1、Learning Objective 1 Explain the objective of conducting an audit of financial statements and an audit of internal controls.第1頁(yè)/共42頁(yè)Objective of Conducting an Audit of Financial StatementsThe objective of the ordinary audit of financialstatements is the expression of an opinion ofthe fairness with w

2、hich they present fairly, inall respects, financial position, result ofoperations, and its cash flows inconformity with GAAP.第2頁(yè)/共42頁(yè)Steps to Develop Audit Objectives1.Understand objectives andresponsibilities for the audit.2.Divide financial statements into cycles.3.Know managementassertions abouta

3、ccounts.第3頁(yè)/共42頁(yè)Steps to Develop Audit Objectives4.Know general audit objectives forclasses of transactions and accounts.5.Know specific audit objectives forclasses of transactions and accounts.第4頁(yè)/共42頁(yè)Learning Objective 2 Distinguish managements responsibility for the financial statements and inter

4、nal control from the auditors responsibility for verifying the financial statements and effectiveness of internal control.第5頁(yè)/共42頁(yè) Managements ResponsibilitiesManagement is responsible for the financialstatements and for internal control.The Sarbanes-Oxley Act increases managementsresponsibility for

5、 the financial statements.It requires the CEO and the CFO of publiccompanies to certify the quarterly and annualfinancial statements submitted to the SEC.第6頁(yè)/共42頁(yè) Managements ResponsibilitiesThe Sarbanes-Oxley Act provides for criminalpenalties for anyone who knowingly falselycertifies the statement

6、s.第7頁(yè)/共42頁(yè)Learning Objective 3 Explain the auditors responsibility for discovering material misstatements.第8頁(yè)/共42頁(yè)Auditors ResponsibilitiesMaterial versus immaterial misstatements Reasonable assurance Errors versus fraud Professional skepticism Fraud resulting from fraudulent financialreporting vers

7、us misappropriation of assets第9頁(yè)/共42頁(yè)Auditors Responsibilities for Discovering Illegal Acts Direct-effect illegal acts Indirect-effect illegal acts Evidence accumulation when there is no reasonto believe indirect-effect illegal act exists第10頁(yè)/共42頁(yè)Auditors Responsibilities for Discovering Illegal Act

8、s Evidence accumulation and other actionswhen there is reason to believe direct- orindirect-effect illegal acts may exist Actions when the auditor knows of an illegal act第11頁(yè)/共42頁(yè)Learning Objective 4 Classify transactions and account balances into financial statement cycles and identify benefits of

9、a cycle approach to segmenting the audit.第12頁(yè)/共42頁(yè)Financial Statements CyclesAudits are performed by dividing the financialstatements into smaller segments or components.第13頁(yè)/共42頁(yè)Transaction Flow ExampleLedgers,Trial Balance,and FinancialStatementsGeneral ledgerand subsidiaryrecordsGeneral ledgertri

10、al balanceFinancialstatementsAcquisitionof goodsand servicesSalesCashreceiptsTransactionsCash receiptsjournalSalesjournalAcquisitionsjournalJournals第14頁(yè)/共42頁(yè)Transaction Flow ExampleAllocationandadjustmentsCashdisbursementsPayrollservices anddisbursementsLedgers,Trial Balance,and FinancialStatementsG

11、eneral ledgerand subsidiaryrecordsGeneral ledgertrial balanceFinancialstatementsTransactionsPayrolljournalCashdisbursementsjournalGeneraljournalJournals第15頁(yè)/共42頁(yè)Relationships Among Transaction CyclesGeneralcashCapital acquisitionand repayment cycleSales andcollectioncycleAcquisitionand paymentcycleP

12、ayroll andpersonnelcycleInventory andwarehousingcycle第16頁(yè)/共42頁(yè)Learning Objective 5 Describe why the auditor obtains a combination of assurance by auditing classes of transactions and ending balances in accounts, including presentation and disclosure.第17頁(yè)/共42頁(yè)Balance and Transactions Affecting Balanc

13、es ExampleBeginning balanceSales$ 17,521$144,328$137,087Cash receipts$ 1,242Sales returnsand allowancesCharge-off ofuncollectibleaccountsEnding balance$ 20,197$ 3,323Accounts Receivable (in thousands)第18頁(yè)/共42頁(yè)Learning Objective 6 Distinguish among the three categories of management assertions about

14、financial information.第19頁(yè)/共42頁(yè)Management Assertions1. Assertions about classes of transactions andevents for the period under audit2. Assertions about account balances a period end3. Assertions about presentation and disclosure第20頁(yè)/共42頁(yè)Management Assertions forEach Category of AssertionsOccurrenceE

15、xistenceOccurrence and rightsand obligationsCompletenessCompletenessCompletenessAccuracyValuation andallocationAccuracy andvaluationClassificationClassification andunderstandabilityCutoffRights andobligations第21頁(yè)/共42頁(yè)Learning Objective 7 Link the six general transaction- related audit objectives to

16、management assertions for classes of transaction.第22頁(yè)/共42頁(yè)OccurrenceRecorded transactionsexistCompletenessExisting transactionsare recordedAccuracyRecorded transactionsare stated at thecorrect amountsGeneral Transactions-related Audit Objectives第23頁(yè)/共42頁(yè)ClassificationTransactions are properlyclassif

17、ied.TimingTransactions are recordedon the correct dates.Posting andsummarizationTransactions are includedin the master files andare correctly summarized.General Transactions-related Audit Objectives第24頁(yè)/共42頁(yè)Management Assertions andTransaction-related Audit ObjectivesOccurrenceOccurrenceRecorded sal

18、es are forshipments made tononfictitious customersCompletenessCompletenessExisting salestransactions are recordedAccuracyAccuracyRecorded sales are forthe amount of goodsshipped and are correctlybilled and recorded第25頁(yè)/共42頁(yè)Management Assertions andTransaction-related Audit ObjectivesAccuracyPosting

19、andsummarizationSales transactions areproperly included in themaster file and arecorrectly summarizedClassificationClassificationSales transactions areproperly classifiedCutoffTimingSales transactions arerecorded on the correctdates.第26頁(yè)/共42頁(yè)Learning Objective 8 Link the eight general balance- relat

20、ed audit objectives to management assertions for account balances.第27頁(yè)/共42頁(yè)ExistenceAmounts included existCompletenessExisting amounts areincludedAccuracyAmounts included arestated at the correctamountsGeneral Balance-relatedAudit Objectives第28頁(yè)/共42頁(yè)ClassificationAmounts are properlyclassifiedCutoff

21、Transactions are recordedin the proper periodDetail tie-inAccount balances agreewith master file amounts,and with the general ledgerGeneral Balance-relatedAudit Objectives第29頁(yè)/共42頁(yè)RealizablevalueAssets are included atestimated realizable valueRights andobligationsAssets must be ownedGeneral Balance-

22、relatedAudit Objectives第30頁(yè)/共42頁(yè)Management Assertions andTransaction-related Audit ObjectivesExistenceExistenceAll recorded inventory existsat the balance sheet dateCompletenessCompletenessAll existing inventory hasbeen counted and includedin the inventory summary第31頁(yè)/共42頁(yè)Management Assertions andTr

23、ansaction-related Audit ObjectivesValuation andallocationAccuracyInventory quantities on the clients perpetual records agree with items physically on handPrices used to value inventories are materially correctExtensions of price times quantity are correct and details are correctly added第32頁(yè)/共42頁(yè)Mana

24、gement Assertions andTransaction-related Audit ObjectivesValuation andallocationClassificationCutoffInventory items are properly classified as to raw materials, work in process, and finished goodsPurchase cutoff at year end is properSales cutoff at year end is proper第33頁(yè)/共42頁(yè)Management Assertions an

25、dTransaction-related Audit ObjectivesValuation andallocationDetail tie-inRealizablevalueTotal of inventory items agrees with general ledgerInventories have been written down where net realizable value is impaired Rights and obligations Rights andobligationsThe company has title to all inventory item

26、s listedInventories are not pledged as collateral第34頁(yè)/共42頁(yè)Learning Objective 9 Link the four presentation and disclosure-related audit objectives to management assertions for presentation and disclosure.第35頁(yè)/共42頁(yè)Management Assertions and Presentation and Disclosure-related Audit ObjectivesOccurrence

27、and rights andobligationsOccurrenceand rights andobligationsNotes payable as described in thefootnotes exist and areobligations of the companyCompletenessCompletenessAll required disclosures relatedto notes payable are included inthe financial statement footnotes第36頁(yè)/共42頁(yè)Management Assertions and Presentation and Disclosure-related Audit ObjectivesValuation andallocationValuation andallocationFootnote