William Messier Jr, Steven Glover, Douglas Prawitt - Auditing & Assurance Services_ A Systematic Approach-McGraw-Hill Education (2016)

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Rev. Confirming PagesFIGURE 1–1for AuditingPractical applications for thePrincipal provides capital and hiresagent to manage resources.modern studenttake place because Information they asymmetry are required by law.Real-World Integration and Hands-On Mini-Cases.Auditor gathersMini EarthWear cases“Hands-on” mini-cases are integrated throughoutthe text. Enhanced case descriptions and a newmini-case on the search for unrecorded liabilitieswere added this edition. The mini-cases are alsoavailable in Connect, giving your students theopportunity to actually do some common auditingprocedures.Practice InsightsPractice Insights in each chapter highlightimportant and interesting real-world trends andpractices.INTERNET ASSIGNMENTHANDS-ON CASESChapter 1 An Introduction to Assurance and Financial Statement Auditing 7Overview of the Principal–Agent Relationship Leading to the DemandChapter 1 An Introduction to Assurance and Financial Statement Auditing 29Principal(Absentee Owner)know, if the securities acts had not been passed by Congress in the 1930s, no onewould be interested in having an audit performed.”Required:Draft a memo that highlights your thoughts about Lee’s statement that audits onlyand conflicts of interestlead to information riskfor the principal.Agent(Manager)LO 1-1, 1-9 1-30 Using an Internet browser, identify five Internet sites that contain accountingor auditing Agent resources. is accountable For to each principal; site identified, prepare a brief summary of theprovides financial reports.types of information that are available. For example, Agent hires the auditor PCAOB’s home pageevidence to evaluateto report(www.pcaobus.org) contains extensive information on Rev. the Confirmingon theorganization’s Pages activitiesfairness of agent’sfairness of agent’sfinancial reports. Auditor (you may use the PCAOB site as one of the five). financial Your five reports. summaries should notissues audit opinion exceed to a total of one typed page.Agent pays auditoraccompany agent’s financialAuditorto reduce principal’sreports, adding credibility toinformation risk.the reports and reducingChapter 1 An Introduction to Assurance and Financial Statement Auditing 29principal’s information risk.EarthWear know, Introductionif the securities acts had not been passed by Congress in the 1930s, no oneIn this activity would you will be interested become further in having acquainted an audit with performed.”adds credibility to the report and reduces information EarthWear risk, or Clothiers the risk that and information their auditors circulatedThis by introductory a company’s activity management also provides will be an false opportunity or misleading. to become Reducing familiar information with the structure risk andWillis andEarthWear OnlineAdams.format potentially of the Required: EarthWear benefits both Online the cases. owner and the manager. Figure 1–1 provides an overview of thisagency relationship. Draft a memo that highlights your thoughts about Lee’s statement that audits onlyVisit Connect’s While take the additional place setting because student we’ve they outlined resources are required is very to find by simple, a law. detailed understanding description the of basics the case of the and owner– to downloadrequired manager materials. relationship is helpful in understanding the demand for auditing. The principal–agent model is a powerful conceptual tool that can be extrapolated to much more complexINTERNET ASSIGNMENT employment and other contractual arrangements. For example, how can a lender preventmanagement from taking the borrowed funds and using them inappropriately? One way is toLO 1-1, 1-9place1-30restrictiveUsing ancovenantsInternetinbrowser,the debtidentifyagreementfivewithInternetwhichsitesthe entitythatandcontainits managementaccountingmust comply.or auditingAgain,resources.this arrangementFor eachgivessiteriseidentified,to a demandpreparefor theaauditingbrief summaryof informationof thereportedtypesby managementof informationto thethatlender.are available. For example, the PCAOB’s home pageAdditional Student(www.pcaobus.org) contains extensive information on the organization’s activitiesVisit Connect for author-created problem material to be completed using IDEA software.Resources PracticeAt the heart (you of may a capital-market use the PCAOB economy site is as the one flow of of the reliable five). information, Your five summaries which investors, should creditors,and exceed regulators a total use of to one make typed informed page. decisions. Chief Justice Warren Burger gave his viewnotINSIGHTofthe significance of the audit function in a 1984 Supreme Court decision:By certifying the public reports that collectively depict a corporation’s financial status, the independentauditor assumes a public responsibility transcending any employment relationship with the cli-HANDS-ON CASESent. The independent public accountant performing this special function owes ultimate allegiance toEarthWear the corporation’s Introductioncreditors and stockholders, as well as to the investing public.In this activity you will become further acquainted with EarthWear Clothiers and their auditors Willis andEarthWear OnlineMore Adams. than This 30 introductory years later, activity the message also provides is the same—users an opportunity of to financial become familiar statements with rely the structure on the external andauditor format to of act the with EarthWear honor Online and integrity cases. in protecting the public interest.Visit Connect’s additional student resources to find a detailed description of the case and to downloadrequired materials.Free IDEA softwareAdditional Studentmes32502_ch01_001-034.indd 7ResourcesVisit Connect for author-created problem material to be completed using IDEA software.The educational version of IDEA software is availablefor free with each new book. IDEA is new tothis edition and the authors wrote chapter-specific IDEA assignments and problems, all of which are found inside Connect.Exposing students to IDEA allows them the opportunity to work with real professional audit software.AACSB StatementMcGraw-Hill Education is a proud corporate member of AACSB International. Understanding the importance and value ofmes32502_ch01_001-034.indd 29 09/30/15 02:33 PMAACSB accreditation, Auditing and Assurance Services 10e recognizes the curricula guidelines detailed in the AACSB standardsfor business accreditation by connecting selected questions in the text and test bank to the six general knowledge andskill guidelines in the AACSB standards.The statements contained in Auditing and Assurance Services 10e are provided only as a guide for the users of thistextbook. The AACSB leaves content coverage and assessment within the purview of individual schools, the missionmes32502_ch01_001-034.indd 2909/30/15 02:33 PMof the school, and the faculty. While Auditing and Assurance Services 10e and the teaching package make no claim ofany specific AACSB qualification or evaluation, we have within Auditing and Assurance Services 10e labeled selectedquestions according to the six general knowledge and as a helpful starting point.09/30/15 02:33 PMxiii
Required=ResultsMcGraw-Hill Connect ®Learn Without LimitsConnect is a teaching and learning platformthat is proven to deliver better results forstudents and instructors.Connect empowers students by continuallyadapting to deliver precisely what theyneed, when they need it, and how they needit, so your class time is more engaging andeffective.88% of instructors who use Connectrequire it; instructor satisfaction increasesby 38% when Connect is required.Using Connect improves passing ratesby 10.8% and retention by 16.4%.AnalyticsConnect Insight ®Connect Insight is Connect’s new one-of-a-kindvisual analytics dashboard—now available forboth instructors and students—that providesat-a-glance information regarding studentperformance, which is immediately actionable. By presentingassignment, assessment, and topical performance results togetherwith a time metric that is easily visible for aggregate or individualresults, Connect Insight gives the user the ability to take a just-intimeapproach to teaching and learning, which was never beforeavailable. Connect Insight presents data that empowers studentsand helps instructors improve class performance in a way that isefficient and effective.MobileConnect’s new, intuitive mobile interface gives studentsand instructors flexible and convenient, anytime–anywhereaccess to all components of the Connect platform.Students can viewtheir results for anyConnect course.
Page 2: Auditing & AssuranceServices A S Y
Page 5 and 6: AUDITING & ASSURANCE SERVICES: A SY
Page 7 and 8: viAbout the AuthorsHe consults acti
Page 9 and 10: viiiWhy a New Edition?3. Making sev
Page 11 and 12: xGive your students an intuitive, h
Page 13: How does 10e prepareyour students?T
Page 17 and 18: AcknowledgmentsFirst and foremost,
Page 19 and 20: xviiiBrief ContentsChapter 14Auditi
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Page 23 and 24: xxiiTable of ContentsUnderstanding
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Page 31 and 32: xxxTable of ContentsAdvanced Module
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earthwearANNUAL REPORT2015© Digita
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company growth strategy EarthWear
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merchandise liquidation Liquidation
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EARTHWEAR CLOTHIERSConsolidated Sta
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EARTHWEAR CLOTHIERSFive-Year Consol
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note c: lines of creditThe Company
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To the StockholdersEarthWear Clothi
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CHAPTER2LEARNING OBJECTIVESUpon com
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38 Part 1 Introduction to Assurance
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Risk AssessmentMajor Phases of an A
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Chapter 4 Risk Assessment 103FIGURE
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Chapter 4 Risk Assessment 113TABLE
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Chapter 4 Risk Assessment 119EXHIBI
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Chapter 4 Risk Assessment 125LO 4-4
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Evidence and DocumentationMajor Pha
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Chapter 5 Evidence and Documentatio
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PART THREEUnderstanding and Auditin
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Internal Control in a FinancialStat
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PART FOURStatistical and Nonstatist
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Audit Sampling: An Overview andAppl
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Chapter 8 Audit Sampling: An Overvi
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CHAPTER10LEARNING OBJECTIVESUpon co
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Auditing the Purchasing ProcessMajo
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Auditing the Human ResourceManageme
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TABLE 12-4Segregation of Duties for
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Auditing the Financing/InvestingPro
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PART SIXCompleting the Audit andRep
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PART SEVENProfessional Responsibili
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APPENDIXAdvanced Module: Profession
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758 IndexAllocation assertion—Con
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760 IndexAuditing Standards (AUs)
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762 IndexCivil liability—ContSarb
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764 IndexControl risk (CR) assessme
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766 IndexEntity—Contpublicly held
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768 IndexFlowcharts—Contrevenue p
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770 IndexInstitute of Internal Audi
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772 IndexLong-term debtauditing, 50
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774 IndexPayroll accountsaudit find
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776 IndexReclassifications, changes
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778 IndexSarbanes-Oxley Public Comp
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780 IndexSunbeam Corporation, 367,
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William Messier Jr, Steven Glover, Douglas Prawitt - Auditing & Assurance Services_ A Systematic Approach-McGraw-Hill Education (2016)