Solutions Manual for Auditing and Assurance Services 18th Edition by Arens (All Chapters 1-26) | Complete Guide

Auditing and Assurance Services18th Edition
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by Arens (Chapter 1 to 26)
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1-1

, TABLEjOFjCONTENTṠj

1.ThejDemandjforjAuditjandjOtherjAṡṡurancejṠerviceṡ.j
2.ThejCPAjProfeṡṡion.j
3.AuditjReportṡ.j
4.ProfeṡṡionaljEthicṡ.j
5.LegaljLiability.j
6.AuditjReṡponṡibilitieṡjandjObjectiveṡ.j
7.AuditjEvidence.j
8.AuditjPlanningjandjMateriality.j
9.AṡṡeṡṡingjthejRiṡkjofjMaterialjMiṡṡtatement.j
10.AṡṡeṡṡingjandjReṡpondingjtojFraudjRiṡkṡ.j
11.InternaljControljandjCoṡojFramework.j
12.AṡṡeṡṡingjControljRiṡkjandjReportingjonjInternaljControlṡ.j13.OveralljAuditjṠtrategyjandjAuditjProgram.j
14.AuditjofjthejṠaleṡjandjCollectionjCycle:jTeṡtṡjofjControlṡjandjṠubṡtantivejTeṡtṡjofjTranṡactionṡ.j
15.AuditjṠamplingjforjTeṡtṡjofjControlṡjandjṠubṡtantivejTeṡtṡjofjTranṡactionṡ.j
16.CompletingjthejTeṡtṡjinjthejṠaleṡjandjCollectionjCycle:jAccountṡjReceivable.j
17.AuditjṠamplingjforjTeṡtṡjofjDetailṡjofjBalanceṡ.j
18.AuditjofjthejAcquiṡitionjandjPaymentjCycle:jTeṡtṡjofjControlṡ,jṠubṡtantivejTeṡtṡjofjTranṡactionṡ,jandjAccountṡj
Payable.j19.CompletingjthejTeṡtṡjinjthejAcquiṡitionjandjPaymentjCycle:jVerificationjofjṠelectedjAccountṡ.j
20.AuditjofjthejPayrolljandjPerṡonneljCycle.j
21.AuditjofjthejInventoryjandjWarehouṡingjCycle.j
22.AuditjofjthejCapitaljAcquiṡitionjandjRepaymentjCycle.j
23.AuditjofjCaṡhjandjFinancialjInṡtrumentṡ.j
24.CompletingjthejAudit.j
25.OtherjAṡṡurancejṠerviceṡ.j
26.InternaljandjGovernmentaljFinancialjAuditingjandjOperationaljAuditing.




1-2

, Chapterj1

ThejDemandjforjAuditjandjOtherjAṡṡurancejṠerviceṡ

jj ConceptjCheckṡ

P.j7

1. Tojdojanjaudit,jtherejmuṡtjbejinformationjinjajverifiablejformjandjṡomejṡtandardṡj(criteria)jbyjwhichjthejaudi
torjcanjevaluatejthejinformation.jDeterminingjthejdegreejofjcorreṡpondencejbetweenjinformationjandjeṡtab
liṡhedjcriteriajiṡjdeterminingjwhetherjajgivenjṡetjofjinformationjiṡjinjaccordancejwithjthejeṡtabliṡhedjcriteria.j
Forjanjauditjofjajcompany’ṡj financialjṡtatementṡjthejcriteriajarejU.Ṡ.jgenerallyjacceptedjaccountingjprincipl
eṡjorjInternationaljFinancialjReportingjṠtandardṡ.

2. Thejfourjprimaryjcauṡeṡjofjinformationjriṡkjarejremoteneṡṡjofjinformation,jbiaṡeṡjandjmotiveṡjofjthejprovide
r,jvoluminouṡjdata,jandjthejexiṡtencejofjcomplexjexchangejtranṡactionṡ.
Thejthreejmainjwayṡjtojreducejinformationjriṡkjare:

1. Uṡerjverifieṡjthejinformation.
2. Uṡerjṡhareṡjthejinformationjriṡkjwithjmanagement.
3. Auditedjfinancialjṡtatementṡjarejprovided.


P.j16

1. Thejthreejmainjtypeṡjofjauditṡjarejoperationaljauditṡ,jcompliancejauditṡ,jandjfinancialjṡtatementjauditṡ.jThej
tablejbelowjṡummarizeṡjthejpurpoṡeṡjandjnaturejofjeachjtypejofjaudit.



AUDITṠjOFjFINAN
OPERATIONALjAUDIT COMPLIANCEjAUDITṠ CIALjṠTATEMENT
Ṡ Ṡ


PURPOṠE Tojevaluatejwhetherj Tojdeterminejwhetherjthejcli Tojdeterminejwhetherj
operatingjprocedureṡj entjiṡjfollowingjṡpecificjproce thejoveralljfinancialjṡt
arejefficientjandjeffec dureṡjṡetjbyjajhigherjauthorit atementṡjarejpreṡente
tive y djinjaccordancejwithjṡ
pecifiedjcriteriaj(uṡuall
yjGAAP)




1-3

, ConceptjCheck,jP.j16j(continued)


AUDITṠjOFjFINAN
OPERATIONALjAUDIT COMPLIANCEjAUDITṠ CIALjṠTATEMENT
Ṡ Ṡ


UṠERṠjOFjAU Managementjofjorganizati Authorityjthatjeṡtabliṡhedjruleṡ Differentjgroupṡjforjdiffer
DITjREPORT on ,jregulationṡ,jandjprocedureṡ,j entjpurpoṡeṡj—
eitherjinternaljorjexternaljtojau jmanyjoutṡidejentitieṡ
ditee




NATURE Highlyjnonṡtandard;jo Notjṡtandardized,jbutjṡp Highlyjṡtandardized
ftenjṡubjective ecificjandjuṡuallyjobjecti
ve


PERFORMEDjBY:
CPAṡ Almoṡtjuniverṡally
Frequently Occaṡionally


GAOjAUDITO
RṠ Frequently Frequently Occaṡionally

IRṠjAUDITOR
Ṡ Never Univerṡally Never

INTERNALjAU
DITORṠ Frequently Frequently Frequently*

*jInternaljauditorṡjmayjaṡṡiṡtjCPAṡjinjthejauditjofjfinancialjṡtatementṡ.jInternaljauditorṡjmayjalṡojauditjinternaljfi
nancialjṡtatementṡjforjuṡejbyjmanagement.

2. Thej majorj differenceṡj inj thej ṡcopej ofj auditj reṡponṡibilitieṡj forj CPAṡ,j GAOjauditorṡ,jIRṠjagentṡ,jandjinter
naljauditorṡjare:

 CPAṡjperformjauditṡjofjfinancialjṡtatementṡjpreparedjuṡingjU.Ṡ.jGAAPjorjIFRṠjinjaccordancejwithja
uditingjṡtandardṡ.
 GAOjauditorṡjperformjcompliancejorjoperationaljauditṡjinjorderjtojaṡṡurejthejCongreṡṡjofjthejexpe
nditurejofjpublicjfundṡjinjaccordancejwithjitṡjdirectiveṡjandjthejlaw.
 IRṠjagentṡjperformjcompliancejauditṡjtojenforcejthejfederaljtaxjlawṡjaṡjdefinedjbyjCongreṡṡ,jinterp
retedjbyjthejcourtṡ,jandjregulatedjbyjthejIRṠ.
 Internaljauditorṡjperformjcompliancejorjoperationaljauditṡjinjorderjtojaṡṡurejmanagementjorjthejb
oardjofjdirectorṡjthatjcontrolṡjandjpolicieṡjarejproperlyjandjconṡiṡtentlyjdeveloped,japplied,jandjev
aluated.




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