Auditing and Assurance Services A Systematic Approach 9th edition William Messier, Steven Glover, Douglas Prawitt - Solutions

Unlock the full potential of "Auditing and Assurance Services: A Systematic Approach, 9th Edition" by exploring our comprehensive solutions. Dive into our online answers key, where you'll find expertly crafted answers and step-by-step solutions. Access the solution manual and solutions PDF for detailed explanations of solved problems, ensuring you grasp every chapter's nuances. Our test bank provides a vast array of questions and answers, enhancing your understanding. Whether you're seeking the instructor manual or a textbook companion, our resources have you covered. Experience seamless learning with our free download options, designed to support your academic journey.

Describe the IAASB and AICPA definitions of a compilation engagement. Discuss common compilation procedures.
Explain three situations in which the practitioner will modify the standard compilation report. Describe how the wording will be modified.
What is interim financial information, and why is interim financial information required to be reviewed? What professional standards provide guidance on the conduct of reviews of interim financial information?
Describe common procedures that the auditor will complete when performing a review of interim financial information.
Refer to Exhibit and describe the typical contents of a review report. Discuss how the disclosure and reporting requirements for interim financial statements differ from those for annual statements.
Define the term special-purpose framework. Explain the considerations and procedures that the practitioner would make and conduct when accepting, planning, and performing an engagement of the audit of special-purpose financial statements.
Explain the contents of a report on an engagement of the audit of special-purpose financial statements.
What guidance would the auditor rely upon for examples of audit reports appropriate to various types of special-purpose financial statements?
AU-C Section 805 provides guidance on audits of single financial statements and specific elements, accounts, or items of a financial statement. Provide examples of these types of situations.
A staff auditor of Erwachen & Diamond, CPAs, has prepared the following draft of an audit report on cash-basis financial statements. Identify any deficiencies in the report and explain why they are deficiencies.Auditor's Report to the Shareholders of Halon Company:We have audited the
Define the term agreed-upon procedures engagement and describe typical procedures performed and reporting on such an engagement. The practitioner should not perform agreed-upon procedures that are overly subjective, and the practitioner should be able to obtain evidence to provide a reasonable
Define the terms prospective financial statements, financial forecast, and financial projection.
Describe the activities involved in a compilation of prospective financial statements and the standards that apply to such an engagement.
Explain how an examination of prospective financial statements differs from a compilation of prospective financial statements.Describe the activities involved in an examination of prospective financial statements.
Distinguish between historical financial information and pro forma financial information. Explain the guidelines that should be adhered to when presenting pro forma financial information.
Describe the procedures that would be appropriate for examining or reviewing pro forma financial information.
Describe forensic accounting and explain how it differs from auditing.
Define the terms nonfinancial reporting, corporate social responsibility reporting, and triple bottom-line reporting. How do these terms relate to sustainability reporting?
What factors have driven the demand for sustainability reporting? Refer to Exhibit and describe the standards that exist for sustainability reporting.
Why is there a demand for independent assurance on sustainability reporting? Describe the features of external assurance over sustainability provided in the Global Reporting Initiative Reporting Framework.
Is it unethical for a company to provide a sustainability report, but provide no assurance on the reliability of the information contained therein?
Go to the Web sites of the following organizations and review their agendas and recent activities concerning assurance over sustainability disclosures:● AICPA● IFAC● IAASB● PCAOBa. How do the activities of these organizations differ? And how are they similar?b. If there is an organization
Locate and read the article listed below and answer the following questions.Ballou, B., D. L. Heitger, and C. E. Landes. 2006. The future of corporate sustainability reporting. Journal of Accountancy. December (6): 65–74.a. What is the issue being addressed in the paper?b. What are the findings
Refer to Exhibit, which lists some of the inquiries and analytical procedures that might be performed for a review of accounts in the revenue cycle. Discuss how these procedures differ from the procedures that would be used to perform an audit of these same accounts.
Why is studying auditing different from studying other accounting topics? How might understanding auditing concepts prove useful for consultants, business managers, and other business decision makers?
Discuss why there is a demand for auditing services in a free- market economy. What evidence suggests that auditing would be demanded even if it were not required by government regulation?
What is meant by the statement “The agency relationship between absentee owners and managers produces a natural conflict of interest”?
Why is independence such an important requirement for auditors? How does independence relate to the agency relationship between owners and managers?
Define auditing, attest, and assurance services.
The Committee on Basic Auditing Concepts has provided a widely cited definition of auditing. What does the phrase “systematic process” mean in this definition?
Dei ne audit risk and materiality. How are these concepts reflected in the auditor’s report?
Briel y describe why on most audit engagements an auditor tests only a sample of transactions that occurred.
What are the major phases of an audit?
What are the primary elements involved in the planning phase of an audit?
Identify the four paragraphs of the auditor’s standard unqualified report for a public company client.
Briefly discuss why auditors must often exercise creativity and innovation in auditing financial statements. Give an example different from the one offered in the text.
Multiple Choice1. An independent audit aids in the communication of economic data because the audit a. Confirms the exact accuracy of management’s financial representations. b. Lends credibility to the financial statements. c. Guarantees that financial data are fairly presented. d. Assures the
You recently attended your five- year college reunion. At the main reception, you encountered an old friend, Lee Beagle, who recently graduated from law school and is now practicing with a large law firm in town. When you told him that you are a CPA and employed by a regional CPA firm, he made the
Greenbloom Garden Centers is a small, privately held corporation that has two stores in Orlando, Florida. The Greenbloom family owns 100 percent of the company’s stock, and family members manage the operations. Sales at the company’s stores have been growing rapidly, and there appears to be a
You were recently hired by the CPA firm of Honson & Hansen. Within two weeks, you were sent to the first- year staff training course. The instructor asks you to prepare answers for the following questions: a. How is audit evidence defined? b. How does audit evidence relate to assertions and to the
John Josephs, an audit manager for Tip, Acanoe & Tylerto, was asked to speak at a dinner meeting of the local Small Business Administration Association. The president of the association has suggested that he talk about the various phases of the audit process. John has asked you, his trusted
Many companies post their financial statements and auditor’s report on their home pages, generally under a heading labeled “investor relations.” Use one of the Internet search engines to do the following: a. Visit Intel’s (www.intel. com) and Microsoft’s (www.microsoft. com) home pages
Using the audit report included in Chapter 1, identify and record the phrases or words that indicate to the users that the financial statements are not necessarily an “ exact” representation of the results of operations and financial position of a company.
The Government Accountability Office (GAO) gave the following results in a report based on an examination of 39 failed banks: 9 The early warning system provided by bank call reports* is seriously l awed. The 39 failed banks’ call reports did not provide the regulators with advance warning of the
Using an Internet browser, identify five Internet sites that contain accounting or auditing resources. For each site identified, prepare a brief summary of the types of information that are available. For example, the PCAOB’s home page (www. pcaobus.org) contains extensive information on the
List the various types of auditors.
Give one example each of compliance, operational, and forensic audits.
Briefly discuss the key events that led up to the Sarbanes- Oxley Act of 2002 and the creation of the PCAOB.
Discuss how the events that have so dramatically affected auditors and the public accounting profession since the Enron scandal may in some sense be “healthy” for the profession.
Compare and contrast management’s responsibility for the entity’s financial statements with the auditor’s responsibilities for detecting errors and fraud in the financial statements.
Briefly discuss each of the components of the high- level model of business offered in the chapter (i.e., objectives, strategies, processes, etc.). Why might understanding the characteristics of an entity’s business in each of these areas be important for a financial statement auditor?
What roles do information systems and systems of internal control play in the high- level model of business discussed in the chapter, and why might it be important for an auditor to understand these roles?
The AICPA performs a number of functions that directly bear on independent auditors of nonpublic entities, including promulgation of rules and standards. List four types of standards issued by the AICPA.
What kind of organization is the PCAOB, why was it formed, and what does it do?
What role does the SEC play in the establishment of accounting and auditing standards for public companies?
What are some of the common documents encountered by auditors that are required by the Securities Exchange Act of 1934? What is the purpose of each of these documents?
List the four categories of Principles Underlying an Audit Conducted in Accordance with GAAS. How do the Principles relate to the 10 GAAS, and how are they different?
List the three categories of GAAS. Discuss why the GAAS and the SAS are considered minimum standards of performance for auditors.
Why is independence such an important standard for auditors? How does auditor independence relate to the agency relationship between owners and managers discussed in Chapter 1?
Multiple Choice1. Which of the following is not a part of the role of internal auditors?a. Assisting the external auditors.b. Providing reports on the reliability of financial statements to investors and creditors.c. Consulting activities.d. Operational audits.2. Operational auditing is oriented
Audits can be categorized into five types: (1) financial statement audits, ( 2) audits of internal control, ( 3) compliance audits, ( 4) operational audits, and ( 5) forensic audits. Required: For each of the following descriptions, indicate which type of audit (financial statement audit, audit of
Dale Boucher, the owner of a small electronics firm, asked Sally Jones, CPA, to conduct an audit of the company’s records. Boucher told Jones that the audit was to be completed in time to submit audited financial statements to a bank as part of a loan application. Jones immediately accepted the
Terri Harrison, CPA, has discussed various reporting considerations with three of the entities she audits. The three entities presented the following situations and asked how they would affect the audit report.a. One of the entities has changed its depreciation method on its machinery from straight
Part I: Merry- Go- Round (MGR), a clothing retailer located primarily in shopping malls, was founded in 1968.10 By the early 1990s, the company had gone public and had expanded to approximately 1,500 stores, 15,000 employees, and $ 1 billion in annual sales. The company’s locations in malls
Part II: Merry- Go- Round. Additional charges made against E& Y included the following (recall that MGR hired E& Y for turnaround consulting services): • E& Y had a close relationship with Rouse Co., one of MGR’s primary land-lords (E& Y was soliciting business from Rouse and provided
Visit the GAO’s home page (www. gao.gov) and search for a recently completed audit. Prepare a summary of the GAO audit that includes background on the issue and the GAO’s findings and recommendations.
a. Go to the AICPA’s website (www. aicpa.org). Find the AICPA’s mission statement (currently under the link “About the AICPA”). Read and briefly summarize the AICPA’s mission as described in its mission statement.b. Go to the SEC’s website (www. sec.gov). Find the SEC’s description of
What types of inquiries about a prospective client should an auditor make to third parties?
Who is responsible for initiating the communication between the predecessor and successor auditors? What type of information should be requested from the predecessor auditor?
What is the purpose of an engagement letter? List the important information that the engagement letter should contain.
What factors should an external auditor use to assess the objectivity and competence of internal auditors?
What is an audit committee and what are its responsibilities?
List the matters an auditor should consider when developing an audit plan.
Distinguish between illegal acts that are “direct and material” and those that are “material but indirect.” List five circumstances that may indicate that an illegal act has occurred.
What are some of the sources of information that may be used to identify transactions with related parties?
What actions should the engagement team members be informed of by the engagement partner and other engagement team members as part of their supervisory role?
What are the three general types of audit tests? Define each type of audit test and give two examples.
Why is it important for CPA firms to develop policies and procedures for establishing materiality?
List and describe the three major steps in applying materiality to an audit.
While net income before taxes is frequently used for calculating overall materiality, discuss circumstances when total assets or revenues might be better bases for calculating overall materiality.
Give three examples of qualitative factors that might affect the overall materiality.
List four factors that would cause the auditor to use a lower percentage for tolerable misstatement.
Multiple Choice:1. Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor’s a. Awareness of the consistency in the application of generally accepted accounting principles between periods. b. Evaluation of all
The audit committee of the board of directors of Rebel Corporation asked Tish & Field, CPAs, to audit Rebel’s financial statements for the year endedDecember 31, 2013. Tish & Field explained the need to make an inquiry of the predecessor auditor and requested permission to do so. Rebel’s
Parker is the in- charge auditor for the upcoming annual audit of FGH Company, a continuing audit client. Parker will supervise two assistants on the engagement and will visit the entity before the fieldwork begins. Parker has completed the engagement letter and established an understanding with
A CPA has been asked to audit the financial statements of a publicly held company for the first time. All preliminary verbal discussions and inquiries among the CPA, the company, the predecessor auditor, and all other necessary parties have been completed. The CPA is now preparing an engagement
For many years the financial and accounting community has recognized the importance of the use of audit committees and has endorsed their formation. By now the use of audit committees has become widespread. Independent auditors have become increasingly involved with audit committees and
Exhibit 3– 2 contains a partial audit program for substantive tests of accounts receivable. Required: For audit procedures 1– 4, identify the primary assertion being tested.
For each of the following scenarios, perform the three steps in the materiality process: (1) determine overall materiality, (2) determine tolerable misstatement, and (3) evaluate the audit findings.Scenario 1:Murphy & Johnson is a privately owned manufacturer of small motors for lawnmowers,
You are the audit manager for Ken- Ron Enterprises. Your firm has been the entity’s auditor for 15 years. Your firm normally uses a range of 3% to 5% of income before taxes to calculate overall materiality and 50– 75% of over-all materiality to calculate tolerable misstatement. Ken- Ron has
Forestcrest Woolen Mills is a closely held North Carolina company that has existed since 1920. The company manufactures high- quality woolen cloth for men’s and women’s outerwear. Your firm has audited Forestcrest for 15 years. Five years ago, Forestcrest signed a consent decree with the North
Visit the Institute of Internal Auditors (IIA) home page (www.theiia. org) and familiarize yourself with the information contained there. Search the site for information about the IIA’s requirements for the objectivity and independence of internal auditors.
EarthWear Clothiers makes high- quality clothing for outdoor sports. It sells most of its products through mail order. Use the Internet to obtain information about the retail mail- order industry.
Distinguish between audit risk and engagement risk.
How do inherent risk and control risk differ from detection risk?
What are some limitations of the audit risk model?
Distinguish between sampling risk and professional judgment errors (nonsampling) risk.
In understanding the entity and its environment, the auditor gathers knowledge about which categories of information?
Give three examples of conditions and events that may indicate the existence of business risks.
Many entities are subject to regulations by state and federal regulatory bodies. For example, the Environmental Protection Agency has a mission of protecting human health and the environment. What business risks would an entity face if it operated in the coal mining industry?

Showing 2500 - 2600 of 10291

First
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
Last

Auditing and Assurance Services A Systematic Approach 9th edition William Messier, Steven Glover, Douglas Prawitt - Solutions

Step by Step Answers