Montgomery's Auditing

Front Cover
This Third College Version offers a rigorous and highly readable introduction to the theory and practice of auditing. Using both the transaction cycle and account balance approaches, it emphasizes the development of judgment by the auditor and provides aids for enhancing decision-making skills. Flexible, current and prepared by a distinguished team of academicians and practicing accountants, it provides students with the ideal mix of theory and practice. A number of changes have been incorporated, including relevant CPA exam questions up to and including the May 1989 exam; the expansion of the Quinn Hardware case through eight chapters covering risk assessment, testing the control structure, auditing the major transaction cycles, completing the audit and drafting the audit report; new developments including the expectation gap standards issued by the AICPA in 1988 and significant new legal cases that affect auditor liability; revisions of chapters 7-9 to conform to the 1988 SASs; and more.

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Contents

THE AUDIT ENVIRONMENT
1
Origins and Early History of Auditing
7
The Expectation GapAn Ongoing Concern 1
17
The Organization and Structure
29
The Organization of the Auditing Profession
38
Auditing Standards and Professional Conduct
52
The AICPA Code of Professional Conduct
59
Incentives for Maintaining Audit Quality
72
Typical Transactions Accounting Systems and Control Procedures
467
Determining the Audit Strategy
479
Additional Tests of Controls
485
Special Considerations for Particular Types
505
Auditing the Buying Cycle
528
Determining the Audit Strategy
540
Additional Tests of Controls
547
Substantive Tests
554

Disciplinary System
81
Auditors Professional Responsibility
102
Auditors Legal Liability
111
THEORY AND CONCEPTS
147
Audit Risk
154
The Steps in an Audit
163
Working Papers
171
Audit Risk Materiality
187
Materiality
194
An Overview of the Control Structure
221
Relevance of Control Objectives to the Achievement of Audit Objectives
241
Assessing Inherent and Control Risk
259
Obtaining an Understanding of the Control Structure Elements
265
Assessing Control Risk
274
Assessing the Accounting System 278 Assessing
281
Documenting the Assessment and Tests
289
Designing and Performing Substantive Tests
326
Audit Programs
343
Audit Sampling
356
Choosing Statistical or Nonstatistical Methods
366
Statistical Substantive Testing
377
Nonstatistical Sampling
394
Documenting Audit Sampling
401
Auditing in an EDP Environment
420
General Control Objectives and Procedures
429
Computer Fraud and Abuse
435
Audit Management
448
Auditing the Production Cycle Cost of Sales
573
Audit Objectives 585 Risk Assessment 586 Audit Testing Plan
589
Substantive Tests
595
Analytical Procedures 607 Management
609
Auditing Cash Balances and Property Plant
623
Property Plant and Equipment
636
Auditing Investments Prepayments and Accruals
657
Prepaid Expenses Estimated and Accrued Liabilities
664
Income Taxes
672
COMPLETING THE WORK
695
Lawyers Letters
701
Client Representations
709
Working Paper Review
723
Review of Financial Statements for Appropriate Disclosure
727
Communication with Audit Committees
734
The Auditors Report
748
Explanatory Language Added to the Standard Report
755
Principal Variations from Standard Reports
781
Responsibilities in Other Engagements
810
Special Reports
816
Information in AuditorSubmitted Documents
822
Opinions on Accounting Principles
826
Compliance Auditing
845
Tables for Determining Sample Size
863
Tables for TwoStage Sequential Sampling Plans
870
Copyright

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