Test Bank For Auditing and Assurance Services, 16/E Alvin A. Arens

Table of Contents

Part 1: The Auditing Profession

 

Chapter 1: The Demand for Audit and Other Assurance Services

·         Nature of Auditing

·         Distinction Between Auditing and Accounting

·         Economic Demand for Auditing

·         Assurance Services

·         Types of Audits

·         Types of Auditors

·         Certified Public Accountant

Chapter 2: The CPA Profession

·         Certified Public Accounting Firms

·         Structure of CPA Firms

·         Sarbanes—Oxley Act and Public Company Accounting Oversight Board

·         Securities and Exchange Commission

·         American Institute of Certified Public Accountants (AICPA)

·         International and U.S. Auditing Standards

·         Organization of U.S. Auditing Standards

·         Quality Control

Chapter 3: Audit Reports

·         Standard Unmodified Opinion Audit Report for Nonpublic Entities

·         Conditions for Standard Unmodified Opinion Audit Report

·         Standard Audit Report and Report on Internal Control Over Financial Reporting Under PCAOB Auditing Standards

·         Unmodified Opinion Audit Report with Emphasis-of-Matter Explanatory Paragraph or Nonstandard Report Wording

·         Modifications to the Opinion in the Audit Report

·         Materiality

·         Discussion of Conditions Requiring a Modification of Opinion

·         Auditor’s Decision Process for Audit Reports

·         International Accounting and Auditing Standards

Chapter 4: Professional Ethics

·         What Are Ethics?

·         Ethical Dilemmas

·         Special Need for Ethical Conduct in Professions

·         Code of Professional Conduct

·         Independence Rule

·         Sarbanes—Oxley and Related Independence Requirements

·         Other Rules of Conduct

·         Enforcement

Chapter 5: Legal Liability

·         Changed Legal Environment

·         Distinguishing Business Failure, Audit Failure, and Audit Risk

·         Legal Concepts Affecting Liability

·         Liability to Clients

·         Liability to Third Parties Under Common Law

·         Civil Liability Under the Federal Securities Laws

·         Criminal Liability

·         The Profession’s Response to Legal Liability

Part 2: The Audit Process

 

Chapter 6: Audit Responsibilities and Objectives

·         Objective of Conducting an Audit of Financial Statements

·         Management’s Responsibilities

·         Auditor’s Responsibilities

·         Professional Skepticism

·         Professional Judgment

·         Financial Statement Cycles

·         Setting Audit Objectives

·         Management Assertions

·         Transaction-Related Audit Objectives

·         Balance-Related and Presentation and Disclosure-Related Audit Objectives

·         How Audit Objectives Are Met

Chapter 7: Audit Evidence

·         Nature of Evidence

·         Audit Evidence Decisions

·         Persuasiveness of Evidence

·         Types of Audit Evidence

·         Analytical Procedures

·         Common Financial Ratios

·         Audit Documentation

Chapter 8: Audit Planning and Materiality

·         Planning

·         Accept Client and Perform Initial Audit Planning

·         Understand the Client’s Business and Industry

·         Perform Preliminary Analytical Procedures

·         Materiality

·         Materiality for Financial Statements as a Whole

·         Determine Performance Materiality

·         Estimate Misstatement and Compare with Preliminary Judgment

Chapter 9: Assessing the Risk of Material Misstatement

·         Audit Risk

·         Risk Assessment Procedures

·         Considering Fraud Risk

·         Identification of Significant Risks

·         Audit Risk Model

·         Assessing Acceptable Audit Risk

·         Assessing Inherent Risk

·         Relationship of Risks to Evidence and Factors Influencing Risks

·         Relationship of Risk and Materiality to Audit Evidence

Chapter 10: Assessing and Responding to Fraud Risks

·         Types of Fraud

·         Conditions for Fraud

·         Assessing the Risk of Fraud

·         Corporate Governance Oversight to Reduce Fraud Risks

·         Responding to the Risk of Fraud

·         Specific Fraud Risk Areas

·         Responsibilities When Fraud Is Suspected

·         Documenting the Fraud Assessment

Chapter 11: Internal Control and Coso Framework

·         Internal Control Objectives

·         Management and Auditor Responsibilities for Internal Control

·         COSO Components of Internal Control

·         Internal Controls Specific to Information Technology

·         Impact of IT Infrastructure on Internal Control

Chapter 12: Assessing Control Risk and Reporting on Internal Controls

·         Obtain and Document Understanding of Internal Control

·         Assess Control Risk

·         Tests of Controls

·         Decide Planned Detection Risk and Design Substantive Tests

·         Auditor Reporting on Internal Control

·         Evaluating, Reporting, and Testing Internal Control for Nonpublic and Smaller Public Companies

·         Impact of IT Environment on Control Risk Assessment and Testing

Chapter 13: Overall Audit Strategy and Audit Program

·         Types of Tests

·         Selecting Which Types of Tests to Perform

·         Evidence Mix

·         Design of the Audit Program

·         Summary of Key Evidence-Related Terms

·         Summary of the Audit Process

Part 3: Application of the Audit Process to the Sales and Collection Cycle

 

Chapter 14: Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transaction

·         Accounts and Classes of Transactions in the Sales and Collection Cycle

·         Business Functions in the Cycle and Related Documents and Records

·         Methodology for Designing Tests of Controls and Substantive Tests of Transactions for Sales

·         Sales Returns and Allowances

·         Methodology for Designing Tests of Controls and Substantive Tests of Transactions for Cash Receipts

·         Audit Tests for Uncollectible Accounts

·         Effect of Results of Tests of Controls and Substantive Tests of Transactions

Chapter 15: Audit Sampling for Tests of Controls and Substantive Tests of Transactions

·         Representative Samples

·         Statistical Versus Nonstatistical Sampling and Probabilistic Versus Nonprobabilistic Sample Selection

·         Sample Selection Methods

·         Sampling for Exception Rates

·         Application of Nonstatistical Audit Sampling

·         Statistical Audit Sampling

·         Application of Attributes Sampling

Chapter 16: Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

·         Methodology for Designing Tests of Details of Balances

·         Designing Tests of Details of Balances

·         Confirmation of Accounts Receivable

·         Developing Tests of Details Audit Program

Chapter 17: Audit Sampling for Tests of Details of Balances

·         Comparisons of Audit Sampling for Tests of Details of Balances and for Tests of Controls and Substantive Tests of Transactions

·         Nonstatistical Sampling

·         Monetary Unit Sampling

·         Variables Sampling

·         Illustration Using Difference Estimation

Part 4: Application of the Audit Process to Other Cycles

 

Chapter 18: Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

·         Accounts and Classes of Transactions in the Acquisition and Payment Cycle

·         Business Functions in the Cycle and Related Documents and Records

·         Methodology for Designing Tests of Controls and Substantive Tests of Transactions

·         Methodology for Designing Tests of Details of Balances for Accounts Payable

Chapter 19: Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

·         Types of Other Accounts in the Acquisition and Payment Cycle

·         Audit of Property, Plant, and Equipment

·         Audit of Prepaid Expenses

·         Audit of Accrued Liabilities

·         Audit of Income and Expense Accounts

Chapter 20: Audit of the Payroll and Personnel Cycle

·         Accounts and Transactions in the Payroll and Personnel Cycle

·         Business Functions in the Cycle and Related Documents and Records

·         Methodology for Designing Tests of Controls and Substantive Tests of Transactions

·         Methodology for Designing Substantive Analytical Procedures and Tests of Details of Balances

Chapter 21: Audit of the Inventory and Warehouse Cycle

·         Business Functions in the Cycle and Related Documents and Records

·         Parts of the Audit of Inventory

·         Audit of Cost Accounting

·         Substantive Analytical Procedures

·         Physical Observation of Inventory

·         Audit of Pricing and Compilation

·         Integration of the Tests

Chapter 22: Audit of the Capital Acquisition and Repayment Cycle

·         Accounts in the Cycle

·         Notes Payable

·         Owners’ Equity

Chapter 23: Audit of Cash and Financial Instruments

·         Types of Cash and Financial Instruments Accounts

·         Cash in the Bank and Transaction Cycles

·         Audit of the General Cash Account

·         Fraud-Oriented Procedures

·         Audit of Financial Instruments Accounts

Part 5: Completing the Audit

 

Chapter 24: Completing the Audit

·         Perform Additional Tests for Presentation and Disclosure

·         Review for Contingent Liabilities and Commitments

·         Review for Subsequent Events

·         Final Evidence Accumulation

·         Evaluate Results

·         Issue the Audit Report

·         Communicate with the Audit Committee and Management

·         Subsequent Discovery of Facts

Part 6: Other Assurance and Nonassurance Services

 

Chapter 25: Other Assurance Services

·         Review, Compilation, and Preparation Services

·         Review of Interim Financial Information for Public Companies

·         Attestation Engagements

·         Reports on Controls at Service Organizations (SOC Reports)

·         Prospective Financial Statements

·         Agreed-Upon Procedures Engagements

·         Other Audits or Limited Assurance Engagements

Chapter 26: Internal and Governmental Financial Auditing and Operational Auditing

·         Internal Financial Auditing

·         Governmental Financial Auditing

Operational Auditing