Solution Manual for Principles of Auditing and Other Assurance Services 22nd Edition by Ray Whittington & Kurt Pany – Complete Chapter Solutions Guide (1–21)

Solution manual for
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Principles Of Auditing And Other Assurance Se
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rvices 22nd Edition By Ray Whittington Kurt
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, • Table of Contents b b




Chapter 1: The Role of the Public Accountant in the AmericanEconomy
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Chapter 2: Professional Standards
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Chapter 3: Professional Ethics
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Chapter 4: Legal Liability of CPAs
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Chapter 5: Audit Evidence and Documentation
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Chapter 6: Audit Planning, Understanding the Client, AssessingRisks, and Responding
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Chapter 7: Internal Control
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Chapter 8: Consideration of Internal Control in an InformationTechnology Environment
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Chapter 9: Audit Sampling
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Chapter 10: Cash and Financial Investments
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Chapter 11: Accounts Receivable, Notes Receivable, andRevenue
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Chapter 12: Inventories and Cost of Goods Sold
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Chapter 13: Property, Plant, and Equipment: Depreciation andDepletion
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Chapter 14: Accounts Payable and Other Liabilities
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Chapter 15: Debt and Equity Capital
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Chapter 16: Auditing Operations and Completing the Audit
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Chapter 17: Auditors’ Reports
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Chapter 18: Integrated Audits of Public Companies
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Chapter 19: Additional Assurance Services: Historical FinancialInformation
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,Chapter 20: Additional Assurance Services: Other Information
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Chapter 21: Internal, Operational, and Compliance Auditing
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CHAPTER 1 b




The Role of the P b b b b




ublic Accountant in t b b b




he
American Economy b




Review Questions
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1-1 The ―crisis of credibility‖ largely arose from the number of companies that restat
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ed their previously issued financial statements as a result of accounting irregula
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rities and fraud. Especially responsible werethe very visible Enron and WorldCom
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fraud cases. Both companies filed for bankruptcy and constituted the largest co
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mpanies in American history to do so. The extent of the accounting irregularities
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and fraud being investigated and disclosed brought into question the effectivene
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ss of financial statement audits. In addition, the criminal conviction of Arthur And
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ersen, LLP, one of the then Big 5 accounting firms, on charges of destroying docu
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ments related to the Enron case brought into question the ethics standards of the
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profession.


1-2 Assurance services are professional services that enhance the quality of infor
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mation, or its context, for decision-
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making. The two types are: (a) those that increase the reliability of information
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, and (b) those that involve putting information in a form or context that facilita
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tes decision-making.b




1-3 A financial statement audit is, by far, the most common type of attest engagemen
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t. The overall assertion,made by management, most frequently is that the financi
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al statements follow generally accepted accounting principles.
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1-4 A large corporation with securities listed on a stock exchange is required by the ru
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les of the stock exchange and by the rules of the Securities and Exchange Commi
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ssion to provide an audit report with theannual financial statements furnished to i
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ts stockholders. It also is required to engage the auditors to provide an opinion on
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its internal control. Apart from legal requirements, however, a large listed corp
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oration recognizes that it must maintain investor confidence in the reliability of it
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s financial statements and internal control over financial reporting if it is to conti
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nue to be able to secure capital from the public. The report by a firm of certified pu
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blic accountants adds credibility to the financial statements prepared by the corp
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oration. When a small family- b b b b




owned enterprise elects to have an audit, the purpose usually is to use the auditor
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s' report to support an application for a bank loan.
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