Copyright © 2016. Pearson Education Australia. All rights reserved.

Arens, A., Best, P., Shailer, G., Fiedler, B., Elder, R., & Beasley, M. (2016). Auditing, assurance services and ethics in australia. Pearson Education Australia.
Created from curtin on 2022-08-04 03:24:22.
 CONTENTS IN FULL vii

Summary 165 CHAPTER 8 Internal control and

Questions and problems 166 control risk 264
Online issue 177
Client and auditor concerns 265
Appendix: Common financial ratios 178
Effect of information technology on internal
control 268
PART 2 THE AUDIT PROCESS: Components of internal control 269
DECISIONS AND Procedures to obtain an understanding of
PLANNING 181 internal control 279
Assessing control risk 284
CHAPTER 6 Audit planning and
Tests of controls 290
documentation 183
Summary 292
Planning 185
Questions and problems 294
Accepting audit engagement and performing
Online issue 303
initial audit planning 186
Case study: Integrated case application—
Understanding the client’s business and industry 191
Pinnacle Manufacturing: Part III 303
Assessing client business risk 196
Performing preliminary analytical procedures 197 CHAPTER 9 Fraud auditing 306
Purposes of audit documentation 199
Types of fraud 307
Content and organisation of audit files 200
Conditions for fraud 309
Effect of technology on audit evidence and audit
Assessing the risk of fraud 312
documentation 206
Corporate governance oversight to reduce fraud
Summary 208
risks 316
Questions and problems 209
Responding to the risk of fraud 321
Online issue 217
Specific fraud risk areas 323
Case study: Integrated case application—
Responsibilities when fraud is suspected 329
Pinnacle Manufacturing: Part I 217
Summary 331
CHAPTER 7 Materiality and risk 221 Questions and problems 332
Materiality 223 Online issue 338
Materiality for financial statements as a whole 224
CHAPTER 10 The impact of information
Determine performance materiality 227
technology on the audit
Estimate misstatement and compare with
process 339
Copyright © 2016. Pearson Education Australia. All rights reserved.

preliminary judgment 230

Audit risk 232 How information technologies enhance internal
Audit risk model for planning 232 control 341
Assessing acceptable audit risk 236 Assessing the risks of information technology 341
Assessing inherent risk 239 Internal controls specific to IT 343
Relationship of risks to evidence and factors Impact of IT on the audit process 349
influencing risks 242 Auditing with use of the computer 352
Relationship of risk and materiality to Using a microcomputer as an audit tool 362
audit evidence 246 Issues for different IT environments 365

Summary 247 Summary 370

Questions and problems 248 Questions and problems 370
Online issue 262 Online issue 382
Case study: Integrated case application— Appendix: Other computer-assisted audit
Pinnacle Manufacturing: Part II 262 techniques 382

Copyright © Pearson Australia (a division of Pearson Australia Group Pty Ltd) 2017—9781488609138—Arens/Auditing, Assurance Services & Ethics 10e

Arens, A., Best, P., Shailer, G., Fiedler, B., Elder, R., & Beasley, M. (2016). Auditing, assurance services and ethics in australia. Pearson Education Australia.
Created from curtin on 2022-08-04 03:24:22.
 viii CONTENTS IN FULL

CHAPTER 11 Overall audit plan and audit Confirmation of accounts receivable 472
program 384 Developing the ‘tests of details’ audit program 478
Types of tests 386 Summary 481
Selecting which types of tests to perform 391 Questions and problems 481
Impact of information technology on audit testing 395 Online issue 492
Evidence mix 395
Design of the audit program 396 CHAPTER 14 Audit sampling 493
Relationship of transaction-related audit The role of audit sampling 494
objectives with balance-related and Representative samples 495
presentation and disclosure-related audit Statistical vs non-statistical sampling and
objectives 404 probabilistic vs non-probabilistic sample
Summary of the audit process 406 selection 496
Summary 409 Application of statistical and non-statistical
Questions and problems 410 sampling 497
Online issue 421 Non-probabilistic sample selection methods 498
Probabilistic sample selection methods 499
CHAPTER 12 Audit of the sales and Sampling for deviation rates and
collection cycle: Tests of misstatements 500
controls and substantive Application of non-statistical audit sampling 501
tests of transactions 422 Application of non-statistical audit sampling
Accounts and classes of transactions in the sales for tests of controls and substantive tests
and collection cycle 423 of transactions 502
Business functions in the cycle and related Non-statistical sampling for tests of details
documents and records 424 of balances 513
Methodology for designing tests of controls and Statistical audit sampling 519
substantive tests of transactions for sales 429 Application of attributes sampling 520
Sales returns and allowances 439 Monetary unit sampling 524
Methodology for designing tests of controls and Variables sampling 533
substantive tests of transactions for
Summary 534
cash receipts 439
Questions and problems 535
Audit tests for the write-off of uncollectable
Online issue 548
accounts 443
Case study: Integrated case application—
Copyright © 2016. Pearson Education Australia. All rights reserved.

Summary 445 Pinnacle Manufacturing: Part IV 548

Questions and problems 446
Online issue 456 CHAPTER 15 Audit of transaction cycles
and financial statement
PART 3 THE AUDIT PROCESS: balances I 551
APPLICATION 457 Accounts and classes of transactions in the
acquisition and payment cycle 552
CHAPTER 13 Completing the tests in the Business functions in the cycle and related
sales and collection cycle: documents and records 553
Accounts receivable 459 Methodology for designing tests of controls and
Methodology for designing tests of details substantive tests of transactions 556
of balances 460 Methodology for designing tests of details of
Designing tests of details of balances 466 balances for accounts payable 562

Copyright © Pearson Australia (a division of Pearson Australia Group Pty Ltd) 2017—9781488609138—Arens/Auditing, Assurance Services & Ethics 10e

Arens, A., Best, P., Shailer, G., Fiedler, B., Elder, R., & Beasley, M. (2016). Auditing, assurance services and ethics in australia. Pearson Education Australia.
Created from curtin on 2022-08-04 03:24:22.
 CONTENTS IN FULL ix

Design and perform analytical procedures Internal controls 653

(phase III) 564 Analytical procedures 654
Design and perform tests of details of the Tests of details of balances 654
accounts payable balance (phase III) 564 Internal controls 656
Reliability of evidence 568 Audit of issued and paid-up capital 657
Business functions in the cycle and related
Summary 660
documents and records 571
Questions and problems 660
Parts of the audit of inventory 573
Online issues 672
Audit of cost accounting 575
Analytical procedures 578
Physical observation of inventory 579 PART 4 THE AUDIT PROCESS:
Auditing of pricing and compilation 583
COMPLETING THE
Integration of the tests 586
Accounts and transactions in the payroll and
AUDIT 673
personnel cycle 589 CHAPTER 17 Completing the audit 675
Business functions in the cycle and related
Perform additional tests for presentation
documents and records 590
and disclosure 677
Methodology for designing tests of controls and
Review for contingent liabilities and
substantive tests of transactions 592
commitments 678
Methodology for designing tests of details
Make inquiries regarding litigation and claims 681
of balances 597
Review for subsequent events 683
Perform analytical procedures (phase III) 598
Final evidence accumulation 686
Design and perform tests of details of balances
Evaluate results 688
for liability and expense accounts (phase III) 599
Communicate with the audit committee
Summary 601 and management 694
Questions and problems 602 Subsequent discovery of facts 696
Online issues 619
Summary 697
Case study: Integrated case application—
Questions and problems 697
Pinnacle Manufacturing: Part V 620
Online issue 705
Case study: Integrated case application—
Pinnacle Manufacturing: Part VI 621
CHAPTER 18 Audit reporting 706
Copyright © 2016. Pearson Education Australia. All rights reserved.

CHAPTER 16 Audit of transaction cycles The audit report 708

and financial statement Standard unmodified audit report 708
balances II 626 Audit reporting requirements of
listed companies 712
Types of cash accounts 628
Conditions requiring a departure 719
Cash balances and transaction cycles 629
Audit reports other than unmodified 719
Audit of the general cash account 631
Materiality 720
Fraud-oriented procedures 639
Examples of reports 723
Audit of property, plant and equipment
, 643
Other reporting issues 725
Audit of manufacturing equipment and related
Impact of e-commerce on audit reporting 727
accounts 644
Audit of prepaid expenses 650 Summary 727
Audit of accrued liabilities 650 Questions and problems 728
Capital acquisition and repayment cycle 652 Online issue 736

Copyright © Pearson Australia (a division of Pearson Australia Group Pty Ltd) 2017—9781488609138—Arens/Auditing, Assurance Services & Ethics 10e

Arens, A., Best, P., Shailer, G., Fiedler, B., Elder, R., & Beasley, M. (2016). Auditing, assurance services and ethics in australia. Pearson Education Australia.
Created from curtin on 2022-08-04 03:24:22.
 x CONTENTS IN FULL

PART 5 SPECIAL TOPICS 737 Phases in performance auditing 763

The role of internal auditors 765
CHAPTER 19 Other auditing and assurance Relationship between internal and
engagements 739 external auditors 767
Assurance engagements 742 Public sector audits in Australia 768
Audit reports on special purpose Auditing of Australian Commonwealth
financial reports 744 Government agencies 769
Assurance services pertaining to specific financial Auditing standards 772
information 744 Features peculiar to the public sector 773
Assurance reports on internal controls 745 Australia’s Clean Energy Scheme 774
Review engagements 752 Assurance issues 777
Audits of prospective financial information 754 External auditor expertise and qualifications 779
Differences between performance auditing and Guidelines and standards for conducting
financial auditing 757 external assurance engagements and
Effectiveness versus efficiency 758 preparing reports 780
Relationship between performance auditing Questions and problems 782
and internal controls 759 Online issue 792
Types of performance audits 759
Who undertakes performance audits? 760 Index 793
Independence and competence of performance Rouge Clothing Company Ltd case study
auditors 761
Criteria for evaluating efficiency and
effectiveness 762
Copyright © 2016. Pearson Education Australia. All rights reserved.

Copyright © Pearson Australia (a division of Pearson Australia Group Pty Ltd) 2017—9781488609138—Arens/Auditing, Assurance Services & Ethics 10e

Arens, A., Best, P., Shailer, G., Fiedler, B., Elder, R., & Beasley, M. (2016). Auditing, assurance services and ethics in australia. Pearson Education Australia.
Created from curtin on 2022-08-04 03:24:22.