Instructor Manual for Auditing & Assurance Services: A Systematic Approach 12th Edition – Complete Teaching Guide

INSTRUCTORVMANUALVFOR
AuditingV&VAssuranceVServicesVAVSystematicVApproachV12eVMe
ssier

ChapterV1
AnVIntroductionVtoVAssuranceVandVFinancialVStatementVAuditing

InternetVAss
Multiple- ignments/VE
ReviewV DiscussionV
LearningVObjectives VChoiceV Problems arthWear
Questions Cases
Questions Mini-
CasesV(EWMC
)
LOV1-
1:VUnderstandVwhyVstudyingV
auditingVcanVbeVvaluableVtoVy
1 29 30
ouVwhetherVorVnotVyouVplanV
toVbecomeVanVauditor,VandVw
hyVitVisVdifferentVfromVstudyi
ng
accounting.
LOV1-
2:VUnderstandVtheVdemandVfor
2,3,4 13,14,20 24,25 29
VauditingVandVbeVableVtoVexpl
ainVtheVdesiredVcharacteristicsV
of
auditorsVandVauditVservices.
LOV1-3:VKnowVtheVbasic
definitionVofVaVfinancialVstateme 5,6 13,14,15,16 25
ntVaudit.
LOV1-
4:VUnderstandVthreeVfundamen
7 17,18 25
talVconceptsVthatVunderlieVfina
ncialVstatement
auditing.
LOV1-5:VUnderstandVwhy
samplingVisVimportantVinVanVau 8
dit.
LOV1-
6:VBeVableVtoVdescribeVtheVb EWMC
asicVfinancialVstatementVauditin
9,V10 17,19,20 26
gVprocessVandVtheVphasesVinV
whichVanVauditVisVcarriedVout
.
LOV1-
7:VKnowVwhatVanVauditVrepor 11 21,22,23 27,28
tVisVandVunderstandVthe
natureVofVanVunqualifiedVreport.
LOV1-
8:VUnderstandVhowVtechnolog
yVandVauditVdataVanalyticsVar
eVchangingVauditsVinVexciting
Vways.
LOV1-
9:VUnderstandVwhyVauditing 12 30
demandsVlogic,Vreasoning,VandVr
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CopyrightV©V2022VMcGrawVHillVEducation.VAllVrightsVreserved.VNoVreproductionVorVdistributionVwithoutVtheVpriorVwrittenVcons
entVofVMcGrawVHillV Education.

,esourcefulness.




NOTE:VReferencesVtoVauditingVstandardsVinVtheVinstructorVmanualVfollowVaVsimilarVconventionVtoVthat
VfollowedVinVtheVtext:VAICPAVstandardsVwillVbeVreferencedVbyVclarifiedVAUVsectionVandVPCAOBVstand
ardsVwillVbeVreferencedVbyVAuditingVStandardV(AS)Vnumber.




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CopyrightV©V2022VMcGrawVHillVEducation.VAllVrightsVreserved.VNoVreproductionVorVdistributionVwithoutVtheVpriorVwrittenVcons
entVofVMcGrawVHillV Education.

,ENDVOFVCHAPTERVMATERIALSVCOMPARISONVCHART


Number Number
Comparison
inV11thVedition inV12thVedition
1-1 Unchanged 1-1
1-2 Unchanged 1-2
1-3 Unchanged 1-3
1-4 Unchanged 1-4
1-5 Unchanged 1-5
1-6 Revised 1-6
1-7 Unchanged 1-7
1-8 Unchanged 1-8
1-9 Unchanged 1-9
1-10 Unchanged 1-10
1-11 Unchanged 1-11
1-12 Unchanged 1-12
1-13 Unchanged 1-13
1-14 Unchanged 1-14
1-15 Unchanged 1-15
1-16 Unchanged 1-16
1-17 Unchanged 1-17
1-18 Unchanged 1-18
1-19 Unchanged 1-19
1-20 Unchanged 1-20
1-21 Unchanged 1-21
1-22 Unchanged 1-22
1-23 Unchanged 1-23
1-24 Unchanged 1-24
1-25 Revised 1-25
1-26 Revised 1-26
1-27 Unchanged 1-27
1-28 Unchanged 1-28
1-29 Unchanged 1-29
1-30 Unchanged 1-30


WhenVstudentsVenterVtheVfirstVintroductoryVclass,VtheyVseldomVunderstandVwhatVassuranceVo
rVauditingVentails.VGenerally,VtheyVwillVnotVhaveVreadVChapterV1VbeforeVclass,VsoVit‘sVimpor
tantVtoVspendVtheVtimeVnecessaryVduringVtheVfirstVclassVtoVcaptureVstudents‘VattentionVandVs
timulateVtheirVinterestVinVauditing.




15-3
CopyrightV©V2022VMcGrawVHillVEducation.VAllVrightsVreserved.VNoVreproductionVorVdistributionVwithoutVtheVpriorVwrittenVcons
entVofVMcGrawVHillV Education.

, Introduction

AfterVgoingVoverVtheVclassVexpectations,VweVspendVtheVfirstVpartVofVclassVdiscussingVan
dVillustratingVtheVdemandVforVauditingVandVtheVroleVofVauditingVinVsociety.VIfVstudentsVareVt
oVbeVinterestedVandVexcitedVtoVdigVinVandVlearnVthisVdauntingVnewVmaterial,VtheyVneedVtoV
beVconvincedVthatVitVisVimportantVandVuseful.VThus,VweValsoVemphasizeVthatVtheVconceptsVu
nderlyingVauditingVareVusefulVinVmanyVcontextsVotherVthanVauditing,VincludingVconsultingVa
ndVmanagement.

LaterVinVtheVclass,VweVmightVaskVtheVstudentsVhowVtheyVwouldVauditVtheVautomobileVre
venuesV(sayV$100Vbillion)VofVaVlargeVautomobileVmanufacturer.VWeVtellVthemVthatVeachVcar
VandVtruckVhasVanVinvoiceVonVtheVwindowVandVinVtheVcompany'sVcomputerVsystem,VandVtha
tV8VmillionVcarsVandVtrucksVwereVsold.VWeVthenVaskVthemVhowVmanyVinvoicesVoutVofV8Vm
illionVtheyVwantVtoVexamineVinVorderVtoVverifyVtheV$100VbillionVofVrevenuesVinVtheVfinanci
alVstatements.VOfVcourse,VyouVwillVgetVsomeVoutlandishVanswersV(e.g.,V400,000Vinvoices).V
WeVeventuallyVtellVthemVthatVyouVmayVnotVlookVatVanyVinvoicesVandVthatVyouVmayVrelyVso
lelyVonVtheVcompany‘sVinternalVcontrolsVinVconjunctionVwithVaVcarefulVratioVanalysisVorVoth
erVtypeVofVanalyticalVprocedure.VThisVtypeVofVexampleVquicklyVgetsVtheVstudents'VattentionVt
hatVauditingVinvolvesVaVsubstantialVamountVofVjudgmentVandVcommonVsense.

[LOV1-1]VTipsVforVLearningVAuditing

WeVspendVaVfewVminutesVonVthisVsectionVemphasizingVtheVdifferencesVbetweenVtheVstud
yVofVaccountingV(whichVtheyVareVveryVfamiliarVwith)VandVtheVstudyVofVauditingV(whichVthe
yVareVnot).V WeVtryVtoVmakeVsureVtheyVunderstandVwhatVauditingVfocusesVonVandVhowVitVis
VmuchVmoreVconceptualVthanVtheirVotherVaccountingVcourses.VWeVintroduceVtheVideaVofVaV
―toolVkit‖VandVhowVitVrelatesVtoVwhatVweVwillVbeVcoveringVduringVtheVcourse.

[LOV1-2]VTheVDemandVforVAuditingVandVAssurance

WeVspendVaVreasonableVamountVofVtimeVduringVtheVfirstVlectureVdiscussingVwhyVthereVis
VaVdemandVforVauditingVandVassuranceVservices.VManyVstudentsVthinkVthatVtheVdemandVforV
auditingVisVdrivenVbyVtheVrequirementsVofVtheVSecuritiesVlaws.VItVisVimportantVthatVtheVstud
entsVhaveVsomeVbasicVunderstandingVofVtheVagencyVrelationshipVthatVleadsVtoVtheVdemandVf
orVauditing.VFigureV1-
1VprovidesVaVgoodVframeworkVforVthisVdiscussion.VWeVthenVbringVinVhowVtheVCPAVfitsVthi
sVneedVwithVtheVqualitiesVofVindependence,Vintegrity,VandVobjectivity.VSometimesVweVdoVrol
e-
plays,VaskingVstudentsVtoVcomeVtoVtheVfrontVofVtheVroom.VOneVisVsellingVaVcar,VwhileVtheV
otherVisVinterestedVinVbuyingVit.VWeVletVthemVdiscussVtheirVconcerns,VwhatVinformationVthey
Vwant,VwhatVtheVincentivesVofVtheVtwoVpartiesVare,VwhatVinformationVasymmetriesVmightVex
ist,Vetc.VWeVthenVtieVthisVscenario,VwhichVmostVstudentsVareVsomewhatVfamiliarVwithVorVatV
leastVcanVrelateVto,VbackVtoVtheVideaVofVtheVdemandVforVauditing.

UseVFigureV1-1


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CopyrightV©V2022VMcGrawVHillVEducation.VAllVrightsVreserved.VNoVreproductionVorVdistributionVwithoutVtheVpriorVwrittenVcons
entVofVMcGrawVHillV Education.