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
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by Systematic Approach by by




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

,• Table of Contents by by




Chapter 1: An Introduction to Assurance and Financial Statement Auditing
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Chapter 2: The Financial Statement Auditing Environment
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Chapter 3: Audit Planning, Types of Audit Tests, and Materiality
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Chapter 4: Risk Assessment
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Chapter 5: Evidence and Documentation
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Chapter 6: Internal Control in a Financial Statement Audit
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Chapter 7: Auditing Internal Control over Financial Reporting
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Chapter 8: Audit Sampling: An Overview and Application to Tests of Controls
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Chapter 9: Audit Sampling: An Application to Substantive Tests of Account Balances
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Chapter 10: Auditing the Revenue Process
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Chapter 11: Auditing the Purchasing Process
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Chapter 12: Auditing the Human Resource Management Process
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Chapter 13: Auditing the Inventory Management Process
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Chapter 14: Auditing the Financing/Investing Process:Prepaid Expenses, Intangible Assets, and Property, Plant, and
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Equipment
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Chapter 15: Auditing the Financing/Investing Process:Long-Term Liabilities, Stockholders’ Equity, and Income
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Statement Accounts
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Chapter 16: Auditing the Financing/Investing Process: Cashand Investments
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Chapter 17: Completing the Audit Engagement
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Chapter 18: Reports on Audited Financial Statements
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Chapter 19: Professional Conduct, Independence, and Quality Management
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Chapter 20: Legal Liability
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Chapter 21: Assurance, Attestation, and Internal Auditing Services
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AN INTRODUCTIONb y b y TO b y ASSURANCE b y AND FINANCIAL STATEMENT b y b y b y AUDITING

Answers to Review Questions by by by




1-1 The study of auditing is more conceptual in nature compared to other accounting
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courses. Rather than focusing on learning the rules, techniques, and computations required
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to prepare financial statements, auditing emphasizes learning a framework of analytical and
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logicalskills to evaluate the relevance and reliability of the systems and processes
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responsible for financial information, as well as the information itself. To be successful,
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students must learn the framework and then learn to use logic and common sense in
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applying auditing concepts to various circumstances and situations.
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Understanding auditing can improve the decision making ability of consultants, by by by by by by by by by



business managers, and accountants by providing a framework for evaluating the
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usefulness andreliability of information.
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1-2 There is a demand for auditing in a free-market economy because the agency
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relationship between an absentee owner and a manager produces a natural conflict of
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interest due to the information asymmetry that exists between the owner and manager. As
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a result, theagent agrees to be monitored as part of his/her employment contract. Auditing
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appears to be acost-effective form of monitoring.
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The empirical evidence suggests auditing was demanded prior to government
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regulationsuch as statutory audit requirements. Additionally, many private companies and
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other entities not subject to government auditing regulations also demand auditing.
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1-3 The agency relationship between an owner and manager produces a natural conflict
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of interest because of differences in the two parties‘ goals and because of information
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asymmetrythat exists between them. That is, the manager generally has more information
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about the ‗true‘financial position and results of operations of the entity than the absentee
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owner does. If both parties seek to maximize their own self-interest, it is likely that the
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manager will not act in the best interest of the owner and may manipulate the information
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provided to the owner accordingly.
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1-4 Independence is an important standard for auditors. If an auditor is not independent by by by by by by by by by by by by



ofthe client, users may lose confidence in the auditor‘s ability to report truthfully on the
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financial statements, and the auditor‘s work loses its value. From an agency perspective, if
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the principal (owner) knows that the auditor is not independent, the owner will not trust the
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auditor‘s work.
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Thus, the agent will not hire the auditor because the auditor‘s report will not be effective
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inreducing information risk from the perspective of the owner.
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1-5 Auditing (broadly defined) is a systematic process of objectively obtaining and by by by by by by by by by by



evaluating evidence regarding assertions about economic actions and events to ascertain
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thedegree of correspondence between those assertions and established criteria and
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communicating the results to interested users.
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Assurance is engagement in which a practitioner expresses a conclusion designed by by by by by by by by by by



to enhance the degree of confidence of the intended users other than the responsible party
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aboutthe outcome of the evaluation or measurement of a subject matter against criteria.
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Examples of assurance services are assurance (audit) of financial statements, by by by by by by by by by



assurance of prospective financial information, assurance of reporting on internal
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, control,assurance of sustainability reporting, and assurance of electronic commerce.
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