Solutions Manual to accompany Principles of Auditing and Other Assurance Services 17th edition 0073379654

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Product details:

• ISBN-10 ‏ : ‎ 0073379654
• ISBN-13 ‏ : ‎ 978-0073379654
• Author: Ray Whittington; Kurt Pany

Whittington/Pany’s “Principles of Auditing”, is a market leader in the auditing discipline and the only text in this market which uses the balance sheet approach (vs. the cycles approach). Until October 2002, Ray Whittington was a member of the Audit Standards Board and prior to Ray being on the ASB Kurt Pany was on the board. This has had a major impact on this revision of the text as Whittington has been involved in the audit standards creation process. “Principles of Auditing” presents concepts clearly and proactively monitors changes in auditing making the relationship between accounting and auditing understandable. The 14th edition maintains the organization and balance sheet orientation, while adding and enhancing topics of Risk, Assurance Services, Fraud, E-Commerce, and the latest auditing standards to meet the needs of the current marketplace.

Table of contents:

 Chapter 1 The Role of the Public Accountant in the American Economy 1 
What Are Assurance Services? 2 The Attest Function 2 
Assurance and Nonassurance Services 4 
Financial Statement Audits 5 
What Creates the Demand for Audits? 6 Major Auditing Developments of the 20th 
Century 8 The Accounting 
Profession?s Credibility Crisis 9 Types of Audits 10 
Types of Auditors 11 
The Public Accounting Profession 12 
American Institute of Certified Public Accountants 12 The CPA Examination 14 
State Boards of Accountancy 15 
Financial Accounting Standards Board 15 Governmental Accounting Standards Board 
15 Federal Accounting 
Standards Advisory Board 15 The Public Company Accounting Oversight Board 15 
Securities and Exchange 
Commission 16 
Other Types of Professional Services 16 Organization of the Public Accounting 
Profession 18 Industry Specialization 
19 
Responsibilities of the Professional Staff 19 Professional Development for 
Public Accounting 
Firm Personnel 21 
Seasonal Fluctuations in Public Accounting Work 21 Relationships with Clients 
21 
Chapter Summary 22 Key Terms Introduced or Emphasized in Chapter 1 23 Review 
Questions 24 
Questions Requiring Analysis 24 
Multiple Choice Questions 25 
Problems 27 
In-Class Team Case 29 
Research and Discussion Case 29 
Suggested References 29 
Chapter 2 Professional Standards 31 
Auditing Standards for Public and Nonpublic Companies 32 
AICPA Generally Accepted Auditing Standards (GAAS) 32 
General Standards?Auditor Qualifications and Quality of Work 33 
Standards of Fieldwork?Accumulating 
and Evaluating Evidence 33 Standards of Reporting 35 AICPA Statements on 
Auditing Standards (SASs) 
35 The Auditors? Responsibility for Detecting Misstatements 37 
Errors and Fraud 37 Illegal Acts by Clients 37 
The Auditors? Reports 38 
The Introductory Paragraph of the Auditors? Report 38 The Scope Paragraph of the 
Auditors? Report 40 
The Opinion Paragraph of the Auditors? Report 40 Other Types of Auditors? 
Reports 43 
Public Company Audit Reports 43 
The Attestation Standards 44 Quality Control in CPA Firms 46 Regulation of 
Accounting Firms 46 
Public Company Accounting Oversight Board 46 Peer Review and Inspections 47 
International Accounting and Auditing Standards 48 Chapter Summary 49 
Key Terms Introduced or Emphasized in Chapter 2 50 Review Questions 51 
Questions Requiring Analysis 52 
Multiple Choice Questions 53 
Problems 54 
In-Class Team Case 57 
Research and Discussion Case 57 
Suggested References 58 
Chapter 3 Professional Ethics 59 
The Nature of Ethics 60 
What Are Ethical Dilemmas? 60 A Framework for Ethical Decisions 60 Making 
Ethical Decisions?A Professional 
Example 61 
The Need for Professional Ethics 63 
Professional Ethics in Public Accounting 64 
The AICPA Code of Professional Conduct 64 
Analysis of Independence 67 Analysis of Integrity and Objectivity 76 Analysis of 
General Standards 76 Analysis of 
Compliance with Standards 76 Analysis of Accounting Principles 77 Analysis of 
Confidential Client Information 78 
Analysis of Contingent Fees 79 
Analysis of Acts Discreditable 80 
Analysis of Advertising and Other Forms 
of Solicitation 80 
Analysis of Commissions and Referral Fees 81 Analysis of Form of Organization 
and Name 81 Alternative Practice 
Structures 81 
The CPA as Tax Advisor?Ethical Problems 82 Enforcement of Professional Ethics 83 
Ethics for Internal Auditors 83 Chapter Summary 85 
Key Terms Introduced or Emphasized in Chapter 3 86 Review Questions 87 
Questions Requiring Analysis 88 
Multiple Choice Questions 89 
Problems 91 
In-Class Team Cases 94 
Research and Discussion Case 95 
Suggested References 95 
Chapter 4 Legal Liability of CPAs 97 
The Scope of CPA Liability 98 
Litigation Placed in Perspective 98 Sources of CPA Liability 98 
CPAs? Liability to Their Clients under Common Law 100 
The Elements of Duty and Breach of Duty 101 The Element of Losses (Damages) 101 
The Element of Causation (Proximate Cause) 101 
Auditors? Common Law Liability to Third Parties 102 
Ultramares (Known User) Approach 103 Restatement of Torts (Foreseen User) 
Approach 103 Rosenblum 
(Foreseeable User) Approach 104 Summary of Third-Party Liability Approaches 104 
Liability to Third Parties under Statutory Law 105 
Securities Act of 1933 105 Securities Exchange Act of 1934 106 Comparison of the 
1933 and 1934 Acts 108 Racketeer 
Influenced and Corrupt Organizations Act 108 Auditors? Criminal Liability under 
the Securities Acts 109 Criminal 
Liability under Other Statutes 110 
SEC and Public Company Accounting Oversight 
Board Regulation 110 
 CPAs? Liability for Accounting and Review Services 111 CPAs?Posture in the Age 
of Litigation 112 
Chapter Summary 113 Key Terms Introduced or Emphasized in Chapter 4 114 
Review Questions 115 
Questions Requiring Analysis 116 Multiple Choice Questions 119 Problems 120 
In-Class Team Case 123 
Research and Discussion Case 124 Suggested References 124 
Chapter 5 Audit Evidence and Documentation 125 
The Relationship of Audit Risk to Audit Evidence 126 
Financial Statement Assertions 126 Audit Risk at the Assertion Level 127 Audit 
Risk Illustrated 129 Measuring Audit 
Risk 129 
Audit Evidence 130 
Types of Audit Evidence 131 
Audit Procedures 137 
Nature of Substantive Audit Procedures 137 Timing of Substantive Audit 
Procedures 137 Extent of Substantive Audit 
Procedures 138 Cost of Audit Procedures 139 
Analytical Procedures 139 
Nature of Analytical Procedures 139 Timing of Analytical Procedures 142 Extent 
of Analytical Procedures 143 
Audit Evidence for Subjective Areas 143 Evidence on Accounting Estimates 143 
Evidence on Fair Market Values 144 
Evidence on Related Party Transactions 145 
Audit Documentation 145 
Confidential Nature of Working Papers 146 Ownership of Audit Working Papers 147 
Working Papers and Auditors? 
Liability 147 Types of Working Papers 148 Organization of Working Papers 150 
Guidelines for Preparation of 
Working Papers 151 Computer-Generated Working Papers 152 Review of Audit Working 
Papers 152 
Chapter Summary 154 Key Terms Introduced or Emphasized in Chapter 5 155 
Review Questions 156 
Questions Requiring Analysis 157 Multiple Choice Questions 160 Problems 161 
In-Class Team Case 167 Research and Discussion Cases 167 Suggested References 
168 
Chapter 6 Planning the Audit; Linking Audit Procedures to Risk 169 
Obtaining Clients 170 
Submitting a Proposal 171 Communication with Predecessor Auditors 172 First-Year 
Procedures 173 
Use of the Client?s Staff 173 
Other CPAs 174 
Arranging for Specialists 174 
Engagement Letters 174 
Audit Planning 174 
Obtaining an Understanding of the Client?s Business and Its Environment 175 
Sources of Information 177 
Developing an Overall Audit Strategy 179 
Audit Risk 183 
Assessing Inherent Risks 184 
Addressing the Risks of Material Misstatement Due to Fraud 184 
Responding to Risks of Material Misstatement 187 Documenting the Audit Planning 
Process and Risk Assessments 188 
Linking Audit Procedures to Risks 189 
The Audit Trail 190 Transaction Cycles (Classes of Transactions) 191 
Organization of the Audit Program 191 
Objectives of Audit Programs 194 
General Objectives of Audit Programs for Assets 194 Substantiation of Account 
Balances 196 
An Illustration of Audit Program Design 197 
Audit Process 199 
Timing of Audit Work 201 
Chapter Summary 201 Key Terms Introduced or Emphasized in Chapter 6 202 
Review Questions 203 
Questions Requiring Analysis 204 Multiple Choice Questions 206 Problems 207 
Ethics Case 209 
Appendix 6A 
Selected Internet Addresses 210 Appendix 6B 
Examples of Fraud Risk Factors 210 Appendix 6C 
Illustrative Audit Case: Keystone Computers & Networks, Inc. 213 
Part I: Audit Planning 213 
Appendix 6C Problems 221 
Chapter 7 Internal Control 223 
The Meaning of Internal Control 224 
The Foreign Corrupt Practices Act of 1977 225 Means of Achieving Internal 
Control 226 
The Control Environment 227 
 Integrity and Ethical Values 227 Commitment to Competence 227 Board of 
Directors or Audit Committee 227 
Management Philosophy and Operating Style 227 Organizational Structure 228 
Assignment of Authority and Responsibility 229 Human Resource Policies and 
Procedures 230 
Risk Assessment 230 The Accounting Information System 231 Control Activities 231 
Performance Reviews 231 Information Processing Controls 232 Physical Controls 
232 
Segregation of Duties 233 
Monitoring of Controls 234 Limitations of Internal Control 234 Enterprise Risk 
Management 234 The 
Auditors? Consideration of Internal Control 235 Obtaining an Understanding of 
Internal Control 
to Plan the Audit 236 
The Control Environment 236 Risk Assessment 236 
The Accounting Information System 236 Control Activities 237 
Monitoring of Controls 238 
Sources of Information about Internal Control 238 Documenting the Understanding 
of 
Internal Control 238 
Assessing Control Risk 242 
Determining the Planned Assessed Level of Control Risk and Designing Additional 
Tests of Controls and the Planned 
Substantive Tests 243 
Performing Additional Tests of Controls 243 Reassessing Control Risk and 
Modifying Planned Substantive Tests 244 
Documenting Information on the Assessed Level 
of Control Risk 245 
Decision Aids for Audit Program Modification 245 Consideration of the Work of 
Internal Auditors 245 Communication 
of Control-Related Matters 248 
Internal Control Reporting by Public Companies and Their Auditors 249 
Overall Approach for an Audit of Internal Control 251 
Internal Control in the Small Company 253 Chapter Summary 254 
Key Terms Introduced or Emphasized 
in Chapter 7 254 
Review Questions 256 
Questions Requiring Analysis 257 Multiple Choice Questions 259 
Problems 261 
In-Class Team Case 264 
Appendix 7A 
Antifraud Programs and Control Measures 266 
Chapter 8 Consideration of Internal Control in an Information Technology 
Environment 269 
Nature of IT-Based Systems 271 
Characteristics of Various Types of IT-Based Systems 271 Impact of IT on the 
Audit Trail 273 
Internal Control in an IT Environment 275 Organizational Structure of the 
Information System Function 275 
Computer-Based Fraud 277 
Internal Auditing in an IT Environment 278 Control Activities in an IT System 
278 General Control Activities 280 
Application Control Activities 282 
User Control Activities 283 
Control in Microcomputer Systems 283 
The Auditors? Consideration of Internal Control in an IT Environment 284 
Obtaining an Understanding of IT-Based System Controls 284 
Documenting IT-Based System Controls 284 Assessing Control Risk?Testing IT-Based 
System Controls 285 
Substantive Testing with Computers 289 
Using Audit Software: An Illustration 290 
Computer Service Centers and Outsourced Computer Processing 290 
Chapter Summary 292 
Key Terms Introduced or Emphasized 
in Chapter 8 293 
Review Questions 295 
Questions Requiring Analysis 296 Multiple Choice Questions 296 Problems 298 
In-Class Team Case 300 
Chapter 9 Audit Sampling 303 
Comparison of Statistical and Nonstatistical Sampling 304 
 Selecting a Random Sample 305 Other Methods of Sample Selection 307 
Stratification 307 
Types of Statistical Sampling Plans 308 Allowance for Sampling Risk (Precision) 
308 Sample Size 309 
Audit Sampling for Tests of Controls 309 Sampling Risk for Tests of Controls 310 
Attributes Sampling 310 
Determine the Objective of the Test 311 Define the Attributes and ?Deviation? 
Conditions 311 Define the Population 
311 
Specify the Risk of Assessing Control Risk Too Low 
and the Tolerable Deviation Rate 312 
Estimate the Expected Population Deviation Rate 312 Determine the Sample Size 
312 
Select the Sample 314 
Test the Sample Items 314 
Evaluate the Sample Results 314 
Document the Sampling Procedure 315 
Detailed Illustration of Attributes Sampling 315 Other Statistical Attributes 
Sampling Approaches 317 Nonstatistical 
Attributes Sampling 319 
Audit Sampling for Substantive Tests 319 Sampling Risk for Substantive Tests 319 
Classical Variables Sampling 320 Mean-per-Unit Estimation 320 Controlling 
Sampling Risk 320 Determination of 
Sample Size 321 Evaluation of Sample Results 322 Illustration of Mean-per-Unit 
Estimation 322 
Difference and Ratio Estimation 325 Illustration of Difference and Ratio 
Estimation 327 
Nonstatistical Sampling for Substantive Tests 328 
Illustration of Nonstatistical Sampling 328 
Chapter Summary 330 Key Terms Introduced or Emphasized in Chapter 9 330 
Review Questions 332 
Questions Requiring Analysis 333 Multiple Choice Questions 335 Problems 336 
In-Class Team Case 339 Appendix 9A 
Probability-Proportional-to-Size (PPS) Sampling 340 
Appendix 9B 
Audit Risk 345 
Key Terms Introduced or Emphasized in Chapter 9 Appendixes 346 
Questions and Problems for Chapter 9 Appendixes 347 In-Class Team Case for 
Chapter 9 Appendixes 348 
Integrating Problem for Chapter 9 and the Appendixes 349

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