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Solution Manual For Auditing and Assurance Services 9th Edition By Timothy J. Louwers, Penolope L. Bagley |All 12 Chapters Covered| Complete A+ Guide $17.99
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Solution Manual For Auditing and Assurance Services 9th Edition By Timothy J. Louwers, Penolope L. Bagley |All 12 Chapters Covered| Complete A+ Guide
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Solution Manual For Auditing and Assurance Services 9th Edition By Timothy J. Louwers, Penolope L. Bagley |All 12 Chapters Covered| Complete A+ Guide

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  • November 21, 2024
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  • 9781266847103
  • penolope l bagley
  • solution manual for auditing and assurance service
  • auditing and assurance services
  • louwers auditing assurance services 9th edition
  • 9th edition by timothy j louwers

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Chapter j01 j- jAuditing jand jAssurance jServices

,Chapter j01 j- jAuditing jand jAssurance jServices



CHAPTER j01

Auditing jand jAssurance jServices

LEARNING jOBJECTIVES


Review Multiple Exercises, jProblems,
Checkpoints
j jChoice jand jSimulations




1. jDefine jinformation jrisk jand jexplain jhow jthe 1, j2, j3 29, j31, j38 65*
jfinancial jstatement jauditing jprocess jhelps
jto jreduce jthis jrisk, jthereby jreducing jthe
jcost jof jcapital jfor ja jcompany.




2. Define jand jcontrast jassurance, jattestation, 4, j5, j6, j7, j8 23, j25, j28, j44, 60, j65*
and jfinancial jstatement jauditing jservices. 50


3. Describe jand jdefine jthe jassertions jthat 9, j10, j11 36, j39, j40, j41, j45, 62, j63, j67, j68, j69
jmanagement jmakes jabout jthe jrecognition, 46, j47, j48, j49, j52,
jmeasurement, jpresentation, jand jdisclosure 53, j54, j55, j57, j58,
jof jthe jfinancial jstatements jand jexplain jwhy 59
jauditors juse jthem jas ja jfocal jpoint jof jthe
jaudit.


4. Define jprofessional jskepticism jand jexplain jits 12 24, j37 61
jkey jcharacteristics.




5. Describe jthe jorganization jof jpublic jaccounting 13, j14 30, j42, j56 72
jfirms jand jidentify jthe jvarious jservices jthat
jthey joffer.




6. Describe jthe jaudits jand jauditors jin 15, j16, j17, j18 26, j27, j32, j34, j35 64, j66
jgovernmental, jinternal, jand
joperational jauditing.




7. List jand jexplain jthe jrequirements jfor 19, j20, j21, j22 33, j43, j51 70, j71
jbecoming ja jcertified jpublic jaccountant
j(CPA) jand jother jcertifications javailable jto
jan jaccounting jprofessional.




(*) jItem jrelates jto jmultiple jlearning jobjectives

,Chapter j01 j- jAuditing jand jAssurance jServices


SOLUTIONS jFOR jREVIEW jCHECKPOINTS

1.1 Business jrisk jis jthe jrisk jthat jan jentity jwill jfail jto jmeet jits jbusiness jobjectives. jWhen jassessing
jbusiness jrisk, ja jprofessional jmust jconsider jall jpossible jthreats jto jan jentity‘s jgoals jand jobjectives.
jSome jillustrative jexamples jinclude jthe jrisk jthat: j1) jits jexisting jcustomers jwill jstart jbuying jproducts jor
jservices jfrom jits jprimary jcompetitors; j2) jits jproduct jlines jwill jbecome jobsolete; j3) jits jtaxes jwill
jincrease; j4) jkey jgovernment jcontracts jwill jbe jlost; j5) jkey jemployees jwill jleave jthe jentity; jand jmany
jother jexamples jexist.


1.2 To jhelp jminimize jbusiness jrisk jand jtake jadvantage jof jother jopportunities jpresented jin jtoday‘s
jcompetitive jbusiness jenvironment, jdecision jmakers jsuch jas jchief jexecutive jofficers j(CEOs) jdemand
jtimely, jrelevant, jand jreliable jinformation. jThere jare jat jleast jfour jenvironmental jconditions jthat jincrease
jdemand jfor jreliable jinformation. jFirst, jcomplexity jwhich jimplies jthat jevents jand jtransactions jin jtoday‘s
jglobal jbusiness jenvironment jcan jbe jcomplicated. jMost jinvestors jdo jnot jhave jthe jlevel jof jexpertise
jneeded jto jproperly jaccount jfor jcomplex jtransactions. jSecond jis jremoteness jwhich jimplies jthat jdecision
jmakers jare joften jseparated jfrom jcurrent jand jpotential jbusiness jrelationships jdue jto jdistance jand jtime. jFor
jexample, jinvestors jmay jnot jbe jable jto jvisit jdistant jlocations jto jcheck jup jon jtheir jinvestments. jThird jis
jtime-sensitivity jwhich jimplies jthat jin jtoday‘s jeconomic jenvironment, jinvestors jand jother jusers jof
jfinancial jstatements jneed jto jmake jdecisions jmore jrapidly jthan jever jbefore. jAs ja jresult, jthe jability jto
jpromptly jobtain jhigh-quality jinformation jis jessential. jFourth jis ja jconsequence jwhich jimplies jthat
jdecisions jmay jvery jwell jinvolve jsignificant jinvestments. j As ja jresult, jthe jconsequences jcan jbe jsevere jif
jinformation jcannot jbe jobtained


1.3 Of jall jthe jdifferent jrisks jdiscussed jin jthe jchapter jup jto jthis jpoint, jinformation jrisk jis jthe jone jthat jis
jmost jlikely jto jcreate jthe jdemand jfor jindependent jand jobjective jassurance jservices jis jinformation jrisk jor
jthe jprobability jthat jthe jinformation jcirculated jby jan jentity jwill jbe jfalse jor jmisleading. jBecause jthe
jprimary jsource jof jinformation jfor jinvestors jand jcreditors jis jthe jcompany jitself, jan jincentive jexists jfor
jthat jcompany‘s jmanagement jto jmake jtheir jbusiness jor jservice jappear jto jbe jbetter jthan jit jactually jmay jbe,
jto jput jtheir jbest jfoot jforward. jAs ja jresult, jpreparers jand jissuers jof jfinancial jinformation j(directors,
jmanagers, jaccountants, jand jother jpeople jemployed jin ja jbusiness) jmight jbenefit jby jgiving jfalse,
jmisleading, jor joverly joptimistic jinformation. jThis jpotential jconflict jof jinterest jbetween jinformation
jproviders jand jusers jwhich jprovides jthe junderlying jbasis jfor jthe jdemand jfor jreliable jinformation.


1.4 The jfour jmajor jelements jof jthe jbroad jdefinition jof jassurance jservices jare

Independence. j CPAs jwant jto jpreserve jtheir jreputation jand jcompetitive jadvantage jby jalways jpreserving
jintegrity jand jobjectivity jwhen jperforming jassurance jservices.


Professional jservices. jVirtually jall jwork jperformed jby jCPAs jis jdefined jas j―professional jservices‖ jas jlong
jas jit jinvolves jsome jelement jof jjudgment jbased jon jeducation jand jexperience.


Improving jthe jquality jof jinformation jor jits jcontext. jThe jemphasis jis jon j―information,‖ jCPAs‘ jtraditional
jarea jof jexpertise. jCPAs jcan jenhance jquality jby jassuring jusers jabout jthe jreliability jand jrelevance jof
jinformation, jand jthese jtwo jfeatures jare jclosely jrelated jto jthe jfamiliar jcredibility-lending jproducts jof
jattestation jand jaudit jservices. j―Context‖ jis jrelevance jin ja jdifferent jlight. jFor jassurance jservices, jimproving
jthe jcontext jof jinformation jrefers jto jimproving jits jusefulness jwhen jtargeted jto jparticular jdecision jmakers
jin jthe jsurroundings jof jparticular jdecision jproblems.


For jdecision jmakers. jAs jthe j―consumers‖ jof jassurance jservices, jdecision jmakers jare jthe jbeneficiaries jof jthe
jassurance jservices. jDecision jmakers jmay jor jmay jnot jbe jthe j―client‖ jthat jpays jthe jfee jand jmay jor jmay jnot
jbe jone jof jthe jparties jto jan jassertion jor jother jinformation, jbut jthey jpersonify jthe jconsumer jfocus jof jnew
jand jdifferent jprofessional jwork.


1.5 An jassurance jservices jengagement jis jany jassignment jthat jimproves jthe jquality jof jinformation, jor jits
jcontext, jfor jdecision jmakers. jBecause jinformation j(e.g., jfinancial jstatements) jare jprepared jby jmanagers
jof jan jentity jwho jhave jauthority jand jresponsibility jfor jfinancial jsuccess jor jfailure, jan joutsider jmay jbe
jskeptical jthat jthe jinformation jtruly jis jobjective, jfree jfrom jbias, jfully jinformative, jand jfree jfrom jmaterial
jerror, jintentional jor jinadvertent. j The jservices jof jan jindependent jauditor jhelps jresolve jthose jdoubts
jbecause jthe

, Chapter j01 j- jAuditing jand jAssurance jServices


auditor‘s jsuccess jdepends jupon jhis jor jher jindependent, jobjective, jand jcompetent jassessment jof jthe
jinformation j(e.g., jthe jconformity jof jthe jfinancial jstatements jwith jthe jappropriate jreporting jframework).
jThe jindependent jauditor‘s jrole jis jto jlend jcredibility jto jthe jinformation; jhence, jthe joutsider jwill jlikely
jseek jhis jor jher jindependent jopinion jabout jthe jfinancial jstatements.


1.6 An jattestation jengagement jis j―an jengagement jin jwhich ja jpractitioner jis jengaged jto jissue jor jdoes jissue
ja jwritten jcommunication jthat jexpresses ja jconclusion jabout jthe jreliability jof ja jwritten jassertion jthat jis
jthe jresponsibility jof janother jparty‖ j(SSAE j10, jAT j101.01). jTo jattest jmeans jto jlend jcredibility jor jto
jvouch jfor jthe jtruth jor jaccuracy jof jthe jstatements jthat jone jparty jmakes jto janother. jThe jattest jfunction jis
ja jterm joften japplied jto jthe jactivities jof jindependent jCPAs jwhen jacting jas jauditors jof jfinancial
jstatements.


1.7 An jassurance jservice jengagement jis jone jthat jimproves jthe jquality jof jinformation, jor jits jcontext, jfor
jdecision jmakers. j Thus, jan jattestation jservice jengagement jis jone jtype jof jan jassurance jservice. j Another
jway jof jthinking jabout jthe jissue jis jto jremember jthat jthe jfinancial jstatement jaudit jengagement jis jone jtype
jof jan jattestation jservice. jPlease jsee jexhibit j1.3 jin jthe jtext jwhich jdepicts jthe jrelationship jamong
jassurance, jattestation, jand jauditing jengagements.


1.8 According jto jthe jAmerican jAccounting jAssociation, j―Auditing jis ja jsystematic jprocess jof jobjectively
jobtaining jand jevaluating jevidence jregarding jassertions jabout jeconomic jactions jand jevents jto jascertain
jthe jdegree jof jcorrespondence jbetween jthe jassertions jand jestablished jcriteria jand jcommunicating jthe
jresults jto jinterested jusers.‖ jIn jeffect, jauditors jadd jreliability jto jthe jinformation jthat jis jprovided jto
jinterested jusers. jOf jcourse, jthis jdefinition jis jfocused jon jan jexternal jreporting jcontext. jStudents jmay
jalso jdiscuss jhow jgovernmental jand jinternal jauditors joperate jas jwell.


In jresponse jto j―What jdo jauditors jdo?‖ jstudents jcan jrespond jby jstating jthat jauditors j(1) jobtain jand jevaluate
jevidence jabout jassertions jmade jby jmanagement jabout jeconomic jactions jand jevents, j(2) jascertain jthe
jdegree jof jcorrespondence jbetween jthe jassertions jand jthe jappropriate jreporting jframework, jand j(3) jissue
jan jaudit jreport j(opinion). jStudents jcan jalso jrespond jmore jgenerally jby jstating jthat jauditors jessentially
jlend jcredibility jto jthe jfinancial jstatements jpresented jby jmanagement.


1.9 Financial jaccounting jrefers jto jthe jprocess jof jrecording, jclassifying, jsummarizing, jand jreporting jabout ja
jcompany‘s jassets, jliabilities, jcapital, jrevenues, jand jexpenses jin jthe jfinancial jstatements jin jaccordance
jwith jthe japplicable jfinancial jreporting jframework j(e.g., jGAAP). jIn jso jdoing, jthe jmanagement jteam jis
jmaking jseveral jassertions jabout jthe jfinancial jstatements. jThe jfinancial jaccounting jprocess jis jthe
jresponsibility jof jthe jmanagement jteam.


Financial jstatement jauditing jrefers jto jthe jprocess jwhereby jprofessional jauditors jgather jevidence jrelated
jto jthe jassertions jthat jmanagement jmakes jin jthe jfinancial jstatements, jevaluates jthe jevidence jand
jconcludes jon jthe jfairness jof jthe jfinancial jstatements jin ja jreport.


They jdiffer jbecause jaccountants jproduce jthe jfinancial jstatements jin jaccordance jwith jthe japplicable
jfinancial jreporting jframework. jAfter jthis jis jcomplete, jfinancial jstatement jauditors jthen jperform
jprocedures jto jascertain jwhether jthe jfinancial jstatements jhave jbeen jprepared jin jaccordance jwith jthe
japplicable jfinancial jreporting jframework.


1.10 The jtwo jmajor jclassifications jof jASB jassertions jwith jseveral jassertions jin jeach jclassification

jare: jAssertions jAbout jClasses jof jTransactions jand jEvents, jand jRelated jDisclosures

Occurrence jassertion: jThe jobjective jis jto jestablish jwith jevidence jthat jtransactions jgiving jrise jto
jassets, jliabilities, jsales, jand jexpenses joccurred. j Key jquestions jinclude j―Did jthe jrecorded jsales
jtransactions jreally joccur?‖


Completeness jassertion: jThe jobjective jis jto jestablish jwith jevidence jthat jall jtransactions jof jthe jperiod
jthat jshould jbe jare jincluded jin jthe jfinancial jstatements j(including jfootnotes). jCompleteness jalso jrefers jto
jproper jinclusion jin jfinancial jstatements jof jall jrevenue, jexpense, jand jrelated jdisclosures. jKey jquestions
jrelated jto

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