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SOLUTION MANUAL FOR Principles Of Auditing And Other Assurance Services 23rd Edition By Ray Whittington Kurt

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SOLUTION MANUAL FOR Principles Of Auditing And Other Assurance Services 23rd Edition By Ray Whittington Kurt

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  • October 2, 2024
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SOLUTION MANUAL FOR
h h




h Principles Of Auditing And Other Assurance Services
h h h h h h h




23rd Edition By Ray Whittington Kurt
h h h h h h




ALL Chapters (1 - 21)
h h h h

,  Table of Contents
h h




Chapterh1:hThehRolehofhthehPublichAccountanthinhthehAmericanEconomy

Chapterh2:hProfessionalhStandards

Chapterh3:hProfessionalhEthics

Chapterh4:hLegalhLiabilityhofhCPAs

Chapterh5:hAudithEvidencehandhDocumentation

Chapterh6:hAudithPlanning,hUnderstandinghthehClient,hAssessingRisks,handhResponding

Chapterh7:hInternalhControl

Chapterh8:hConsiderationhofhInternalhControlhinhanhInformationTechnologyhEnvironment

Chapterh9:hAudithSampling

Chapterh10:hCashhandhFinancialhInvestments

Chapterh11:hAccountshReceivable,hNoteshReceivable,handRevenue

Chapterh12:hInventorieshandhCosthofhGoodshSold

Chapterh13:hProperty,hPlant,handhEquipment:hDepreciationhandDepletion

Chapterh14:hAccountshPayablehandhOtherhLiabilities

Chapterh15:hDebthandhEquityhCapital

Chapterh16:hAuditinghOperationshandhCompletinghthehAudit

Chapterh17:hAuditors’hReports

Chapterh18:hIntegratedhAuditshofhPublichCompanies

Chapterh19:hAdditionalhAssurancehServices:hHistoricalhFinancialInformation

Chapterh20:hAdditionalhAssurancehServices:hOtherhInformation

Chapterh21:hInternal,hOperational,handhCompliancehAuditing

,CHAPTER 1 h




The Role of the Publi
h h h h



c Accountant in the
h h h



American Economy h




ReviewhQuestions

1-1 Theh―crisishofhcredibility‖hlargelyharosehfromhthehnumberhofhcompanieshthathrestatedhtheirhpreviouslyhissu
edhfinancialhstatementshash ah resulthofh accountinghirregularitieshandhfraud.h Especiallyhresponsiblehwerehthe
hveryhvisiblehEnronhandhWorldComhfraudhcases.hBothhcompaniesh filedhforh bankruptcyhandhconstitutedhth

ehlargesthcompanieshinhAmericanhhistoryhtohdohso.h Thehextenthofhthehaccountinghirregularitieshandhfraudh
beinghinvestigatedhandhdisclosedhbroughthintohquestionhtheheffectivenesshofhfinancialhstatementhaudits.h In
haddition,hthehcriminalhconvictionhofhArthurhAndersen,hLLP,honehofhthehthenhBigh5haccountinghfirms,honhc

hargeshofhdestroyinghdocumentshrelatedhtohthehEnronhcasehbroughthintohquestionhthehethicshstandardshofht
hehprofession.

1-2 Assurancehservicesharehprofessionalhserviceshthathenhancehthehqualityhofhinformation,horhitshcontext,hfor
hdecision-

making.hThehtwohtypeshare:h(a)hthosehthathincreasehthehreliabilityhofhinformationhandh(b)hthosehthathinv
olvehputtinghinformationhinhahformhorhcontexththathfacilitateshdecision-making.

1-3 Ahfinancialhstatementhaudith is,hbyhfar,hthehmosthcommonhtypehofhattesthengagement.h Thehoverallhassertion
,hmadehbyhmanagement,hmosthfrequentlyhishthaththehfinancialhstatementshfollowhgenerallyhacceptedhaccoun
tinghprinciples.

1-4 Ahlargehcorporationhwithhsecuritieshlistedhonhahstockhexchangehishrequiredhbyhthehruleshofhthehstockhexchan
gehandhbyhthehruleshofhthehSecuritiesh andhExchangehCommissionhtohprovidehanhaudith reporth withhthehannu
alhfinancialhstatementshfurnishedhtohitshstockholders.h Ithalsohishrequiredhtohengagehthehauditorshtohprovideh
anhopinionhonhitshinternalhcontrol.hAparthfromhlegalhrequirements,hhowever,hahlargehlistedhcorporationhre
cognizeshthathithmusthmaintainhinvestorhconfidencehinhthehreliabilityhofhitshfinancialhstatementsh andh interna
lhcontrolhoverh financialh reportingh ifh ith ish tohcontinuehtohbehablehtoh securehcapitalhfromhthehpublic.hThehrep
orth byhahfirmhofhcertifiedhpublichaccountantshaddshcredibilityhtohthehfinancialhstatementshpreparedhbyhthehc
orporation.h Whenhahsmallhfamily-
ownedhenterprisehelectsh tohhavehanhaudit,hthehpurposehusuallyhishtohusehthehauditors'hreporthtohsupporthanha
pplicationh forhahbankhloan.

, 1-5 Ahreporthbyhanhindependenthpublichaccountanthconcerninghthehfairnesshofhahcompany'shfinancialhstatement
shishcommonlyhrequiredhinhthehfollowinghsituations:

(1) Applicationhforhahbankhloan.
(2) Establishinghcredith forhpurchasehofh merchandise,hequipment,horhotherhassets.
(3) Reportinghoperatinghresults,h financialhposition,handhcashhflowsh tohabsenteehownersh (stockholder
shorhpartners).
(4) Issuancehofhsecuritieshbyhahcorporation.
(5) Annualhfinancialhstatementsh byhahcorporationhwithhsecuritiesh listedhonhahstockhexchangehorhtrade
dhoverhthehcounter.
(6) Salehofhanhongoinghbusiness.
(7) Terminationhofh ah partnership.

1-6 Tohaddhcredibilityhtohfinancialhstatementsh ishtohincreasehthehlikelihoodhthaththeyhhavehbeenhpreparedhfollo
winghthehappropriatehcriteria,husuallyhgenerallyhacceptedhaccountinghprinciples.h Ashsuch,hanhincreasehinhcr
edibilityhresultshinhfinancialhstatementshthathcanhbehbelievedhandhreliedhuponhbyhthirdhparties.

1-7 Businesshriskhish thehriskhthath thehinvestmenthwillhbehimpairedhbecausehahcompanyhinvestedhinhish unableht
ohmeethitshfinancialhobligationshduehtoheconomichconditionshorhpoorhmanagementhdecisions.hInformationh
riskhishthehriskhthaththehinformationhusedhtohassesshbusinesshriskhishnothaccurate.hAuditorshcanhdirectlyh
reducehinformationhrisk,hbuthhavehonlyhlimitedheffecthonhbusinesshrisk.

1-8 Aththehbeginninghofhthehcentury,hthehprincipalhobjectivehofhauditinghwash thehpreventionhandhdetectionhofhf
raud.hAudithworkhcenteredhonhthehbalancehsheet,hbecausehthehincomehstatementhwashregardedhashhighlyhco
nfidentialhandhnoth forhpublichdisclosure.h Today,hthehprincipalhobjectivehofhauditinghish tohformhanhopinion
honhthehfairnessh ofhfinancialhstatementsh andhtheirhconformityhwithhgenerallyhacceptedhaccountinghprinciple

s.h Buththehprofessionalhstandardshalsohrequirehthathanhaudith behdesignedhtohprovidehreasonablehassuranceh
ofhdetectinghmaterialhmisstatements,hduehtoherrorsh orhfraud.h Particularhemphasish ish placedhonhthehincome
hstatementh whichhish ofhgreath importancehtohinvestors.h Auditinghtodayhalsohhash thehobjectivesh ofhmeetinght

hehrequirementshofhthehSecuritieshandhExchangehCommissionh(SEC)h andhthehPublichCompanyhAccountin
ghOversighthBoardhforhpublichcompanies.

1-9 Thehstatementh ish incorrect.hThehincreasinghintegratedhdatabaseshofh today,halonghwithhavailablehaudi
thprocedureshmakehauditedhentirehpopulationshahpossibilityhinhmanyhsituations.

1-10 Anhoperationalhaudithattemptshtohmeasurehtheheffectivenesshandhefficiencyhofhahspecifichunithofhanhorg
anization.h Ithinvolvesh morehsubjectivehjudgmentshthanhahcompliancehaudithorhanhaudith ofhfinancialhstat
ementshbecausehthehcriteriah ofheffectivenesshandhefficiencyhofhdepartmentalhperformanceharehnoth ashcl
earlyhestablishedhasharehmanyhlawshandhregulationshorhgenerallyhacceptedhaccountinghprinciples.
Thehreporth preparedhafterhcompletionhofhanhoperationalhaudith ish usuallyhdirectedhtohmanagementh
ofhthehorganizationhinhwhichhthehaudithworkhwashdone.

1-11 Ahcompliancehaudithishanhaudithtohdeterminehwhetherhfinancialhreportshorhotherhassertionsharehinhcomplia
ncehwithhestablishedhcriteria.h Thehnecessaryhingredientsharehverifiablehdatahandhthehexistencehofhstandard
shestablishedhbyhanhauthoritativehbody.h Anhoperationalhaudit,honhthehotherhhand,hish ahreviewhofhahdepart
menthorhotherhunithofhahbusinessh orhgovernmentalhorganizationhtohmeasurehtheheffectivenesshandhefficien
cyhofhoperations.h InternalhauditorshoftenhperformhoperationalhauditshashdohauditorshemployedhbyhthehGo
vernmenthAccountabilityhOfficeh(GAO)hofhthehfederalhgovernment.

1-12 Internalhauditorsh musthbehindependenthofhthehdepartmenthheadshandhotherhlinehexecutiveshwhosehworkhthe
yhreview.hHowever,hinternalhauditorsharehnothindependenthinhthehsamehsensehashahpublichaccountinghfirm.

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