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Solution Manual For Auditing & Assurance Services: A Systematic Approach, 12th Edition By William Messier Jr, Steven Glover, Verified Chapters 1 - 21, Complete Newest Version $17.99   Add to cart

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Solution Manual For Auditing & Assurance Services: A Systematic Approach, 12th Edition By William Messier Jr, Steven Glover, Verified Chapters 1 - 21, Complete Newest Version

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  • October 28, 2024
  • 185
  • 2024/2025
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  • 9781264468690
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  • Auditing & Assurance Services, 12th Edition
  • Auditing & Assurance Services, 12th Edition
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SOLUTION MANUAL for Auditing & Assurance Services A
Systematic Approach

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

,• Table of Contents
j j




Chapterj1:jAnjIntroductionjtojAssurancejandjFinancialjStatementjAuditing

Chapterj2:jThejFinancialjStatementjAuditingjEnvironment

Chapterj3:jAuditjPlanning,jTypesjofjAuditjTests,jandjMateriality

Chapterj4:jRiskjAssessment

Chapterj5:jEvidencejandjDocumentation

Chapterj6:jInternaljControljinjajFinancialjStatementjAudit

Chapterj7:jAuditingjInternaljControljoverjFinancialjReporting

Chapterj8:jAuditjSampling:jAnjOverviewjandjApplicationjtojTestsjofjControls

Chapterj9:jAuditjSampling:jAnjApplicationjtojSubstantivejTestsjofjAccountjBalances

Chapterj10:jAuditingjthejRevenuejProcess

Chapterj11:jAuditingjthejPurchasingjProcess

Chapterj12:jAuditingjthejHumanjResourcejManagementjProcess

Chapterj13:jAuditingjthejInventoryjManagementjProcess

Chapterj14:jAuditingjthejFinancing/InvestingjProcess:PrepaidjExpenses,jIntangiblejAssets,jandjProperty,jPlant,jandjEquip
ment

Chapterj15:jAuditingjthejFinancing/InvestingjProcess:Long-
TermjLiabilities,jStockholders’jEquity,jandjIncomejStatementjAccounts

Chapterj16:jAuditingjthejFinancing/InvestingjProcess:jCashandjInvestments

Chapterj17:jCompletingjthejAuditjEngagement

Chapterj18:jReportsjonjAuditedjFinancialjStatements

Chapterj19:jProfessionaljConduct,jIndependence,jandjQualityjManagement

Chapterj20:jLegaljLiability

Chapterj21:jAssurance,jAttestation,jandjInternaljAuditingjServices

,CHAPTERj1

ANj INTRODUCTIONj TOj ASSURANCEj ANDj FINANCIALj STATEMENTj AUDITING

AnswersjtojReviewjQuestions

1-1 Thejstudyjofjauditingjisjmorejconceptualjinjnaturejcomparedjtojotherjaccountingjcourses.jR
atherjthanjfocusingjonjlearningjthejrules,jtechniques,jandjcomputationsjrequiredjtojpreparejfinancialj
statements,jauditingjemphasizesjlearningjajframeworkjofjanalyticaljandjlogicaljskillsjtojevaluatejthejr
elevancejandjreliabilityjofjthejsystemsjandjprocessesjresponsiblejforjfinancialjinformation,jasjwelljasj
thejinformationjitself.jTojbejsuccessful,jstudentsjmustjlearnjthejframeworkjandjthenjlearnjtojusejlogicj
andjcommonjsensejinjapplyingjauditingjconceptsjtojvariousj circumstancesj andjsituations.
Understandingjauditingjcanjimprovejthejdecisionjmakingjabilityjofjconsultants,jbusinessjman
agers,jandjaccountantsjbyjprovidingjajframeworkjforjevaluatingjthejusefulnessjandjreliability
j ofj information.



1-2 Therejisjajdemandjforjauditingjinjajfree-
marketjeconomyjbecausejthejagencyjrelationshipjbetweenjanjabsenteejownerjandjajmanagerjprod
ucesjajnaturaljconflictjofjinterestjduejtojthejinformationjasymmetryjthatjexistsjbetweenjthejownerjan
djmanager.jAsjajresult,jthejagentjagreesjtojbejmonitoredjasjpartjofjhis/herjemploymentjcontract.jAu
ditingjappearsjtojbejajcost-effectivejformj ofj monitoring.
Thejempiricaljevidencejsuggestsjauditingjwasjdemandedjpriorjtojgovernmentjregulationjsuc
hjasjstatutoryjauditjrequirements.jAdditionally,jmanyjprivatejcompaniesjandjotherjentitiesjnotjsubjec
tjtojgovernmentj auditingjregulationsj alsojdemandjauditing.

1-3 Thejagencyjrelationshipjbetweenjanjownerjandjmanagerjproducesjajnaturaljconflictjofjinter
estjbecausejofjdifferencesjinjthejtwojparties‘jgoalsjandjbecausejofjinformationjasymmetryjthatjexist
sjbetweenjthem.jThatjis,jthejmanagerjgenerallyjhasjmorejinformationjaboutjthej‗true‘jfinancialjpositi
onjandjresultsjofjoperationsjofjthejentityjthanjthejabsenteejownerjdoes.jIfjbothjpartiesjseekjtojmaxim
izejtheirjownjself-
interest,jitjisjlikelyjthatjthejmanagerjwilljnotjactjinjthejbestjinterestjofjthejownerjandjmayjmanipulatejth
ejinformationjprovidedjtojthejownerjaccordingly.

1-4 Independencejisjanjimportantjstandardjforjauditors.jIfjanjauditorjisjnotjindependentjofjthejcl
ient,jusersjmayjlosejconfidencejinjthejauditor‘sjabilityjtojreportjtruthfullyjonjthejfinancialjstatements,j
andjthejauditor‘sjworkjlosesjitsjvalue.jFromjanjagencyjperspective,jifjthejprincipalj(owner)jknowsjtha
tjthejauditorjisjnotjindependent,jthejownerjwilljnotjtrustjthejauditor‘sjwork.
Thus,jthejagentjwilljnotjhirejthejauditorjbecausejthejauditor‘sjreportjwilljnotjbejeffectivejinjreducingjinfo
rmationjriskjfromjthejperspectivejofj thejowner.

1-5 Auditingj(broadlyjdefined)jisjajsystematicjprocessjofjobjectivelyjobtainingjandjevaluatingj
evidencejregardingjassertionsjaboutjeconomicjactionsjandjeventsjtojascertainjthejdegreejofjcorre
spondencejbetweenjthosejassertionsjandjestablishedjcriteriajandjcommunicatingjthejresultsj tojin
terestedj users.
Assurancejisjengagementjinjwhichjajpractitionerjexpressesjajconclusionjdesignedjtojenha
ncejthejdegreejofjconfidencejofjthejintendedjusersjotherjthanjthejresponsiblejpartyjaboutjthejoutcom
ejofjthejevaluationj orj measurementjofjajsubjectjmatterjagainstjcriteria.
Examplesjofjassurancejservicesjarejassurancej(audit)jofjfinancialjstatements,jassurancejofj
prospectivejfinancialjinformation,jassurancejofjreportingjonjinternaljcontrol,jassurancejofjsustainabil
ityjreporting,jandjassurancejofjelectronicjcommerce.

, 1-6 Thejphrasejsystematicjprocessjimpliesjthatjtherejshouldjbejajwell-
planned,jlogicaljapproachjforjconductingjanjauditjthatjinvolvesjobjectivelyjobtainingjandjevaluatin
gjevidence.

1-7 Materiality:j"Omissionsjorjmisstatementsjofjitemsjarejmaterialjifjtheyjcould,jindividuallyjorjco
llectively,jinfluencejthejeconomicjdecisionsjofjusersjtakenjonjthejbasisjofjthejfinancialjstatements.jM
aterialityjdependsjonjthejsizejandjnaturejofjthejomissionjorjmisstatementjjudgedjinjthejsurroundingjci
rcumstances.jThejsizejorjnaturejofjthejitem,jorjajcombinationjofjboth,jcouldjbejthej determiningjfactor."j
(IASB).
Auditjriskjisjdefinedjasjthejriskjthatjthejauditorjexpressesjanjinappropriatejauditjopinionjwhenj
thejfinancialjstatementsjarej materiallyj misstatedj(ISAj200).
Thejauditjreportjstatesjthatjthejauditorjobtainsj―reasonablejassurance‖jwhetherjthejfinancialj
statementsjarejfreejfromj“material”jmisstatement.jThejtermjreasonablejassurancejinformsjthejread
erjthatjtherejisjsomejleveljofjriskjthatjthejauditjdidjnotjdetectjalljmaterialjmisstatements.jInjaddition,jth
ejauditor‘sjopinionjcommonlyjusesjthejwordingjthatjthejfinancialjstatementsjpresentjfairly,j―injalljmat
erialjrespects.‖jThesejphrasesjcommunicatejtojthirdjpartiesjthatjthejauditjreportjisjlimitedjtoj materialji
nformation.

1-8 Onjmostjaudits,jitjisjnotjfeasiblejorjcost-
effectivejtojauditjalljtransactions.jForjexample,jinjajsmalljbusiness,jthejauditorjmightjbejablejtojexami
nejalljtransactionsjthatjoccurredjduringjthejperiod.jHowever,jitjisjunlikelyjthatjthejownerjofjthejbusine
ssjcouldjaffordjtojpayjforjsuchjanjextensivejaudit.jForjajlargejorganization,jthejsheerjvolumejofjtransa
ctionsjpreventsjthejauditorjfromjexaminingjeveryjtransaction.jThus,jtherejisjajtrade-
offjbetweenjthejexactnessjorjprecisionjofj thejauditj andjitsj cost.

1-9 Thejmajorjphasesjofjthejauditjare:
 Clientj acceptance/continuancej andj establishingj engagementj terms
 Preplanning
 Assessjrisksjandjestablishjmateriality
 Planjthejaudit
 Considerjinternaljcontrol
 Auditjbusinessjprocessesjandjrelatedjaccounts
 Completejthejaudit
 Evaluatejresultsjandjissuejauditjreport

1-10 Thejauditor‘sjunderstandingjofjthejentityjandjitsjenvironmentjincludesjknowledgejabou
t:j(1)jthejnaturejofjthejentity,j(2)jitsjobjectivesjandjstrategies,j(3)jitsjindustry,jregulatory,jandjotherje
xternaljfactors,j(4)jitsjmanagement,j(5)jitsjgovernance,j(6)jitsjmeasurementjandjperformancejpro
cess,j andj(7)jitsj businessj processes.

1-11 Sometimesjauditorsjwilljfacejsituationsjwherejnojstandardjauditjprocedurejexists,jsuchjasjth
ejexamplejfromjthejtextjofjverifyingjthejinventoryjofjreindeer.jSuchjcircumstancesjrequirejthatjthejau
ditorjpossessjcreativityjandjinnovationjwhenjplanningjandjadministeringjauditjproceduresjwherejlittl
ejorjnojprecedentjexists.jEveryjclientjisjdifferent,jandjapplyingjauditingjconceptsjinjdifferentjsituation
sjrequiresjlogicjandjcommonjsense,jandjfrequentlyjcreativityjandjinnovation.

SolutionsjtojProblems

1-12 Thejmemojshouldjcitejthejfollowingjfacts:
 Therejisjajhistoricaljrelationshipjbetweenjaccountingjandjauditing.

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