PART1TheAuditingProfession
TheDemandforAuditandOtherAssuranceServices
LearningObjectives
NatureofAuditing
DistinctionBetweenAuditingandAccounting
EconomicDemandforAuditing
AssuranceServices
TypesofAudits
TypesofAuditors
CertifiedPublicAccountant
TheCPAProfession
LearningObjectives
CertifiedPublicAccountingFirms
ActivitiesofCPAFirms
StructureofCPAFirms
Sarbanes-OxleyActandPublicCompanyAccountingOversightBoard
SecuritiesandExchangeCommission
AmericanInstituteofCertifiedPublicAccountants(AICPA)
GenerallyAcceptedAuditingStandards
StatementsonAuditingStandards
InternationalStandardsonAuditing
QualityControl
AuditReports
LearningObjectives
StandardUnqualifiedAuditReport
CombinedReportsonFinancialStatementsandInternalControlOverFinancialReportingUnderSection404oftheSarbanes-OxleyAct
UnqualifiedAuditReportwithExplanatoryParagraphorModifiedWording
DeparturesfromanUnqualifiedAuditReport
Materiality
DiscussionofConditionsRequiringaDeparture
AuditorsDecisionProcessforAuditReports
ImpactofE-CommerceonAuditReporting
ProfessionalEthics
LearningObjectives
WhatAreEthics?
EthicalDilemmas
SpecialNeedforEthicalConductinProfessions
CodeofProfessionalConduct
Independence
IndependenceRuleofConductandInterpretations
OtherRulesofConduct
Enforcement
LegalLiability
LearningObjectives
ChangedLegalEnvironment
DistinguishingBusinessFailure,AuditFailure,andAuditRisk
LegalConceptsAffectingLiability
LiabilitytoClients
LiabilitytoThirdPartiesUnderCommonLaw
CivilLiabilityUndertheFederalSecuritiesLaws
CriminalLiability
TheProfessionsResponsetoLegalLiability
ProtectingIndividualCPAsfromLegalLiability
PART2TheAuditProcess
AuditResponsibilitiesendObjectives
LearningObjectives
ObjectiveofConductinganAuditofFinancialStatements
ManagementsResponsibilities
AuditorsResponsibilities
FinancialStatementCycles
SettingAuditObjectives
ManagementAssertions
Transaction-RelatedAuditObjectives
Balance-RelatedAuditObjectives
PresentationandDisclosure-RelatedAuditObjectives
HowAuditObjectivesAreMet
AuditEvidence
LearningObjectives
NatureofEvidence
AuditEvidenceDecisions
PersuasivenessofEvidence
TypesofAuditEvidence
AuditDocumentation
AuditPlanningandAnalyticalProcedures
LearningObjectives
Planning
AcceptClientandPerformInitialAuditPlanning
UnderstandtheClientsBusinessandIndustry
AssessClientBusinessRisk
PerformPreliminaryAnalyticalProcedures
SummaryofthePartsofAuditPlanning
AnalyticalProcedures
FiveTypesofAnalyticalProcedures
CommonFinancialRatios
MuterialityandRisk
LearningObjectives
Materiality
SetPreliminaryJudgmentaboutMateriality
AllocatePreliminaryJudgmentaboutMaterialitytoSegments(TolerableMisstatement)
EstimateMisstatementandComparewithPreliminaryJudgment
Risk
TypesofRisks
AssessingAcceptableAuditRisk
AssessingInherentRisk
RelationshipofRiskstoEvidenceandFactorsInfluencingRisks
EvaluatingResults
Section404AuditsofinternalControlandControlRisk
LearningObjectives
InternalControlObjectives
ManagementandAuditorResponsibilitiesforInternalControl
COSOComponentsofInternalControl
ObtainandDocumentUnderstandingofInternalControl
AssessControlRisk
TestsofControls
DecidePlannedDetectionRiskandDesignSubstantiveTests
Section404ReportingonInternalControl
Evaluating,Reporting,andTestingInternalControlforNonpublicCompanies
OverallAuditPlanandAuditProgram
LearningObjectives
TypesofTests
SelectingWhichTypesofTeststoPerform
ImpactofInformationTechnologyonAuditTesting
EvidenceMix
DesignoftheAuditProgram
PART3ApplicationoftheAuditProcesstotheSalesandCollectionCycle
AuditoftheSalesandCollectionCycle:TestsofControlsandSubstantiveTestsofTransactions
LearningObjectives
AccountsandClassesofTransactionsintheSalesandCollectionCycle
BusinessFunctionsintheCycleandRelatedDocumentsandRecords
MethodologyforDesigningTestsofControlsandSubstantiveTestsofTransactionsforSales
SalesReturnsandAllowances
MethodologyforDesigningTestsofControlsandSubstantiveTestsofTransactionsforCashReceipts
AuditTestsfortheWrite-offofUncollectibleAccounts
AdditionalInternalControlsoverAccountBalancesandPresentationandDisclosure,
EffectofResultsofTestsofControlsandSubstantiveTestsofTransactions
AuditSamplingforTestsofControlsandSubstantiveTestsofTransactions
LearningObjectives
RepresentativeSamples
StatisticalVersusNonstatisticalSamplingandProbabilisticVersusNonprobabilisticSampleSelection
NonprobabilisticSampleSelectionMethods
ProbabilisticSampleSelectionMethods
SamplingforExceptionRates
ApplicationofNonstatisticalAuditSampling
StatisticalAuditSampling
SamplingDistribution
ApplicationofAttributesSampling
CompletingtheTestsintheSalesandCollectionCycle:AccountsReceivable
LearningObjectives
MethodologyforDesigningTestsofDetailsofBalances
DesigningTestsofDetailsofBalances
ConfirmationofAccountsReceivable
DevelopingTestsofDetailsAuditProgram
PART4ApplicationoftheAuditProcesstoOtherCycles
AuditofthePayrollandPersonnelCycle
LearningObjectives
AccountsandTransactionsinthePayrollandPersonnelCycle
BusinessFunctionsintheCycleandRelatedDocumentsandRecords
MethodologyforDesigningTestsofControlsandSubstantiveTestsofTransactions
MethodologyforDesigningTestsofDetailsofBalances
AuditoftheAcquisitionandPaymentCycle:TestsofControls,SubstantiveTestsofTransactions,andAccountsPayable
LearningObjectives
AccountsandClassesofTransactionsintheAcquisitionandPaymentCycle
BusinessFunctionsintheCycleandRelatedDocumentsandRecords
HowE-CommerceAffectstheAcquisitionandPaymentCycle
MethodologyforDesigningTestsofControlsandSubstantiveTestsofTransactions
MethodologyforDesigningTestsofDetailsofBalancesforAccountsPayable
AuditoftheInventoryandWarehousingCycle
LearningObjectives
BusinessFunctionsintheCycleandRelatedDocumentsandRecords
HowE-CommerceAffectsInventoryManagement
PartsoftheAuditofInventory
AuditofCostAccounting
AnalyticalProcedures
MethodologyforDesigningTestsofDetailsofBalances
PhysicalObservationofInventory
AuditofPricingandCompilation
IntegrationoftheTests
AuditoftheCapitalAcquisitionandRepaymentCycle
LeamlngObjectives
AccountsintheCycle
NotesPayable
OwnersEquity
AuditofCashBalances
LearningObjectives
CashintheBankandTransactionCycles
TypesofCashAccounts
AuditoftheGeneralCashAccount
Fraud-OrientedProcedures
AuditoftheImprestPayrollBankAccount
AuditofImprestPettyCash
PART5CompletingtheAudit
CompletingtheAudit
LearningObjectives
PerformAdditionalTestsforPresentationandDisclosure
ReviewforContingentLiabilitiesandCommitments
ReviewforSubsequentEvents
FinalEvidenceAccumulation
EvaluateResults
IssuetheAuditReport
CommunicatewiththeAuditCommitteeandManagement
SubsequentDiscoveryofFacts
Appendix:HillsburgHardwareCompany2007AnnualReport