SOLUTION MANUAL FOR
Principles Of Auditing And Other Assurance Services
23rd Edition By Ray Whittington Kurt
ALL
Chapters (1
- 21)
, Table of Contents hw hw
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 hw
The Role of the Pub
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lic Accountant in the
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American Economy hw
Review Questions
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1-1 The ―crisis of credibility‖ largely arose from the number of companies that restated their p
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reviously issued financial statements as a result of accounting irregularities and fraud. Espe
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cially responsible werethe very visible Enron and WorldCom fraud cases. Both companies fi
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led for bankruptcy and constituted the largest companies in American history to do so. Th
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e extent of the accounting irregularities and fraud being investigated and disclosed brough
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, t into question the effectiveness of financial statement audits. In addition, the criminal con
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viction of Arthur Andersen, LLP, one of the then Big 5 accounting firms, on charges of de
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stroying documents related to the Enron case brought into question the ethics standards
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of the profession.
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1-2 Assurance services are professional services that enhance the quality of information, or its
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context, for decision-
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making. The two types are: (a) those that increase the reliability of information and (b) t
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hose that involve putting information in a form or context that facilitates decision-
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making.
1-3 A financial statement audit is, by far, the most common type of attest engagement. The
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overall assertion,made by management, most frequently is that the financial statements follo
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w generally accepted accounting principles.
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1-4 A large corporation with securities listed on a stock exchange is required by the rules of th
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e stock exchange and by the rules of the Securities and Exchange Commission to provide
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an audit report with theannual financial statements furnished to its stockholders. It also is
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required to engage the auditors to provide an opinion on its internal control. Apart from
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legal requirements, however, a large listed corporation recognizes that it must maintain in
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vestor confidence in the reliability of its financial statements and internal control over finan
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cial reporting if it is to continue to be able to secure capital from the public. The report
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by a firm of certified public accountants adds credibility to the financial statements prepare
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d by the corporation.
hw hw hw h w When a small family- hw hw hw
owned enterprise elects to have an audit, the purpose usually is to use the auditors' report
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hw to support an application for a bank loan.
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Principles Of Auditing And Other Assurance Services
23rd Edition By Ray Whittington Kurt
ALL
Chapters (1
- 21)
, Table of Contents hw hw
Chapter 1: The Role of the Public Accountant in the AmericanEconomy
hw hw hw hw hw hw hw hw hw hw
Chapter 2: Professional Standards
hw hw hw
Chapter 3: Professional Ethics
hw hw hw
Chapter 4: Legal Liability of CPAs
hw hw hw hw hw
Chapter 5: Audit Evidence and Documentation
hw hw hw hw hw
Chapter 6: Audit Planning, Understanding the Client, AssessingRisks, and Responding
hw hw hw hw hw hw hw hw hw
Chapter 7: Internal Control
hw hw hw
Chapter 8: Consideration of Internal Control in an InformationTechnology Environment
hw hw hw hw hw hw hw hw hw
Chapter 9: Audit Sampling
hw hw hw
Chapter 10: Cash and Financial Investments
hw hw hw hw hw
Chapter 11: Accounts Receivable, Notes Receivable, andRevenue
hw hw hw hw hw hw
Chapter 12: Inventories and Cost of Goods Sold
hw hw hw hw hw hw hw
Chapter 13: Property, Plant, and Equipment: Depreciation andDepletion
hw hw hw hw hw hw hw
Chapter 14: Accounts Payable and Other Liabilities
hw hw hw hw hw hw
Chapter 15: Debt and Equity Capital
hw hw hw hw hw
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
hw hw hw hw hw hw
Chapter 21: Internal, Operational, and Compliance Auditing
hw hw hw hw hw hw
CHAPTER 1 hw
The Role of the Pub
hw hw hw hw
lic Accountant in the
hw hw hw
American Economy hw
Review Questions
hw
1-1 The ―crisis of credibility‖ largely arose from the number of companies that restated their p
hw hw hw hw hw hw hw hw hw hw hw hw hw hw
reviously issued financial statements as a result of accounting irregularities and fraud. Espe
hw hw hw hw hw hw hw hw hw hw hw hw
cially responsible werethe very visible Enron and WorldCom fraud cases. Both companies fi
hw hw w
h hw hw hw hw hw hw hw hw hw hw
led for bankruptcy and constituted the largest companies in American history to do so. Th
hw hw hw hw hw hw hw hw hw hw hw hw hw hw
e extent of the accounting irregularities and fraud being investigated and disclosed brough
hw hw hw hw hw hw hw hw hw hw hw hw
, t into question the effectiveness of financial statement audits. In addition, the criminal con
hw hw hw hw hw hw hw hw hw hw hw hw hw
viction of Arthur Andersen, LLP, one of the then Big 5 accounting firms, on charges of de
hw hw hw hw hw hw hw hw hw hw hw hw hw hw hw hw
stroying documents related to the Enron case brought into question the ethics standards
hw hw hw hw hw hw hw hw hw hw hw hw hw
of the profession.
hw hw
1-2 Assurance services are professional services that enhance the quality of information, or its
hw hw hw hw hw hw hw hw hw hw hw hw
context, for decision-
hw hw hw
making. The two types are: (a) those that increase the reliability of information and (b) t
hw hw hw hw hw hw hw hw hw hw hw hw hw hw hw
hose that involve putting information in a form or context that facilitates decision-
hw hw hw hw hw hw hw hw hw hw hw hw
making.
1-3 A financial statement audit is, by far, the most common type of attest engagement. The
hw hw hw hw hw hw hw hw hw hw hw hw hw hw hw
overall assertion,made by management, most frequently is that the financial statements follo
hw w
h hw hw hw hw hw hw hw hw hw hw
w generally accepted accounting principles.
hw hw hw hw
1-4 A large corporation with securities listed on a stock exchange is required by the rules of th
hw hw hw hw hw hw hw hw hw hw hw hw hw hw hw hw
e stock exchange and by the rules of the Securities and Exchange Commission to provide
hw hw hw hw hw hw hw hw hw hw hw hw hw hw hw
an audit report with theannual financial statements furnished to its stockholders. It also is
hw hw hw hw w
h hw hw hw hw hw hw hw hw hw hw
required to engage the auditors to provide an opinion on its internal control. Apart from
hw hw hw hw hw hw hw hw hw hw hw hw hw hw hw
legal requirements, however, a large listed corporation recognizes that it must maintain in
hw hw hw hw hw hw hw hw hw hw hw hw
vestor confidence in the reliability of its financial statements and internal control over finan
hw hw hw hw hw hw hw hw hw hw hw hw hw
cial reporting if it is to continue to be able to secure capital from the public. The report
hw hw hw hw hw hw hw hw hw hw hw hw hw hw hw hw hw hw
by a firm of certified public accountants adds credibility to the financial statements prepare
hw hw hw hw hw hw hw hw hw hw hw hw hw
d by the corporation.
hw hw hw h w When a small family- hw hw hw
owned enterprise elects to have an audit, the purpose usually is to use the auditors' report
hw hw hw hw hw hw hw hw hw hw hw hw hw hw hw
hw to support an application for a bank loan.
hw hw hw hw hw hw hw
