
Tests of Control
Decide Planned Detection Risk and Design Substantive Tests
Section 404 Reporting on Internal Control
Evaluating, Reporting, and Testing Internal Control for Nonpublic Companies
Chapter 11: Fraud Auditing
Types of Fraud
Conditions of 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
Chapter 12: The Impact of Information Technology on the Audit Process
How Information Technologies Improve Internal Control
Assessing Risks of Information Technology
Internal Controls Specific to Information Technology
Impact of Information Technology to the Audit Process
Issues for Different IT Environments
Chapter 13: Overall Audit Strategy and Audit Program
Types of Tests
Selecting Which Types of Tests to Perform
Impact of Information Technology on Audit Testing
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: Test of Controls and Substantive Tests of Transactions
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 Control and Substantive Tests of Transactions for Cash Receipts
Audit Tests for the Write-off of Uncollectible Accounts
Additional Internal Controls over Account Balances and Presentation and Disclosure
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
Probabilistic Sample Selection Methods
Sampling for Exception Rates
Application of Nonstatistical Audit Sampling
Statistical Audit Sampling
Sampling Distribution
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 Balances and for Tests of Controls and Substantive Tests of Transactions
Nonstatisitcal 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 Acquisitions 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 Tests of Details and Balances
Chapter 21: Audit of the Inventory and Warehouse Cycle
Business Functions in the Cycle and Related Documents and Records
Parts of the Audit Inventory
Audit of Cost Accounting
Analytical Procedures
Physical Observation of Inventory
Audit of Pricing and Compilation
Integration of the Tests
Chapter 22: Audit of the Capital Acquisition and Repayment
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: Comleting 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 and Compilation Services
Review of Interim Financial Information for Public Companies
Attestation Engagements
WebTrust and SysTrust Services
Reports on Controls at Service Organizations
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
