Solution Manual for Principles of Auditing and Other Assurance Services, 23rd Edition 2024, by Ray Whittington, Kurt Pany, All Chapters 1 - 21, Complete Newest Version

SOLUTION MANUAL FOR
Principles Of Auditing And Other Assurance Services

23rd Edition By Ray Whittington Kurt
ALL Chapters (1 - 21)

,  Table of Contents
I I




ChapterI1:ITheIRoleIofItheIPublicIAccountantIinItheIAmericanEconomy

ChapterI2:IProfessionalIStandards

ChapterI3:IProfessionalIEthics

ChapterI4:ILegalILiabilityIofICPAs

ChapterI5:IAuditIEvidenceIandIDocumentation

ChapterI6:IAuditIPlanning,IUnderstandingItheIClient,IAssessingRisks,IandIResponding

ChapterI7:IInternalIControl

ChapterI8:IConsiderationIofIInternalIControlIinIanIInformationTechnologyIEnvironment

ChapterI9:IAuditISampling

ChapterI10:ICashIandIFinancialIInvestments

ChapterI11:IAccountsIReceivable,INotesIReceivable,IandRevenue

ChapterI12:IInventoriesIandICostIofIGoodsISold

ChapterI13:IProperty,IPlant,IandIEquipment:IDepreciationIandDepletion

ChapterI14:IAccountsIPayableIandIOtherILiabilities

ChapterI15:IDebtIandIEquityICapital

ChapterI16:IAuditingIOperationsIandICompletingItheIAudit

ChapterI17:IAuditors’IReports

ChapterI18:IIntegratedIAuditsIofIPublicICompanies

ChapterI19:IAdditionalIAssuranceIServices:IHistoricalIFinancialInformation

ChapterI20:IAdditionalIAssuranceIServices:IOtherIInformation

ChapterI21:IInternal,IOperational,IandIComplianceIAuditing

,CHAPTER 1 I




The Role of the Publi
I I I I




c Accountant in the
I I I




American Economy I




ReviewIQuestions

1-1 TheI―crisisIofIcredibility‖IlargelyIaroseIfromItheInumberIofIcompaniesIthatIrestatedItheirIpreviouslyIissuedIfina
ncialIstatementsI asI aI resultI ofI accountingIirregularitiesI andIfraud.I EspeciallyIresponsibleIwereItheIveryIvisibleI
EnronIandIWorldComIfraudIcases.IBothIcompaniesI filedIforI bankruptcyIandIconstitutedItheIlargestI companie
sI inIAmericanIhistoryItoIdoIso.I TheIextentI ofItheIaccountingIirregularitiesI andIfraudIbeingIinvestigatedIandIdisc
losedIbroughtI intoIquestionItheIeffectivenessI ofI financialIstatementI audits.I InIaddition,ItheIcriminalIconviction
IofIArthurIAndersen,ILLP,IoneIofItheIthenIBigI5IaccountingIfirms,IonIchargesI ofI destroyingIdocumentsI relatedIt

oItheIEnronIcaseIbroughtI intoIquestionItheIethicsI standardsIofItheIprofession.

1-2 AssuranceIservicesIareIprofessionalIservicesIthatIenhanceItheIqualityIofIinformation,IorIitsIcontext,IforIdecis
ion-
making.ITheItwoItypesIare:I(a)IthoseIthatIincreaseItheIreliabilityIofIinformationIandI(b)IthoseIthatIinvolveIpu
ttingIinformationIinIaIformIorIcontextIthatIfacilitatesIdecision-making.

1-3 AIfinancialIstatementI auditI is,IbyIfar,ItheImostI commonItypeIofI attestI engagement.I TheIoverallIassertion,ImadeI
byImanagement,ImostIfrequentlyIisIthatItheIfinancialIstatementsIfollowIgenerallyIacceptedIaccountingIprincip
les.

1-4 AIlargeIcorporationIwithIsecuritiesIlistedIonIaIstockIexchangeIisIrequiredIbyItheIrulesIofItheIstockIexchangeIandI
byItheIrulesI ofI theISecuritiesI andIExchangeICommissionItoIprovideIanIauditI reportI withItheIannualIfinancialIstat
ementsI furnishedItoIitsI stockholders.I ItI alsoIisI requiredItoIengageItheIauditorsI toIprovideIanIopinionIonIitsIinter
nalIcontrol.IApartIfromIlegalIrequirements,Ihowever,IaIlargeIlistedIcorporationIrecognizesIthatIitImustI mainta
inIinvestorIconfidenceIinItheIreliabilityIofIitsIfinancialIstatementsI andI internalI controlIoverI financialI reportingI i
fI itI isI toI continueItoI beIableItoIsecureIcapitalIfromItheIpublic.I TheIreportI byIaIfirmIofIcertifiedIpublicIaccountants
I addsI credibilityItoItheIfinancialIstatementsI preparedIbyItheIcorporation.I WhenIaI smallIfamily-

ownedIenterpriseIelectsI toIhaveIanIaudit,ItheIpurposeIusuallyIisItoIuseItheIauditors'IreportItoIsupportIanIapplicati
onI forIaIbankIloan.

, 1-5 AIreportI byIanIindependentI publicIaccountantI concerningItheIfairnessI ofIaI company'sI financialIstatementsIisIco
mmonlyIrequiredIinItheIfollowingIsituations:

(1) ApplicationIforIaI bankIloan.
(2) EstablishingIcreditI forI purchaseIofI merchandise,Iequipment,IorI otherI assets.
(3) ReportingIoperatingIresults,I financialIposition,I andIcashIflowsI toIabsenteeIownersI (stockholdersIorIp
artners).
(4) IssuanceIofI securitiesI byIaI corporation.
(5) AnnualIfinancialIstatementsI byIaI corporationIwithIsecuritiesI listedIonIaI stockIexchangeIorI tradedIover
ItheIcounter.

(6) SaleIofI anIongoingIbusiness.
(7) TerminationIofI aI partnership.

1-6 ToIaddIcredibilityItoIfinancialIstatementsI isItoIincreaseItheIlikelihoodIthatI theyIhaveIbeenIpreparedIfollowingIth
eIappropriateIcriteria,IusuallyIgenerallyIacceptedIaccountingIprinciples.I AsI such,IanIincreaseIinIcredibilityIres
ultsI inIfinancialIstatementsIthatI canIbeIbelievedIandIreliedIuponIbyIthirdIparties.

1-7 BusinessI riskIisI theIriskIthatI theIinvestmentI willIbeIimpairedIbecauseIaI companyIinvestedIinIisI unableItoImeetIi
tsIfinancialIobligationsIdueItoIeconomicIconditionsIorIpoorImanagementIdecisions.IInformationIriskIisItheIris
kIthatItheIinformationIusedItoIassessIbusinessIriskIisInotIaccurate.IAuditorsIcanIdirectlyIreduceIinformationIr
isk,IbutIhaveIonlyIlimitedIeffectIonIbusinessIrisk.

1-8 AtItheIbeginningIofItheIcentury,ItheIprincipalIobjectiveIofIauditingIwasI theIpreventionIandIdetectionIofIfraud.I A
uditI workIcenteredIonItheIbalanceIsheet,IbecauseItheIincomeIstatementI wasI regardedIasIhighlyIconfidentialIand
I notI forI publicIdisclosure.I Today,I theIprincipalI objectiveIofI auditingI isI toI formIanIopinionIonItheIfairnessI ofI fin

ancialIstatementsI andItheirIconformityIwithIgenerallyIacceptedIaccountingIprinciples.I ButI theIprofessionalIsta
ndardsI alsoIrequireIthatI anIauditI beIdesignedItoIprovideIreasonableIassuranceIofI detectingImaterialImisstateme
nts,I dueItoIerrorsI orI fraud.I ParticularI emphasisI isI placedIonItheIincomeIstatementI whichIisI ofIgreatI importanceI
toIinvestors.I AuditingItodayIalsoIhasI theIobjectivesI ofImeetingItheIrequirementsI ofItheISecuritiesI andIExchange
ICommissionI(SEC)I andItheIPublicICompanyIAccountingIOversightIBoardIforIpublic Icompanies.




1-9 TheIstatementI isI incorrect.ITheIincreasingIintegratedIdatabasesI ofI today,IalongIwithIavailableIauditIpro
ceduresImakeIauditedIentireIpopulationsIaIpossibilityIinImanyIsituations.

1-10 AnIoperationalIauditIattemptsI toImeasureItheIeffectivenessI andIefficiencyIofIaIspecificIunitI ofIanIorganizati
on.I ItIinvolvesI moreIsubjectiveIjudgmentsIthanIaIcomplianceIauditI orIanIauditI ofIfinancialIstatementsI beca
useItheIcriteriaI ofI effectivenessI andIefficiencyIofI departmentalIperformanceIareInotI asIclearlyIestablishedIa
sI areImanyIlawsI andIregulationsIorIgenerallyIacceptedIaccountingIprinciples.
TheIreportI preparedIafterI completionIofI anIoperationalIauditI isI usuallyIdirectedItoImanagementIofItheI
organizationIinIwhichItheIauditIworkIwasIdone.

1-11 AIcomplianceIauditIisIanIauditItoIdetermineIwhetherIfinancialIreportsIorIotherIassertionsIareI inIcomplianceIwi
thIestablishedIcriteria.I TheInecessaryIingredientsI areIverifiableIdataI andItheIexistenceIofIstandardsI establishe
dIbyIanIauthoritativeIbody.I AnIoperationalIaudit,IonItheIotherI hand,IisI aI reviewIofI aIdepartmentI orIotherIunitI of
I aI businessI orI governmentalIorganizationItoImeasureItheIeffectivenessI andIefficiencyIofI operations.I InternalIa

uditorsI oftenIperformIoperationalIauditsI asI doIauditorsI employedIbyItheIGovernmentIAccountabilityIOffic
eI(GAO)IofItheIfederalIgovernment.

1-12 InternalIauditorsI mustI beIindependentI ofItheIdepartmentI headsI andIotherIlineIexecutivesI whoseIworkItheyIrevie
w.I However,IinternalIauditorsIareInotIindependentIinItheIsameIsenseIasIaIpublicIaccountingIfirm.