SOLUTION MANUAL FOR
Principles Of Auditing And Other Assurance Services
23rd Edition By Ray Whittington Kurt
ALL Chapters (1 - 21)
, Table of Contents
f4 f4
Chapter f41: f4The f4Role f4of f4the f4Public f4Accountant f4in f4the f4AmericanEconomy
Chapter f42: f4Professional f4Standards
Chapter f43: f4Professional f4Ethics
Chapter f44: f4Legal f4Liability f4of f4CPAs
Chapter f45: f4Audit f4Evidence f4and f4Documentation
Chapter f46: f4Audit f4Planning, f4Understanding f4the f4Client, f4AssessingRisks, f4and f4Responding
Chapter f47: f4Internal f4Control
Chapter f48: f4Consideration f4of f4Internal f4Control f4in f4an f4InformationTechnology f4Environment
Chapter f49: f4Audit f4Sampling
Chapter f410: f4Cash f4and f4Financial f4Investments
Chapter f411: f4Accounts f4Receivable, f4Notes f4Receivable, f4andRevenue
Chapter f412: f4Inventories f4and f4Cost f4of f4Goods f4Sold
Chapter f413: f4Property, f4Plant, f4and f4Equipment: f4Depreciation f4andDepletion
Chapter f414: f4Accounts f4Payable f4and f4Other f4Liabilities
Chapter f415: f4Debt f4and f4Equity f4Capital
Chapter f416: f4Auditing f4Operations f4and f4Completing f4the f4Audit
Chapter f417: f4Auditors’ f4Reports
Chapter f418: f4Integrated f4Audits f4of f4Public f4Companies
Chapter f419: f4Additional f4Assurance f4Services: f4Historical f4FinancialInformation
Chapter f420: f4Additional f4Assurance f4Services: f4Other f4Information
Chapter f421: f4Internal, f4Operational, f4and f4Compliance f4Auditing
,CHAPTER 1 f4
The Role of the f4 f4 f4
f4 Public Accountant in
f4 f4
f4 the
American Economy f4
Review f4Questions
1-1 The f4―crisis f4of f4credibility‖ f4largely f4arose f4from f4the f4number f4of f4companies f4that f4restated f4their
f4previously f4issued f4financial f4statements f4 as f4 a f4 result f4 of f4 accounting f4irregularities f4 and f4fraud.
f4 Especially f4responsible f4were4fthe f4very f4visible f4Enron f4 and f4WorldCom f4fraud f4 cases. f4 Both
f4companies f4 filed f4 for f4 bankruptcy f4and f4 constituted f4the f4largest f4 companies f4 in f4American f4history
f4to f4do f4so. f4 The f4extent f4 of f4 the f4accounting f4irregularities f4 and f4fraud f4being f4investigated f4and
f4disclosed f4brought f4 into f4question f4the f4effectiveness f4 of f4 financial f4statement f4 audits. f4 In f4addition,
f4the f4criminal f4conviction f4of f4Arthur f4 Andersen, f4LLP, f4one f4of f4 the f4then f4Big f45 f4 accounting f4firms,
f4on f4charges f4 of f4 destroying f4documents f4 related f4to f4 the f4Enron f4case f4brought f4 into f4question f4the
f4ethics f4 standards f4 of f4the f4profession.
1-2 Assurance f4services f4are f4professional f4services f4that f4enhance f4the f4quality f4of f4information, f4or f4its
f4context, f4for f4decision-making. f4The f4two f4types f4are: f4(a) f4those f4that f4increase f4the f4reliability f4of
f4information f4and f4(b) f4those f4that f4involve f4putting f4information f4in f4a f4form f4or f4context f4that
f4facilitates f4decision-making.
1-3 A f4financial f4statement f4 audit f4 is, f4by f4far, f4the f4most f4 common f4type f4of f4 attest f4 engagement. f4 The
f4overall f4assertion,4fmade f4by f4management, f4most f4frequently f4is f4that f4the f4financial f4statements f4follow
f4generally f4accepted f4accounting f4principles.
1-4 A f4large f4corporation f4with f4securities f4listed f4on f4a f4stock f4exchange f4is f4required f4by f4the f4rules f4of f4the
f4stock f4exchange f4and f4by f4the f4rules f4 of f4 the f4Securities f4 and f4Exchange f4Commission f4 to f4provide f4an
f4audit f4 report f4 with f4the4fannual f4financial f4statements f4 furnished f4to f4its f4 stockholders. f4 It f4 also f4is
f4 required f4to f4engage f4the f4auditors f4 to f4provide f4an f4opinion f4on f4its f4internal f4control. f4Apart f4from
f4legal f4requirements, f4however, f4a f4large f4listed f4corporation f4recognizes f4 that f4 it f4 must f4 maintain
f4investor f4confidence f4in f4 the f4reliability f4of f4 its f4 financial f4statements f4 and f4 internal f4 control f4 over
f4 financial f4 reporting f4 if f4 it f4 is f4 to f4 continue f4 to f4 be f4 able f4 to f4 secure f4 capital f4from f4the f4public. f4 The
f4report f4 by f4a f4 firm f4of f4 certified f4public f4accountants f4 adds f4 credibility f4to f4the f4financial f4statements
f4 prepared f4by f4the f4corporation. f 4 When f4a f4 small f4family-owned f4enterprise f4elects f4 to f4have f4an
, f4 audit, f4the f4purpose f4usually f4is f4to f4use f4the f4auditors' f4report f4 to f4support f4an f4application f4 for f4a
f4 bank f4loan.
Principles Of Auditing And Other Assurance Services
23rd Edition By Ray Whittington Kurt
ALL Chapters (1 - 21)
, Table of Contents
f4 f4
Chapter f41: f4The f4Role f4of f4the f4Public f4Accountant f4in f4the f4AmericanEconomy
Chapter f42: f4Professional f4Standards
Chapter f43: f4Professional f4Ethics
Chapter f44: f4Legal f4Liability f4of f4CPAs
Chapter f45: f4Audit f4Evidence f4and f4Documentation
Chapter f46: f4Audit f4Planning, f4Understanding f4the f4Client, f4AssessingRisks, f4and f4Responding
Chapter f47: f4Internal f4Control
Chapter f48: f4Consideration f4of f4Internal f4Control f4in f4an f4InformationTechnology f4Environment
Chapter f49: f4Audit f4Sampling
Chapter f410: f4Cash f4and f4Financial f4Investments
Chapter f411: f4Accounts f4Receivable, f4Notes f4Receivable, f4andRevenue
Chapter f412: f4Inventories f4and f4Cost f4of f4Goods f4Sold
Chapter f413: f4Property, f4Plant, f4and f4Equipment: f4Depreciation f4andDepletion
Chapter f414: f4Accounts f4Payable f4and f4Other f4Liabilities
Chapter f415: f4Debt f4and f4Equity f4Capital
Chapter f416: f4Auditing f4Operations f4and f4Completing f4the f4Audit
Chapter f417: f4Auditors’ f4Reports
Chapter f418: f4Integrated f4Audits f4of f4Public f4Companies
Chapter f419: f4Additional f4Assurance f4Services: f4Historical f4FinancialInformation
Chapter f420: f4Additional f4Assurance f4Services: f4Other f4Information
Chapter f421: f4Internal, f4Operational, f4and f4Compliance f4Auditing
,CHAPTER 1 f4
The Role of the f4 f4 f4
f4 Public Accountant in
f4 f4
f4 the
American Economy f4
Review f4Questions
1-1 The f4―crisis f4of f4credibility‖ f4largely f4arose f4from f4the f4number f4of f4companies f4that f4restated f4their
f4previously f4issued f4financial f4statements f4 as f4 a f4 result f4 of f4 accounting f4irregularities f4 and f4fraud.
f4 Especially f4responsible f4were4fthe f4very f4visible f4Enron f4 and f4WorldCom f4fraud f4 cases. f4 Both
f4companies f4 filed f4 for f4 bankruptcy f4and f4 constituted f4the f4largest f4 companies f4 in f4American f4history
f4to f4do f4so. f4 The f4extent f4 of f4 the f4accounting f4irregularities f4 and f4fraud f4being f4investigated f4and
f4disclosed f4brought f4 into f4question f4the f4effectiveness f4 of f4 financial f4statement f4 audits. f4 In f4addition,
f4the f4criminal f4conviction f4of f4Arthur f4 Andersen, f4LLP, f4one f4of f4 the f4then f4Big f45 f4 accounting f4firms,
f4on f4charges f4 of f4 destroying f4documents f4 related f4to f4 the f4Enron f4case f4brought f4 into f4question f4the
f4ethics f4 standards f4 of f4the f4profession.
1-2 Assurance f4services f4are f4professional f4services f4that f4enhance f4the f4quality f4of f4information, f4or f4its
f4context, f4for f4decision-making. f4The f4two f4types f4are: f4(a) f4those f4that f4increase f4the f4reliability f4of
f4information f4and f4(b) f4those f4that f4involve f4putting f4information f4in f4a f4form f4or f4context f4that
f4facilitates f4decision-making.
1-3 A f4financial f4statement f4 audit f4 is, f4by f4far, f4the f4most f4 common f4type f4of f4 attest f4 engagement. f4 The
f4overall f4assertion,4fmade f4by f4management, f4most f4frequently f4is f4that f4the f4financial f4statements f4follow
f4generally f4accepted f4accounting f4principles.
1-4 A f4large f4corporation f4with f4securities f4listed f4on f4a f4stock f4exchange f4is f4required f4by f4the f4rules f4of f4the
f4stock f4exchange f4and f4by f4the f4rules f4 of f4 the f4Securities f4 and f4Exchange f4Commission f4 to f4provide f4an
f4audit f4 report f4 with f4the4fannual f4financial f4statements f4 furnished f4to f4its f4 stockholders. f4 It f4 also f4is
f4 required f4to f4engage f4the f4auditors f4 to f4provide f4an f4opinion f4on f4its f4internal f4control. f4Apart f4from
f4legal f4requirements, f4however, f4a f4large f4listed f4corporation f4recognizes f4 that f4 it f4 must f4 maintain
f4investor f4confidence f4in f4 the f4reliability f4of f4 its f4 financial f4statements f4 and f4 internal f4 control f4 over
f4 financial f4 reporting f4 if f4 it f4 is f4 to f4 continue f4 to f4 be f4 able f4 to f4 secure f4 capital f4from f4the f4public. f4 The
f4report f4 by f4a f4 firm f4of f4 certified f4public f4accountants f4 adds f4 credibility f4to f4the f4financial f4statements
f4 prepared f4by f4the f4corporation. f 4 When f4a f4 small f4family-owned f4enterprise f4elects f4 to f4have f4an
, f4 audit, f4the f4purpose f4usually f4is f4to f4use f4the f4auditors' f4report f4 to f4support f4an f4application f4 for f4a
f4 bank f4loan.
