Solution Manual For Auditing & Assurance Services: A Systematic Approach, 12th Edition By William Messier Jr, Steven Glover, Verified Chapters 1 - 21, Complete Newest Version

SOLUTION MANUAL for Auditing & Assurance Services A
Systematic Approach

12th Edition by William Messier Jr, Steven Glover,
Chapters 1 - 21 / Complete




1

,• Table of Contents
o o




Chaptero1:oAnoIntroductionotooAssuranceoandoFinancialoStatementoAuditing

Chaptero2:oTheoFinancialoStatementoAuditingoEnvironment

Chaptero3:oAuditoPlanning,oTypesoofoAuditoTests,oandoMateriality

Chaptero4:oRiskoAssessment

Chaptero5:oEvidenceoandoDocumentation

Chaptero6:oInternaloControloinoaoFinancialoStatementoAudit

Chaptero7:oAuditingoInternaloControlooveroFinancialoReporting

Chaptero8:oAuditoSampling:oAnoOverviewoandoApplicationotooTestsoofoControls

Chaptero9:oAuditoSampling:oAnoApplicationotooSubstantiveoTestsoofoAccountoBalances

Chaptero10:oAuditingotheoRevenueoProcess

Chaptero11:oAuditingotheoPurchasingoProcess

Chaptero12:oAuditingotheoHumanoResourceoManagementoProcess

Chaptero13:oAuditingotheoInventoryoManagementoProcess

Chaptero14:oAuditingotheoFinancing/InvestingoProcess:PrepaidoExpenses,oIntangibleoAssets,oandoProperty,oPlant,oandoEq
uipment

Chaptero15:oAuditingotheoFinancing/InvestingoProcess:Long-
TermoLiabilities,oStockholders’oEquity,oandoIncomeoStatementoAccounts

Chaptero16:oAuditingotheoFinancing/InvestingoProcess:oCashandoInvestments

Chaptero17:oCompletingotheoAuditoEngagement

Chaptero18:oReportsoonoAuditedoFinancialoStatements

Chaptero19:oProfessionaloConduct,oIndependence,oandoQualityoManagement

Chaptero20:oLegaloLiability

Chaptero21:oAssurance,oAttestation,oandoInternaloAuditingoServices
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,CHAPTERo1

ANo INTRODUCTIONo TOo ASSURANCEo ANDo FINANCIALo STATEMENTo AUDITING

AnswersotooReviewoQuestions

1-1 Theostudyoofoauditingoisomoreoconceptualoinonatureocomparedotoootheroaccountingocour
ses.oRatherothanofocusingoonolearningotheorules,otechniques,oandocomputationsorequiredotoopre
pareofinancialostatements,oauditingoemphasizesolearningoaoframeworkoofoanalyticaloandologicalosk
illsotooevaluateotheorelevanceoandoreliabilityoofotheosystemsoandoprocessesoresponsibleoforofinan
cialoinformation,oasowelloasotheoinformationoitself.oToobeosuccessful,ostudentsomustolearnotheofra
meworkoandothenolearnotoouseologicoandocommonosenseoinoapplyingoauditingoconceptsotoovariou
socircumstanceso andosituations.
Understandingoauditingocanoimproveotheodecisionomakingoabilityoofoconsultants,obusines
somanagers,oandoaccountantsobyoprovidingoaoframeworkoforoevaluatingotheousefulnessoa
ndoreliabilityoofoinformation.

1-2 Thereoisoaodemandoforoauditingoinoaofree-
marketoeconomyobecauseotheoagencyorelationshipobetweenoanoabsenteeoowneroandoaomanag
eroproducesoaonaturaloconflictoofointerestodueotootheoinformationoasymmetryothatoexistsobetwee
notheoowneroandomanager.oAsoaoresult,otheoagentoagreesotoobeomonitoredoasopartoofohis/heroem
ploymentocontract.oAuditingoappearsotoobeoaocost-effectiveoformoofomonitoring.
Theoempiricaloevidenceosuggestsoauditingowasodemandedopriorotoogovernmentoregulatio
nosuchoasostatutoryoauditorequirements.oAdditionally,omanyoprivateocompaniesoandootheroentities
onotosubjectotoogovernmento auditingoregulationso alsoodemandoauditing.



1-3 Theoagencyorelationshipobetweenoanoowneroandomanageroproducesoaonaturaloconflictoo
fointerestobecauseoofodifferencesoinotheotwooparties’ogoalsoandobecauseoofoinformationoasymme
tryothatoexistsobetweenothem.oThatois,otheomanagerogenerallyohasomoreoinformationoaboutotheo‘t
rue’ofinancialopositionoandoresultsoofooperationsoofotheoentityothanotheoabsenteeoownerodoes.oIfo
bothopartiesoseekotoomaximizeotheiroownoself-
interest,oitoisolikelyothatotheomanagerowillonotoactoinotheobestointerestoofotheoowneroandomayoma
nipulateotheoinformationoprovidedotootheoowneroaccordingly.

1-4 Independenceoisoanoimportantostandardoforoauditors.oIfoanoauditoroisonotoindependento
ofotheoclient,ousersomayoloseoconfidenceoinotheoauditor’soabilityotooreportotruthfullyoonotheofinanci
alostatements,oandotheoauditor’soworkolosesoitsovalue.oFromoanoagencyoperspective,oifotheoprinci
palo(owner)oknowsothatotheoauditoroisonotoindependent,otheoownerowillonototrustotheoauditor’sowo
rk.
Thus,otheoagentowillonotohireotheoauditorobecauseotheoauditor’soreportowillonotobeoeffectiveoinoredu
cingoinformationoriskofromotheoperspectiveoofotheoowner.

1-5 Auditingo(broadlyodefined)oisoaosystematicoprocessoofoobjectivelyoobtainingoandoeval
uatingoevidenceoregardingoassertionsoaboutoeconomicoactionsoandoeventsotooascertainotheode
greeoofocorrespondenceobetweenothoseoassertionsoandoestablishedocriteriaoandocommunicati
ngotheoresultsotoointerestedo users.
Assuranceoisoengagementoinowhichoaopractitioneroexpressesoaoconclusionodesignedotoo
enhanceotheodegreeoofoconfidenceoofotheointendedousersootherothanotheoresponsibleopartyoabouto
theooutcomeoofotheoevaluationooromeasurementoofoaosubjectomatteroagainstocriteria.
Examplesoofoassuranceoservicesoareoassuranceo(audit)oofofinancialostatements,oassuran
ceoofoprospectiveofinancialoinformation,oassuranceooforeportingoonointernalocontrol,oassuranceoofo
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, sustainabilityoreporting,oandoassuranceoofoelectronicocommerce.




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