PART1 The Auditing Profession 1 The Demand for Audit and Other Assurance Services Learning Objectives Nature of Auditing Distinction Between Auditing and Accounting Economic Demand for Auditing Assurance Services Types of Audits Types of Auditors Certified Public Accountant 2 The CPA Profession Learning Objectives Certified Public Accounting Firms Activities of CPA Firms Structure of CPA Firms Sarbanes-Oxley Act and Public Company Accounting Oversight Board Securities and Exchange Commission American Institute of Certified Public Accountants (AICPA) Generally Accepted Auditing Standards Statements on Auditing Standards International Standards on Auditing Quality Control 3 Audit Reports Learning Objectives Standard Unqualified Audit Report Combined Reports on Financial Statements and Internal Control Over Financial Reporting Under Section of the Sarbanes-Oxley Act Unqualified Audit Report with Explanatory Paragraph or Modified Wording Departures from an Unqualified Audit Report Materiality Discussion of Conditions Requiring a Departure Auditor's Decision Process for Audit Reports Impact of E-Commerce on Audit Reporting 4 Professional Ethics Leamlng Objectives What Are Ethics? Ethical Dilemmas Special Need for Ethical Conduct in Professions Code of Professional Conduct Independence Independence Rule of Conduct and Interpretations Other Rules of Conduct Enforcement 5 Legal Liability Learning Objectives Changed Legal Environment Distinguishing Business Failure, Audit Failure, and Audit Risk Legal Concepts Affecting Liability Liability to Clients Liability to Third Parties Under Common Law Civil Liability Under the Federal Securities Laws Criminal Liability The Profession's Response to Legal Liability Protecting Individual CPAs from Legal Liability PART2 The Audit Process 6 Audit Responsibilities and Objectives Learning Objectives Objective of Conducting an Audit of Financial Statements Management's Responsibilities Auditor's Responsibilities Financial Statement Cycles Setting Audit Objectives Management Assertions Transaction-Related Audit Objectives Balance-Related Audit Objectives Presentation and Disclosure-Related Audit Objectives How Audit Objectives Are Met 7 Audit Evidence Learning Objectives Nature of Evidence Audit Evidence Decisions Persuasiveness of Evidence Types of Audit Evidence Audit Documentation 8 Audit Planning and Analytical Procedures Learning Objectives Planning Accept Client and Perform Initial Audit Planning Understand the Client's Business and Industry Assess Client Business Risk Perform Preliminary Analytical Procedures Summary of the Parts of Audit Planning Analytical Procedures Five Types of Analytical Procedures Common Financial Ratios 9 Materlallty and Risk Learning Objectives Materiality Set Preliminary Judgment about Materiality Allocate Preliminary Judgment about Materiality to Segments(Tolerable Misstatement) Estimate Misstatement and Compare with Preliminary Judgment Risk Types of Risks Assessing Acceptable Audit Risk Assessing Inherent Risk Relationship of Risks to Evidence and Factors Influencing Risks Evaluating Results …… PART3 Application of the Audit Process to the Sales and Collection Cycle PART4 Application of the Audit Process to Other Cycles PART5 Completing the Audit
