SOLUTIONS MANUAL
Auditing and Assurance Services
Alvin A Arens
18th edition
PR
O
FD
O
C
,Table of Contents — Auditing and Assurance Services (18th Edition)
PART 1: THE AUDITING PROFESSION
1. The Demand for Audit and Other Assurance Services
2. The CPA Profession
3. Audit Reports
4. Professional Ethics
PR
5. Legal Liability
PART 2: THE AUDIT PROCESS
O
9. Audit Responsibilities and Objectives
10. Audit Evidence
FD
11. Audit Planning and Materiality
12. Assessing the Risk of Material Misstatement
O
13. Assessing and Responding to Fraud Risks
C
14. Internal Control and COSO Framework
15. Assessing Control Risk and Reporting on Internal Controls
16. Overall Audit Strategy and Audit Program
PART 3: APPLICATION OF THE AUDIT PROCESS TO THE SALES AND COLLECTION
CYCLE
17. Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions
18. Audit Sampling for Tests of Controls and Substantive Tests of Transactions
,19. Completing the Tests in the Sales and Collection Cycle: Accounts Receivable
20. Audit Sampling for Tests of Details of Balances
PART 4: APPLICATION OF THE AUDIT PROCESS TO OTHER CYCLES
21. Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions,
and Accounts Payable
22. Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts
PR
23. Audit of the Payroll and Personnel Cycle
24. Audit of the Inventory and Warehousing Cycle
O
25. Audit of the Capital Acquisition and Repayment Cycle
26. Audit of Cash and Financial Instruments
FD
PART 5: COMPLETING THE AUDIT
27. Completing the Audit
O
PART 6: OTHER ASSURANCE AND NONASSURANCE SERVICES
C
28. Other Assurance Services
29. Internal and Governmental Financial Auditing and Operational Auditing
, Chapter 1
The Demand for Audit and Other Assurance Services
Concept Checks
P. 7
1. To do an audit, there must be information in a verifiable form and some
standards (criteria) by which the auditor can evaluate the information.
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. For an audit of a company’s
financial statements the criteria are U.S. generally accepted accounting
principles or International Financial Reporting Standards.
PR
2. 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:
O
1. User verifies the information.
2. User shares the information risk with management.
3. Audited financial statements are provided.
FD
P. 16
1. The three main types of audits are operational audits, compliance audits, and
financial statement audits. The table below summarizes the purposes and
nature of each type of audit.
O
C
AUDITS OF
OPERATIONAL COMPLIANCE FINANCIAL
AUDITS AUDITS STATEMENTS
PURPOSE To evaluate To determine To determine
whether whether the client is whether the
operating following specific overall financial
procedures are procedures set by a statements are
efficient and higher authority presented in
effective accordance with
specified criteria
(usually GAAP)
1-1
Auditing and Assurance Services
Alvin A Arens
18th edition
PR
O
FD
O
C
,Table of Contents — Auditing and Assurance Services (18th Edition)
PART 1: THE AUDITING PROFESSION
1. The Demand for Audit and Other Assurance Services
2. The CPA Profession
3. Audit Reports
4. Professional Ethics
PR
5. Legal Liability
PART 2: THE AUDIT PROCESS
O
9. Audit Responsibilities and Objectives
10. Audit Evidence
FD
11. Audit Planning and Materiality
12. Assessing the Risk of Material Misstatement
O
13. Assessing and Responding to Fraud Risks
C
14. Internal Control and COSO Framework
15. Assessing Control Risk and Reporting on Internal Controls
16. Overall Audit Strategy and Audit Program
PART 3: APPLICATION OF THE AUDIT PROCESS TO THE SALES AND COLLECTION
CYCLE
17. Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions
18. Audit Sampling for Tests of Controls and Substantive Tests of Transactions
,19. Completing the Tests in the Sales and Collection Cycle: Accounts Receivable
20. Audit Sampling for Tests of Details of Balances
PART 4: APPLICATION OF THE AUDIT PROCESS TO OTHER CYCLES
21. Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions,
and Accounts Payable
22. Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts
PR
23. Audit of the Payroll and Personnel Cycle
24. Audit of the Inventory and Warehousing Cycle
O
25. Audit of the Capital Acquisition and Repayment Cycle
26. Audit of Cash and Financial Instruments
FD
PART 5: COMPLETING THE AUDIT
27. Completing the Audit
O
PART 6: OTHER ASSURANCE AND NONASSURANCE SERVICES
C
28. Other Assurance Services
29. Internal and Governmental Financial Auditing and Operational Auditing
, Chapter 1
The Demand for Audit and Other Assurance Services
Concept Checks
P. 7
1. To do an audit, there must be information in a verifiable form and some
standards (criteria) by which the auditor can evaluate the information.
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. For an audit of a company’s
financial statements the criteria are U.S. generally accepted accounting
principles or International Financial Reporting Standards.
PR
2. 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:
O
1. User verifies the information.
2. User shares the information risk with management.
3. Audited financial statements are provided.
FD
P. 16
1. The three main types of audits are operational audits, compliance audits, and
financial statement audits. The table below summarizes the purposes and
nature of each type of audit.
O
C
AUDITS OF
OPERATIONAL COMPLIANCE FINANCIAL
AUDITS AUDITS STATEMENTS
PURPOSE To evaluate To determine To determine
whether whether the client is whether the
operating following specific overall financial
procedures are procedures set by a statements are
efficient and higher authority presented in
effective accordance with
specified criteria
(usually GAAP)
1-1
