About the Authors ix About the Auditing and Attestation Professors xi Welcome to Auditing and Attestation xii Ethics, Professional Responsibilities, and General Principles 1 AICPA Code of Professional Conduct 2 Introduction and Preface 2 Members in Public Practice 5 MIPPs Introduction and Conceptual Framework 5 MIPPs Nonindependence Rules 7 Conflicts of Interest, Directorships, and Gifts 7 Reporting Information and Subordination of Judgment 9 Advocacy, Third-Party Service Providers (TSPs), General Standards, and Accounting Principles 11 Discreditable Acts 13 Fees 15 Advertising and Confidentiality 17 Form of Organization and Names 19 MIPPs Independence Rules 21 Introduction to MIPPs Independence Rules 21 Network Firms and Affiliates 23 Reissues, Engagement Letters, ADR, and Unpaid Fees 25 Financial Interests 26 Overview and Unsolicited Financial Interests 26 Mutual Funds and Retirement Plans 28 Partnerships, 529s, Trust and Estates, Employee Benefit Plans 30 Depository Accounts, Brokerage Accounts, and Insurance Policies 32 Loans, Leases, and Business Relationships 33 Family Relationships 35 Employment Relationships 37 Current Employment 37 Subsequent Employment 39 Other Associations and Relationships 41 Nonaudit Services 43 Code Provisions 43 Specific Services 46 Members in Business 53 Other Members 56 Requirements of SEC and PCAOB 57 Securities and Exchange Commission (SEC) 57 Public Company Accounting Oversight Board (PCAOB) 64 Requirements of GAO and DOL 67 Government Accountability Office (GAO) 67 Department of Labor (DOL) 75 Assessing Risk and Developing a Planned Response 77 Financial Statement Audits 78 Accounting vs. Auditing 78 GAAS and Principles 80 Professional Standards 82 Quality Control Standards (SQCS) 84 Overview of Audit Process 86 Different Types of Engagements 87 PCAOB Responsibilities 89 PCAOB on Engagement Quality Review 91 Planning Activities 93 Pre-Engagement Planning Issues 93 Planning and Supervision 98 Materiality 100 Audit Risk 102 Analytical Procedures 105 Audit Data Analytics 107 Detecting Fraud 111 Fraud: Evaluation and Communication 116 Detecting Illegal Acts 118 Using the Work of a "Specialist" 120 Required Communications with Those Charged with Governance 124 PCAOB on Communications with Audit Committees 127 Internal Control -- Concepts and Standards 130 Obtaining an Understanding of Internal Control 130 Evaluating Internal Control 132 Assessing Control Risk Under AICPA Standards 135 Performing Procedures in Response to Assessed Risks 139 Required Communications 142 Using the Work of an Internal Audit Function 145 Performing Further Procedures and Obtaining Evidence 149 Internal Control: Transaction Cycles 150 Specific Transaction Cycles 150 Revenue/Receipts--Sales 152 Revenue/Receipts--Cash 154 Expenditures/Disbursements 156 Payroll Cycle 159 Miscellaneous Cycles 161 Audit Evidence: Concepts and Standards 163 Overview of Substantive Procedures 163 The Nature of Audit Evidence 167 Assertions and Types of Audit Procedures 171 PCAOB Risk Assessment Audit Standards 174 Evaluation of Misstatements Identified During the Audit 178 Audit Documentation 180 PCAOB on Audit Documentation 184 Confirmation 186 Accounting Estimates 188 Fair Value Estimates 192 Lawyer''s Letters 195 Management Representations Letters 198 Related-Party Issues 201 PCAOB on Related Parties 205 Subsequent Events and Related Issues 208 Going Concern Issues 212 Audit Evidence: Specific Audit Areas 216 Introduction to Auditing Individual Areas 216 Cash 218 Accounts Receivable 221 Inventory 223 Investments in Securities and Derivative Instruments 226 Fixed Assets 233 Current Liabilities 235 Long-Term Liabilities 237 Stockholders'' Equity 238 Payroll 239 Audit Sampling 241 Introduction to Sampling 241 Attributes Sampling 243 Variables Sampling 245 Probability-Proportional-to-Size (PPS) Sampling 249 IT (Computer) Auditing 251 IT General & Application Controls 251 Other IT Considerations 255 Forming Conclusions and Reporting 259 Audit Reports 260 Introduction to Audit Reports 260 Reporting Key Audit Matters 267 PCAOB on Audit Reports 270 Audits of Group Financial Statements 274 Emphasis-of-Matter Paragraphs and Other-Matter Paragraphs 278 Qualified for Scope Limitation 282 Qualified for Misstatement 285 Adverse Opinion 288 Disclaimer of Opinion 291 Consistency of Financial Statements 294 PCAOB on Evaluating Consistency of Financial Statements 296 Opening Balances--Initial Audits 298 Responsibilities for Other Information in Annual Reports 302 Supplementary Information Related to Financial Statements 305 Required Supplementary Information 307 PCAOB on Auditing Supplemental Information 309 Alert to Restrict Report 312 Financial Statements Using Another Country''s Framework 314 Reporting on Summary Financial Statements 317 Interim Financial Information 320 Other Types of Reports 326 Reports on Application of Requirements of Framework 326 F/S with Special Purpose Frameworks 329 Audits of Single F/S and Specific Elements, Accounts, or Items 333 Reporting on Compliance with Requirements in an F/S Audit 337 Service Organizations--User Auditors 341 Service Organizations--Service Auditors 343 Comfort Letters 346 Government Auditing Standards 351 Compliance Audits 354 SSARSs--General Principles 358 SSARSs--Preparation of Financial Statements 361 SSARSs--Compilation Engagements 364 SSARSs--Review Engagements 368 SSARSs--Other Topics 375 Other Professional Services 380 AICPA on Reporting on Internal Control in an Integrated Audit 380 PCAOB on Reporting on Internal Control in an Integrated Audit 390 PCAOB on Reporting Whether a Previously Reported Material Weakness Continues to Exist 396 Auditing Employee Benefit Plans 400 Introduction to Attestation Standards 407 Attestation Standards--Common Concepts 410 Examination Engagements 414 Examination Reports 418 Review Engagements 422 Review Reports 426 Agreed-Upon Procedures Engagements 430 Prospective Financial Information 435 Pro Forma Financial Information 442 Compliance Attestation 447 Management''s Discussion and Analysis (MD&A) 452 Assurance Services 456 Index 459.