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Auditing and Assurance Services, 16th edition

  • Alvin A. Arens
  • Randal J. Elder
  • Mark S. Beasley
  • Chris E. Hogan

Published by Pearson (February 11th 2016) - Copyright © 2017

16th edition

Overview

Comprehensive and up-to-date, including discussion of new standards, codes, and concepts, Auditing and Assurance Services: An Integrated Approach presents an integrated concepts approach to auditing that details the process from start to finish. Based on the author’s belief that the fundamental concepts of auditing center on the nature and amount of evidence that auditors should gather in specific engagements, this edition’s primary objective is to illustrate auditing concepts using practical examples and real-world settings.

The 16th Edition remains up-to-date with examples of key real-world audit decisions and an emphasis on audit planning, risk assessment processes, and collecting and evaluating evidence in response to risks.

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Table of contents

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

 

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