The Executive’s Guide to Financial Management: Improving Risk, Strategy, and Financial Performance

Cover......Page 1
Contents......Page 6
List of Illustrations......Page 13
Foreword......Page 17
Preface......Page 19
Acknowledgements......Page 21
 1.1 Learning Objectives......Page 24
 1.2 Auditing through World History......Page 25
 1.3 The Auditor, Corporations and Financial Information......Page 26
 1.4 International Accounting and Auditing Standards......Page 28
 1.5 An Audit Defined......Page 33
 1.6 Types of Audit......Page 36
 1.7 Types of Auditor......Page 38
 1.8 Setting Audit Objectives Based on Management Assertions......Page 41
 1.9 The Audit Process Model......Page 44
 1.10 International Audit Firms......Page 49
 1.11 Summary......Page 54
 1.12 Questions, Exercises and Cases......Page 57
 1.13 Notes......Page 62
 2.1 Learning Objectives......Page 65
 2.3 Theories on the Demand and Supply of Audit Services......Page 66
 2.4 Audit Regulation: International Perspective......Page 69
 2.5 Independent Oversight......Page 71
 2.6 Audit Firms......Page 73
 2.7 Legal Liability......Page 75
 2.8 Some Developments in the Audit Market......Page 81
 2.9 Examples of Landmark Studies and Legislation that Influenced the International Audit Market......Page 87
 2.10 Summary......Page 89
 2.11 Questions, Exercises and Cases......Page 91
 2.12 Notes......Page 95
 3.1 Learning Objectives......Page 98
 3.2 What Are Ethics?......Page 99
 3.3 The International Ethics Standards Board of Accountants (IESBA) Code of Ethics for Professional Accountants......Page 101
 3.4 Part A – General Application of the IESBA Code of Ethics for Professional Accountants......Page 102
 3.5 Part B – Ethics Applicable to Professional Accountants in Public Practice......Page 109
 3.6 Independence – Audit and Review Engagements (Section 290)......Page 115
 3.7 Part C – Professional Accountants in Business......Page 127
 3.9 Summary......Page 132
 3.10 Questions, Exercises and Cases......Page 136
 3.11 Notes......Page 140
 4.1 Learning Objectives......Page 142
 4.2 International Framework for Auditor Services......Page 143
 4.3 Elements of an Assurance Engagement......Page 146
 4.4 General Considerations in an Assurance Engagement......Page 155
 4.5 Audits of Historical Financial Information......Page 159
 4.6 Professional Judgement, Professional Scepticism and Inherent Limitations......Page 160
 4.7 Quality Control (ISQC #1 and ISA 220)......Page 162
 4.8 Summary......Page 166
 4.9 Questions, Exercises and Cases......Page 169
 4.10 Notes......Page 172
 5.1 Learning Objectives......Page 175
 5.2 Client Acceptance: The First Step on the Journey to an Opinion......Page 176
 5.3 Evaluate the Client\'s Background......Page 177
 5.4 Ability to Meet Ethical and Specific Competence Requirements......Page 181
 5.5 Use of Other Professionals in the Audit......Page 186
 5.6 Communicating With the Predecessor (Existing) Auditor......Page 188
 5.7 Acceptance by the Client – The Engagement Proposal......Page 189
 5.8 The Audit Engagement Letter......Page 193
 5.9 Summary......Page 197
 5.10 Questions, Exercises and Cases......Page 199
 5.11 Notes......Page 202
 6.1 Learning Objectives......Page 204
 6.2 Planning Objective and Procedures......Page 205
 6.3 Understanding the Entity and its Environment......Page 207
 6.4 Audit Risk Model......Page 217
 6.5 Materiality......Page 224
 6.6 Fraud and Irregularities......Page 230
 6.7 Using the Work of Others (including ISA 610, ISA 620) and Considering Auditee Use of Service Organisations (ISA 402)......Page 236
 6.8 Inherent Risk Assessment......Page 240
 6.9 Other Planning Activities......Page 241
 6.10 Summary......Page 245
 6.11 Questions, Exercises and Cases......Page 249
 6.12 Notes......Page 253
 7.1 Learning Objectives......Page 257
 7.3 Internal Control Defined......Page 258
 7.4 The Importance of Internal Control......Page 263
 7.5 IT Risk and Controls......Page 264
 7.6 Components of Internal Control......Page 266
 7.7 Control Environment......Page 267
 7.8 Risk Assessment......Page 276
 7.9 Information Systems, Communication and Related Business Processes......Page 278
 7.10 Control Activities (Control Procedures)......Page 281
 7.11 Monitoring of Controls......Page 287
 7.12 Hard and Soft Control......Page 288
 7.13 Design of Internal Controls......Page 291
 7.14 Preliminary Assessment of Control Risk......Page 293
 7.15 Summary......Page 294
 7.16 Questions, Exercises and Cases......Page 297
 7.17 Notes......Page 302
 8.1 Learning Objectives......Page 305
 8.2 Introduction......Page 306
 8.3 The Analytical Review Process......Page 307
 8.4 Formulating Expectations......Page 312
 8.5 General Analytical Procedures......Page 314
 8.6 Analytical Procedures During Different Phases in the Audit Process......Page 321
 8.7 Analytical Procedures as Substantive Tests......Page 323
 8.8 Computer Assisted Audit Techniques (CAATs) and Generalised Audit Software (GAS)......Page 325
 8.9 Analytical Procedures Using Data Mining Techniques......Page 328
 8.11 Summary......Page 330
 8.12 Questions, Exercises and Cases......Page 333
 8.13 Notes......Page 337
  8.A.1 Preface......Page 338
  8.A.3 Definitions......Page 339
  8.A.4 Sample Design, Size and Selection......Page 342
  8.A.5 Performing Audit Procedures (530.9)......Page 348
  8.A.7 Projecting Misstatements (530.14 and 530.A18)......Page 349
  8.A.8 Evaluating Results of Audit Sampling (530.15 and 530.A21–23)......Page 351
  8.A.9 Questions, Exercises and Cases......Page 352
  8.A.10 Notes......Page 354
 9.1 Learning Objectives......Page 355
 9.2 Introduction......Page 356
 9.3 The Basis of Evidence......Page 358
 9.4 Financial Statement Assertions......Page 359
 9.5 Test of Controls......Page 360
 9.6 Substantive Procedures......Page 363
 9.7 Sufficient Appropriate Audit Evidence......Page 368
 9.8 Summary......Page 375
 9.9 Questions, Exercises and Cases......Page 378
 9.10 Notes......Page 384
 10.1 Learning Objectives......Page 386
 10.3 Audit Procedures for Obtaining Audit Evidence......Page 387
 10.4 External Confirmation......Page 394
 10.5 Sampling......Page 399
 10.6 Audit of Estimates......Page 401
 10.7 Evaluation of Misstatements Identified During the Audit (ISA 450)......Page 403
 10.8 Related Parties......Page 404
 10.9 Written Representations (Letter of Representation)......Page 410
 10.10 Summary......Page 415
 10.11 Questions, Exercises and Cases......Page 418
 10.12 Notes......Page 423
  10.A.1 Introduction......Page 426
  10.A.2 Form and Content of the Working Papers......Page 428
  10.A.3 Document Retention......Page 430
  10.A.4 Permanent and Current Files......Page 431
  10.A.5 Preparation of Working Schedule......Page 436
  10.A.6 Adjusting Entry......Page 437
  10.A.7 Summary......Page 439
  10.A.8 Notes......Page 441
 11.1 Learning Objectives......Page 442
 11.2 Introduction......Page 443
 11.3 Quality Control (ISQC #1, ISA 220, SOX)......Page 445
 11.4 Evaluate Governance Evidence......Page 448
 11.5 Review for Discovery of Subsequent Events......Page 452
 11.6 Review Financial Statements and Other Report Material......Page 455
 11.7 Wrap-up Procedures......Page 458
 11.8 Going Concern Issues......Page 465
 11.9 Matters for Attention of Partners (MAPs)......Page 467
 11.10 Reports to the Board of Directors......Page 468
 11.11 Summary......Page 469
 11.12 Questions, Exercises and Cases......Page 472
 11.13 Notes......Page 478
 12.1 Learning Objectives......Page 481
 12.2 Introduction......Page 482
 12.3 Basic Elements of the Auditor\'s Report......Page 483
 12.4 Types of Report Expressing Audit Opinions......Page 491
 12.5 Emphasis of a Matter Paragraph......Page 500
 12.6 Circumstances That May Result in Other Than an Unmodified Opinion......Page 507
 12.7 Uncertainties Leading to Qualification of Opinions......Page 509
 12.8 Communications with those Charged with Governance......Page 510
 12.9 Long-Form Audit Report......Page 516
 12.11 Summary......Page 518
 12.12 Questions, Exercises and Cases......Page 521
 12.13 Notes......Page 528
 13.1 Learning Objectives......Page 530
 13.3 Acceptance and Continuance......Page 531
 13.4 Overall Audit Strategy and Audit Plan......Page 532
 13.5 Communication......Page 539
 13.6 Consolidation......Page 541
 13.8 Reporting......Page 542
 13.10 Extended Example of a Group Audit......Page 543
 13.11 The Audit Planning Memorandum – Strategy Part......Page 549
 13.12 The Audit Planning Memorandum – Plan Part......Page 554
 13.13 Audit Programme (Audit Plan)......Page 558
 13.14 Completion Memorandum......Page 574
 13.15 Summary......Page 579
 13.16 Questions, Exercises and Cases......Page 582
 13.17 Notes......Page 592
 14.1 Learning Objectives......Page 594
 14.3 Special Areas Engagements......Page 595
 14.4 Review Engagements......Page 601
 14.5 Assurance Engagements Other Than Audits or Reviews of Historical Financial Information (ISAE 3000–3699)......Page 604
 14.6 Related Services......Page 619
 14.7 Summary......Page 623
 14.8 Questions, Exercises and Cases......Page 627
 14.9 Notes......Page 630
 15.1 Learning Objectives......Page 634
 15.2 Introduction......Page 635
 15.3 The Nature of Corporate Governance......Page 637
 15.4 Corporate Governance Structures......Page 644
 15.5 Corporate Governance Committees and Reports......Page 645
 15.6 Best Practice from a Global Perspective......Page 648
 15.7 Corporate Governance and the Role of the Auditor......Page 664
 15.8 The Audit Profession and Corporate Governance......Page 668
 15.9 Summary......Page 671
 15.10 Questions, Exercises and Cases......Page 674
 15.11 Notes......Page 676
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