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

SOLUTION6MANUAL6for6Auditing6&6Assurance6Services6A6
Systematic6Approach6

12th6Edition6by6William6Messier6Jr,6Steven6Glover,6
Chapters616-6216/6Complete

,• Table6of6Contents
Chapter61:6An6Introduction6to6Assurance6and6Financial6Statement6Auditing

Chapter62:6The6Financial6Statement6Auditing6Environment

Chapter63:6Audit6Planning,6Types6of6Audit6Tests,6and6Materiality

Chapter64:6Risk6Assessment

Chapter65:6Evidence6and6Documentation

Chapter66:6Internal6Control6in6a6Financial6Statement6Audit

Chapter67:6Auditing6Internal6Control6over6Financial6Reporting

Chapter68:6Audit6Sampling:6An6Overview6and6Application6to6Tests6of6Controls

Chapter69:6Audit6Sampling:6An6Application6to6Substantive6Tests6of6Account6Balances

Chapter610:6Auditing6the6Revenue6Process

Chapter611:6Auditing6the6Purchasing6Process

Chapter612:6Auditing6the6Human6Resource6Management6Process

Chapter613:6Auditing6the6Inventory6Management6Process

Chapter614:6Auditing6the6Financing/Investing6Process:Prepaid6Expenses,6Intangible6Assets,6and6Property,6Plant,6
and6Equipment

Chapter615:6Auditing6the6Financing/Investing6Process:Long-
Term6Liabilities,6Stockholders’6Equity,6and6Income6Statement6Accounts

Chapter616:6Auditing6the6Financing/Investing6Process:6Cashand6Investments

Chapter617:6Completing6the6Audit6Engagement

Chapter618:6Reports6on6Audited6Financial6Statements

Chapter619:6Professional6Conduct,6Independence,6and6Quality6Management

Chapter620:6Legal6Liability

Chapter621:6Assurance,6Attestation,6and6Internal6Auditing6Services

,CHAPTER61

AN6 INTRODUCTION6 TO6 ASSURANCE6 AND6 FINANCIAL6 STATEMENT6 AUDITING

Answers6to6Review6Questions

1-1 The6study6of6auditing6is6more6conceptual6in6nature6compared6to6other6accountin
g6courses.6Rather6than6focusing6on6learning6the6rules,6techniques,6and6computations6re
quired6to6prepare6financial6statements,6auditing6emphasizes6learning6a6framework6of6anal
ytical6and6logical6skills6to6evaluate6the6relevance6and6reliability6of6the6systems6and6proc
esses6responsible6for6financial6information,6as6well6as6the6information6itself.6To6be6succ
essful,6students6must6learn6the6framework6and6then6learn6to6use6logic6and6common6se
nse6in6applying6auditing6concepts6to6various6circumstances6and6situations.
Understanding6auditing6can6improve6the6decision6making6ability6of6consultants,6bu
siness6managers,6and6accountants6by6providing6a6framework6for6evaluating6the6u
sefulness6and6reliability6of6information.

1-2 There6is6a6demand6for6auditing6in6a6free-
market6economy6because6the6agency6relationship6between6an6absentee6owner6and6a6
manager6produces6a6natural6conflict6of6interest6due6to6the6information6asymmetry6that6
exists6between6the6owner6and6manager.6As6a6result,6the6agent6agrees6to6be6monitored
6as6part6of6his/her6employment6contract.6Auditing6appears6to6be6a6cost-
effective6form6of6monitoring.
The6empirical6evidence6suggests6auditing6was6demanded6prior6to6government6reg
ulation6such6as6statutory6audit6requirements.6Additionally,6many6private6companies6and6o
ther6entities6not6subject6to6government6auditing6regulations6also6demand6auditing.

1-3 The6agency6relationship6between6an6owner6and6manager6produces6a6natural6co
nflict6of6interest6because6of6differences6in6the6two6parties‘6goals6and6because6of6inform
ation6asymmetry6that6exists6between6them.6That6is,6the6manager6generally6has6more6inf
ormation6about6the6‗true‘6financial6position6and6results6of6operations6of6the6entity6than6t
he6absentee6owner6does.6If6both6parties6seek6to6maximize6their6own6self-
interest,6it6is6likely6that6the6manager6will6not6act6in6the6best6interest6of6the6owner6and
6may6manipulate6the6information6provided6to6the6owner6accordingly.

1-4 Independence6is6an6important6standard6for6auditors.6If6an6auditor6is6not6indepe
ndent6of6the6client,6users6may6lose6confidence6in6the6auditor‘s6ability6to6report6truthfully
6on6the6financial6statements,6and6the6auditor‘s6work6loses6its6value.6From6an6agency6p
erspective,6if6the6principal6(owner)6knows6that6the6auditor6is6not6independent,6the6owner
6will6not6trust6the6auditor‘s6work.
Thus,6the6agent6will6not6hire6the6auditor6because6the6auditor‘s6report6will6not6be6effectiv
e6in6reducing6information6risk6from6the6perspective6of6the6owner.

1-5 Auditing6(broadly6defined)6is6a6systematic6process6of6objectively6obtaining6and
6evaluating6evidence6regarding6assertions6about6economic6actions6and6events6to6ascer
tain6the6degree6of6correspondence6between6those6assertions6and6established6criteria6a
nd6communicating6the6results6to6interested6users.
Assurance6is6engagement6in6which6a6practitioner6expresses6a6conclusion6design
ed6to6enhance6the6degree6of6confidence6of6the6intended6users6other6than6the6responsibl
e6party6about6the6outcome6of6the6evaluation6or6measurement6of6a6subject6matter6agains
t6criteria.

, Examples6of6assurance6services6are6assurance6(audit)6of6financial6statements,6as
surance6of6prospective6financial6information,6assurance6of6reporting6on6internal6control,6as
surance6of6sustainability6reporting,6and6assurance6of6electronic6commerce.