Chapter18 Audit of the Payroll and Personnel Cycle(审计学-英文版)
审计英语采购与付款循环的审计
审计英语采购与付款循环的审计一、考情分析本部分需要掌握的英语知识点包括:本循环内部控制目标、内部控制与审计测试的关系；未入账应付账款的审计；固定资产的实质性程序。
二、专业词汇检查：Inspect询问：Inquiry期初余额：Opening balances后任CPA: Successor CPA资产负债表：Statement of financial position工作底稿：Working papers期末余额：Closing balance连续审计：Continuous auditing实质性程序：Substantive procedures监盘：Supervision of inventory count截止：Cut off完整性：Completeness付款凭证：Payment vouchers资产负债表日：Balance sheet date采购部门：Procurement department在途物资：Goods in transit支付折扣：Payment discount没有记录的债务：Unrecorded liability正确性：Accuracy应付账款：Account payable购货发票：Seller invoice顺查法：Trace逆查法：Vouch验收报告：Receiving report购货订单：Purchase order采购：Procurement请购：Requisition注销：Write off存在性：Existence内部控制：Internal controls三、重点、难点讲解I.采购内部控制目标、内部控制与审计测试的关系1.内部控制目标：所记录的采购都确已收到商品或已接受劳务（存在）Ⅰ.Relationship among Internal Control Objectives, Internal Controls and Audit Tests in Procurement Cycle1.Internal control objectivesFor recorded procurements, all goods have been received or all services have been accepted（Existence）（1）关键内部控制：请购单、订购单、验收单和卖方发票一应俱全，并附在付款凭单后。
中级会计学英文课件 (18)
Revenue Recognition at Point of Sale (Delivery)
Sales with Buyback Agreements
When a repurchase agreement exists at a set price and this price covers all cost of the inventory plus related holding costs, the inventory and related liability remain on the seller’s books.* In other words, no sale.
2. The buyer has paid the seller, or the buyer is obligated
3. The buyer’s obligation to the seller would not be
changed in the event of theft or physical destruction or damage of the product.
Revenue Recognition at Point of Sale (Delivery)
Departures from the Sale Basis
FASB’s Concepts Statement No. 5, companies usually meet the two conditions for recognizing revenue by the time they deliver products or render services to customers. Implementation problems,
Chapter01 The Demand for Audit and Other Assurance Services(审计学-英文版)
1-9
Distinguish Between Auditing and Accounting
Accounting is the recording, classifying, and summarizing of economic events for the purpose of providing financial information used in decision making.
Auditing should be done by a competent, independent person.
©2006 Prentice Hall Business Publishing, Auditing 11/e, Arens/Beasley/Elder
1-3
Information and Established Criteria
1 - 16
Capital Costs to Shrink: Elliott’s Example
Elliott believes the following factors will drastically reduce information risk: Advanced technology
New accounting and auditing standards
1 - 11
Economic Demand for Auditing
Information risk reflects the possibility that the information upon which the business risk decision was made was inaccurate.
审计英语——精选推荐
审计英语审计英语教学⼤纲Chapter 1 An Introduction to AuditingChapter 2 Auditing StandardsChapter 3 Professional Ethics and Legal LiabilityChapter 4 Audit Objectives and Audit ProcessChapter 5 Audit ReportChapter 6 Audit Evidence and Working PapersChapter 7 Audit Planning and MaterialityChapter 8 Understanding the Entity and its Environment and Assessing the Risks of Material MisstatementChapter 9 Auditor’s Procedures in Response to Assessed Risks Chapter 10 Audit SamplingChapter 11 Audit of the Sales and Collection CycleChapter 12 Audit of the Acquisition and Payment CycleChapter 13 Audit of the Manufacturing CycleChapter 14 Audit of the Capital Acquisition and Payment Cycle Chapter 15 Audit of the Cash BalancesChapter 16 Completing the AuditChapter 1 An Introduction to Auditing1.1 Definition of auditing1.2 Auditing, attestation and assurance1.3 The three parties involved in auditing1.4 The classification of audit1.5 Types of auditors1.6 Distinction between auditing and accountingLearning ObjectivesAfter studying this chapter, you should be able to1. Understand the definition of auditing.2. Understand the relationship among auditing, attestation andassurance.3. Comprehend the differences between auditing and review.4. Learn the three parties involved in auditing.5. Learn the classification of audit.6. Learn the types of auditors.7. Comprehend the distinction between auditing and accounting.Dependable information is essential to the very existence of our society. The investor making a decision to buy or sellsecurities, the bankerdeciding whether to approve a loan, the government in obtainingrevenue based on income tax returns, all are relying upon informationprovided by others. In many of these situations, the goals of theproviders of information run directly counter to those of the users of theinformation. Implicit in this line of reasoning is recognition of the socialneed for independent public accountants-individuals of professionalcompetence and integrity who can tell us whether the information thatwe use constitutes a fair picture of what is really going on.1.1 Definition of auditingGlossaryauditing 审计assertion 认定GAAP(general accepted accounting principles) 公认会计准则review审阅reasonable assurance 合理保证limited assurance 有限保证misstatement 错报positive assurance 积极鉴证negative assurance 消极鉴证There are different definitions about auditing from the history development of auditing. Some people defined the auditing is theappraisal process, some defined that the auditing is the evaluationprocess, and others defined that the auditing is the economic controlprocess. The most accepted definition for auditing should be stated asfollows:“Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions andevents to ascertain the degree of correspondence between thoseassertions and established criteria and communicating the results tointerested users.”From this definition, several important words are needed to pay attention to. First, auditing is a systematic process. It is not the appraisalprocess, evaluation process, or economic control process. Second, whenthe auditor collects the evidence, they need to keep objectivity. Third,the collected evidence should be compared with the assertions.Assertions are the implication or representation by management. Forth,the auditor’s report is about the degree of correspondence betw eenassertions and established criteria. The results of auditing will beavailable to all the interested users. Fifth, the established criteria usuallyrefer to GAAP(general accepted accounting principles).There is another definition-review, which is similar to audit, but there are many differences between them. The audit offers reasonableassurance about verified information, whereas the review offers limitedassurance about verified information. What does reasonable assurancemean It means that the audit cannot find all the misstatements becauseof his or her knowledge and scope limitation. However, the auditors trytheir best to collect sufficient evidence to prove their opinions. Thelimited assurance means that the auditors just use limited procedures tocollect evidence, which just includes inquiry and analytical procedures.They don’t try their best to collect evidence so that they only can offerthe limited assurance. That’s why we call audit is a positive assurance,and the review is a negative assurance.1.2 Auditing, attestation and assuranceGlossaryin all material respects 在所有重⼤⽅⾯credibility 可信性，可信程度attestation 鉴证assurance 保证或可信性保证agreed-upon procedures 执⾏商定程序high levels of assurance ⾼保证⽔平moderate levels of assurance 中等保证⽔平reliability 可靠性，可靠程度relevance 相关，相关性assurance standards 鉴证准则The phrases used to express the CPA’s opinion are “give a true and fair view” or “present fairly, in all material respects,”which are equivalent terms. Although the CPA’s opinion enhances the credibility of the financial statements, the user cannot assume that the opinion is an assurance as to the future viability of the entity nor the efficiency or effectiveness with which management has conducted the affairs of the entity.A financial statement audit is, by far, the most common type of assurance engagements. Many times, the term "attestation" is used to describe the same activities as auditing. However, CPAs attest to the reliability of a wide range of other types of information, including financial forecasts, internal control, compliance with laws and regulations.There is a broad range of assurance engagements, which includes engagements of the following:1. Engagements to report on a broad range of subject matters covering financial and non-financial information.2. Engagements intended to provide high or moderate levels of assurance.3. Attest and direct reporting engagements.4. Engagements to report internally and externally.5. Engagements in the private and public sector.Not all engagements performed by CPAs are assurance engagements. Other engagements frequently performed by CPAs that are not assurance engagements include the following.1. Agreed-upon procedures.2. Compilation of financial or other information.3. Preparation of tax returns where no conclusion is expressed, and tax consulting.4. Management consulting.5. Other advisory services.In China, the assurance standards are issued in 2006 and implemented on January 1, 2007. The “assurance” in China means assurance service and attestation service.Assurance engagement 鉴证业务Audit 审计Review Engagement审阅业务Review of internal control内部控制审核The Examination of Prospective Financial Information预测性财务信息审核Related services 相关服务Management Consulting管理咨询Agreed-upon Procedures商定程序Compilation代编Taxation services税务服务Accounting services会计服务1.3 The three parties involved in auditingGlossaryauditor 审计机构、审计⼈员CPA firms 会计师事务所accountability 受托经济责任financial statement 财务报表independence 独⽴性We know that there are three parties involved in auditing, and they are auditors, owners and managers. The auditors are the first party in thisrelationship and they usually refer to CPA firms. The owners are thethird party in this relationship. The owners entrust the auditors to do theauditing. The relationship between the owners and managers is calledaccountability, which is the responsibility or obligation of managers tooperate and manage the economic resources entrusted by the owners.The managers must report the situation of application of economicresources to the owners and the owners will assess the performance ofmanagers through the information. From the point of managers’ view,there is a conflict between the position of entrustee and thecompensation related to performance. So they will offer different information to satisfy the owners. The owners have no direct information from the company, therefore, they invite the auditor to assess the information offered by the management.This is why the auditing appeared. The owners entrust the auditors to audit the managers, and the auditors report the results to the owners. When the auditors audit the managers, the managers should feedback the information the auditors want.However, this three-party relationship is changing in the real life. The managers instead of the owners entrust the auditors to do auditing. Because government requires many companies to offer the audited financial statement, the managers have to ask the auditors to audit the financial statements.So the managers control the auditors because the managers become the entrustor and they decide the employment and salaries of auditors. This kind of relationship impairs the independence of auditors.1.4 The classification of auditGlossaryCPA firms auditing 注册会计师审计government auditing 国家审计internal control auditing or internal auditing 内部审计proprietorship独资general partnership 普通合伙制Limited Liability Company (LLC) 有限责任制Limited Liability Partnership (LLP) 有限责任合伙制CPA(Certified Public Accountant) 注册会计师Big Four 四⼤（国际性会计师事务所）Glossaryfinancial statement audit 财务报表审计compliance audit 合规性审计operational audit 经营审计fixed time audit 定期审计flexible time audit 不定期审计auditing at the client’s company 就地审计auditing at CPA firms 报送审计Micro-audit 微观审计Macro-audit 宏观审计Glossarydomestic audit 国内审计overseas audit 海外审计international audit 国际审计Accounting number-based audit approach 账项基础审计System-based audit approach 制度基础审计Risk-oriented audit approach 风险导向审计There are many ways to classify the audit. First, according to the different auditors, there are three main auditing, and they are CPA firmsauditing, government auditing, and internal control auditing. The CPA firms usually have four types, proprietorship, general partnership, limited liability company, and limited liability partnership. Proprietorship is organized by one CPA (Certified Public Accountant), and the owner will bear all the liabilities of the company. If the assets of company cannot offset the liabilities, the owner has to use his or her own property to pay off the obligations. The general partnership is organized by two or more than two CPAs, and all the owners bear the liabilities of company according to the share of assets. If the assets cannot offset the liabilities, they also must use their own property to pay off the obligations.The limited liability company is organized by buying share stock of company and the owners have limited responsibilities for the liabilities of company according to how many stocks they hold. Their own properties will not be used to offset the liabilities of company. The limited liability partnership has the characteristics of partnership and corporation. The CPA firms are responsible for all the liabilities, but only the partner who brought up the loss for CPA firms will undertake all the obligations. The big four CPA firms in USA are all partnership corporations. In China, only two types of firms are allowed-general partnership and limited liability company.The government audit is implemented by the members in the government and the audit department is a department of government.The internal audit is operated by employees within the company andthe audit department is a department in the company.“The Big Four”Deloitte & Touche 德勤Price Waterhouse Coopers 普华永道;Ernst & Young 安永;KPMG 毕马威Second, according to the objects of auditing, the audit can be divided into three types-financial statement audit, compliance audit, and operational audit.Financial statement audit is conducted to determine whether all the material aspects in the overall financial statements are stated in accordance with specified criteria. The financial statements include balance sheet, income statement, the statement of cash flows, as well as accompanying footnotes. This is the main engagement for CPA firms. ?The operational audit is a review of any part of an organization’s operating procedures and methods for the purpose of evaluating efficiency and effectiveness. In operational auditing, the reviews are not limited to accounting. They can include the evaluation of organization structure, computer operations, production methods, marketing, and any other area in which the auditor is qualified. After the completion of an operational audit, the auditors will give some recommendations for improving the operations to the managers. The government audit and internal audit focus on the operational audit. Internal audit also includes compliance audit.The compliance audit is to determine whether the auditee is following specific procedures, rules, or regulations set by some higher authority. ?Third, according to the time to perform the engagement, the audit can be divided into two types-fixed time audit and flexible time audit.The fixed time audit means that the auditors perform the auditing at the fixed time every year. The typical example is financial statement audit and CPA firms audit. The financial statement audit starts after the balance sheet date.The other one is flexible time audit, which is to be performed in flexible time. It usually depends on higher authorities’ or manager’s determination. For example, the internal audit is performed when the manager thinks it is necessary.Forth, according to the place to conduct the auditing, there are two types of audit-auditing at the client’s company, auditing at CPA firms.Auditing at the client’s company means that the auditors go to client’s company and perform the auditing there. This type is suitable for thosecompanies which have complex business and a large amount of accounting documents. So it is impossible to take these documents to CPA firms. This is a common way to conduct the auditing.Auditing at CPA firms means that the client sends the documents to CPA firms and auditors conduct auditing at CPA firms. This type isapplicable for those companies which have simple business and a small number of accounting documents.There are also other classifications of audit. According to the scope ofauditing functions, there are Micro-audit and Macro-audit. According to the boundary of country, there are domestic audit, overseas audit, and international audit.According to auditing approachesAccounting number-based audit approach账项基础审计System-based audit approach制度基础审计Risk-oriented audit approach风险导向审计1.5 Types of auditorsGlossaryExternal auditors 外部审计⼈员Internal auditors内部审计⼈员Government auditors政府审计⼈员GAO(the General Accounting Office) 审计总署External auditorsExternal auditors are often referred to as independent auditors or certified public accountants. They audit financial statements for publicly traded and private companies, partnerships, individuals and other types of entities. They may also conduct compliance, operational audits for such entities. Professional standards require that external auditors maintain their objectivity and independence when providing auditing or other attestation services for clients.Internal auditorsNearly every large corporation maintains an internal auditing staff. Internal auditors are also employed extensively by governmental andnon-profit organizations. A principal goal of the internal auditors is to investigate and appraise the effectiveness with which the various organizational units of the company are carrying out their assigned functions. Much attention is given by internal auditors to the study and appraisal of internal control.A large part of the work of the internal auditors consists of operational audits; in addition, they may conduct numerous compliance audits. The number and kind of investigative projects vary from year to year. Unlike the CPAs, who are committed to verify each significant item in the annual financial statements, the internal auditors are not obligated to repeat their audits on an annual basis.Government auditorsGovernment auditors are employed by federal, state, and local agencies. At the federal lever, two agencies use auditors extensively: the General Accounting Office (GAO) and the Internal Revenue Service (IRS). The GAO is under the direction of the comptroller general of the United States and is responsible to Congress. The majority of the audits conducted by GAO auditors are compliance and operational audits.The IRS is part of the US Treasury Department. The main activity of IRS auditors is examining and auditing the books and records of individuals and other organizations to determine their federal tax liability. IRS audit are typically compliance audits.Relations between internal and external auditorsThe similarities :1) Both external and internal auditors need technical competence and adequate training; both should continue their professional education bytaking courses (usually called Professional Development) over thecourse of their professional lives.2) Both auditors should be professional in their work and should exercise due care in the conduct of their respective audits.3) The techniques used by both auditors (for example, evidence gathering, sampling to draw conclusions about populations, issuingreports at the completion of their work) are very similar.4) Both internal and external auditors can perform audits of financial information.The differences :1) Internal auditors are employees of the company. External auditors are independent professionals who provide a service to companies for afee.2) The independence of internal auditors depends on the position of the internal audit function in the company and to whom they report. Theindependence of external auditors depends on their mental attitude,behavior, and relationship to the client.3) Internal auditors prepare reports for management, whereas external auditors prepare reports for wide circulation, such as shareholders,banks, and government regulatory bodies.4) Internal auditors usually assess the efficiency, economy, and effectiveness of the operations(3E) of the company and may or may notaudit financial matters. External auditors usually focus on the company’s financial statements.Make use of internal auditin external auditInternal audit is a part of internal control.They have consistency in their work, so we can make use of internal audit results.In external audit we make use of internal audit, which improve efficiency and save cost.1.6 Distinction between auditing and accountingGlossaryaccounting 会计Many financial statements users and members of the general public confuse auditing with accounting. The confusion results because most auditing is usually concerned with accounting information, and many auditors have considerable expertise in accounting matters. The con fusion is increased by giving the title ‘certified public accountant’ to many individuals who perform audits.Accounting is the recording, classifying, and summarizing of economic events in a logical manner for the purpose of providing financial information for decision-making. The function of accounting is to provide certain types of quantitative information that management and others can use to make decisions. To provide relevant information, accountants must havea thorough understand of the principles and rulesthat provide the basis for preparing the accounting information. Inaddition, accountants must develop a system to make sure that theentity’s economic events are properly recorded on a timely basis and ata reasonable cost.In auditing accounting area, the concern is determining whether recorded information properly reflects the economic events thatoccurred during the accounting period. Because accounting rules are thecriteria for evaluating whether the accounting information is properlyrecorded, and auditor involved with these data must also thoroughunderstand those rules. In the context of the audit of financialstatements, the rules are GAAPs.In addition to understand accounting, an auditor must possess expertise in the accumulation and interpretation of audit evidence. It isthis expertise that distinguishes auditors from accountants. Determiningthe proper audit procedures, deciding the number and types of items totest, and evaluating the results are problems unique to the auditors.Will financial statement audits become obsoleteSome products have rather limited life cycles. However, first legislated in the British Companies Act 1844, financial audits have survived forover a century. Does this suggest unusual endurance of obsolescence Inthe information era, stockholders are demanding information that is farmore current and far more pertinent to their decision-making needs.Balance sheets were designed to show what a business would be worthif it was liquidated today. What managements need, however, arebalance sheets that relate the enterprise’s current condition to its future wealth-producing capacity. This is not to say that there is no need for financial statements. Rather, there is a need for statements that capture the value of information.In response to claims that financial statements may no longer be relevant, the AICPA established a Special committee on Financial Reporting, chaired by Edmund Jenkins, to recommend improvements in business reporting. Following three years of deliberations, the Committee released a series of recommendations, among which business report forward-looking information.Review Questions1. Explain the relationship among audit services, attestation services, and assurance services, and give examples of each.2. Discuss the definition of auditing.3. State the four major types of services CPA firms perform, and explain each.Problems and DiscussionAudits can be categorized into three types: (1) financial statements audits, (2) compliance audits, and (3) operational audits. Auditors also can be categorized into three types: (1) CPA firms, (2) internal auditors, and (3) governmental auditors. Required:For each of the following descriptions, indicate which type of audit best characterizes the nature of the audit being conducted. Also indicatewhich type of auditor is likely to perform the audit engagement.Determine the fair presentations of the Sjex Chemical’s balance sheet, income statement, and statement of cash flows. Evaluate the Computer Services Department of a government unit in terms of the efficient and effective use of corporate resources.Audit the Federal income tax returns of an officer of the corporation. Review the computer operations of a corporation to evaluate whether the computer center is being operated as efficiently as possible. Choice1. Which of the following professional services would be considered an attestation engagementa. A consulting services engagement to provide computer-processing advice to a clientb. An engagement to report on statutory requirements,c. An income tax engagement to prepare federal and state tax returns.d. The compilation of financial statements from a client’s financial records.2. A primary purpose of an operational audit is to providea. a means of assurance that internal accounting controls are functioning as planned.b. a measure of management performance in meeting organizational goals.c. the results of internal examinations of financial and accounting matters to a company’s top-level management.。
审计英语第一章
审计英语教学大纲Chapter 1 An Introduction to AuditingChapter 2 Auditing StandardsChapter 3 Professional Ethics and Legal LiabilityChapter 4 Audit Objectives and Audit ProcessChapter 5 Audit ReportChapter 6 Audit Evidence and Working PapersChapter 7 Audit Planning and MaterialityChapter 8 Understanding the Entity and its Environment and Assessing the Risks of Material MisstatementChapter 9 Auditor’s Procedures in Response to Assessed Risks Chapter 10 Audit SamplingChapter 11 Audit of the Sales and Collection CycleChapter 12 Audit of the Acquisition and Payment Cycle Chapter 13 Audit of the Manufacturing CycleChapter 14 Audit of the Capital Acquisition and Payment Cycle Chapter 15 Audit of the Cash BalancesChapter 16 Completing the AuditChapter 1 An Introduction to Auditing1.1 Definition of auditing1.2 Auditing, attestation and assurance1.3 The three parties involved in auditing1.4 The classification of audit1.5 Types of auditors1.6 Distinction between auditing and accountingLearning ObjectivesAfter studying this chapter, you should be able to1. Understand the definition of auditing.2. Understand the relationship among auditing, attestation and assurance.3. Comprehend the differences between auditing and review.4. Learn the three parties involved in auditing.5. Learn the classification of audit.6. Learn the types of auditors.7. Comprehend the distinction between auditing and accounting.➢Dependable information is essential to the very existence of our society. The investor making a decision to buy or sell securities, thebanker deciding whether to approve a loan, the government in obtainingrevenue based on income tax returns, all are relying upon informationprovided by others. In many of these situations, the goals of theproviders of information run directly counter to those of the users of theinformation. Implicit in this line of reasoning is recognition of the socialneed for independent public accountants-individuals of professionalcompetence and integrity who can tell us whether the information thatwe use constitutes a fair picture of what is really going on.1.1 Definition of auditingGlossary➢auditing 审计➢assertion 认定➢GAAP(general accepted accounting principles) 公认会计准则➢review 审阅➢reasonable assurance 合理保证➢limited assurance 有限保证➢misstatement 错报➢positive assurance 积极鉴证➢negative assurance 消极鉴证➢There are different definitions about auditing from the history development of auditing. Some people defined the auditing is the appraisal process, some defined that the auditing is the evaluation process, and others defined that the auditing is the economic control process. The most accepted definition for auditing should be stated as follows:➢“Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.”➢From this definition, several important words are needed to pay attention to. First, auditing is a systematic process. It is not the appraisalprocess, evaluation process, or economic control process. Second, whenthe auditor collects the evidence, they need to keep objectivity. Third,the collected evidence should be compared with the assertions.Assertions are the implication or representation by management. Forth,the auditor’s report is about the degree of correspondence betweenassertions and established criteria. The results of auditing will beavailable to all the interested users. Fifth, the established criteria usuallyrefer to GAAP(general accepted accounting principles).➢There is another definition-review, which is similar to audit, but there are many differences between them. The audit offers reasonableassurance about verified information, whereas the review offers limitedassurance about verified information. What does reasonable assurancemean? It means that the audit cannot find all the misstatements becauseof his or her knowledge and scope limitation. However, the auditors trytheir best to collect sufficient evidence to prove their opinions. Thelimited assurance means that the auditors just use limited procedures tocollect evidence, which just includes inquiry and analytical procedures.They don’t try their best to collect evidence so that they only can offert he limited assurance. That’s why we call audit is a positive assurance,and the review is a negative assurance.1.2 Auditing, attestation and assuranceGlossary➢in all material respects 在所有重大方面➢credibility 可信性，可信程度➢attestation 鉴证➢assurance 保证或可信性保证➢agreed-upon procedures 执行商定程序➢high levels of assurance 高保证水平➢moderate levels of assurance 中等保证水平➢reliability 可靠性，可靠程度➢relevance 相关，相关性➢assurance standards 鉴证准则➢The phrases used to express the CPA’s opinion are “give a true and fair view” or “present fairly, in all material respects,” which are equivalent terms. Although the CPA’s opinion enhances the credibility of the financial statements, the user cannot assume that the opinion is an assurance as to the future viability of the entity nor the efficiency or effectiveness with which management has conducted the affairs of the entity.➢A financial statement audit is, by far, the most common type of assurance engagements. Many times, the term "attestation" is used todescribe the same activities as auditing. However, CPAs attest to the reliability of a wide range of other types of information, including financial forecasts, internal control, compliance with laws and regulations.➢There is a broad range of assurance engagements, which includes engagements of the following:1. Engagements to report on a broad range of subject matters covering financial and non-financial information.2. Engagements intended to provide high or moderate levels of assurance.3. Attest and direct reporting engagements.4. Engagements to report internally and externally.5. Engagements in the private and public sector.➢Not all engagements performed by CPAs are assurance engagements. Other engagements frequently performed by CPAs that are not assurance engagements include the following.1. Agreed-upon procedures.2. Compilation of financial or other information.3. Preparation of tax returns where no conclusion is expressed, and tax consulting.4. Management consulting.5. Other advisory services.➢In China, the assurance standards are issued in 2006 and implemented on January 1, 2007. The “assurance” in China means assurance service and attestation service.➢Assurance engagement 鉴证业务➢Audit 审计➢Review Engagement 审阅业务➢Review of internal control 内部控制审核➢The Examination of Prospective Financial Information 预测性财务信息审核➢Related services 相关服务➢Management Consulting 管理咨询➢Agreed-upon Procedures 商定程序➢Compilation 代编➢Taxation services 税务服务➢Accounting services 会计服务1.3 The three parties involved in auditingGlossary➢auditor 审计机构、审计人员➢CPA firms 会计师事务所➢accountability 受托经济责任➢financial statement 财务报表➢independence 独立性➢We know that there are three parties involved in auditing, and they are auditors, owners and managers. The auditors are the first party in thisrelationship and they usually refer to CPA firms. The owners are thethird party in this relationship. The owners entrust the auditors to do theauditing. The relationship between the owners and managers is calledaccountability, which is the responsibility or obligation of managers tooperate and manage the economic resources entrusted by the owners.The managers must report the situation of application of economicresources to the owners and the owners will assess the performance ofmanagers through the information. From the point of managers’ view,there is a conflict between the position of entrustee and thecompensation related to performance. So they will offer differentinformation to satisfy the owners. The owners have no directinformation from the company, therefore, they invite the auditor toassess the information offered by the management.➢This is why the auditing appeared. The owners entrust the auditors to audit the managers, and the auditors report the results to the owners. When the auditors audit the managers, the managers should feedback the information the auditors want.➢However, this three-party relationship is changing in the real life. The managers instead of the owners entrust the auditors to do auditing. Because government requires many companies to offer the audited financial statement, the managers have to ask the auditors to audit the financial statements.➢So the managers control the auditors because the managers become the entrustor and they decide the employment and salaries of auditors. This kind of relationship impairs the independence of auditors.1.4 The classification of auditGlossary➢CPA firms auditing 注册会计师审计➢government auditing 国家审计➢internal control auditing or internal auditing 内部审计➢proprietorship 独资➢general partnership 普通合伙制➢Limited Liability Company (LLC) 有限责任制➢Limited Liability Partnership (LLP) 有限责任合伙制➢CPA(Certified Public Accountant) 注册会计师➢Big Four 四大（国际性会计师事务所）Glossary➢financial statement audit 财务报表审计➢compliance audit 合规性审计➢operational audit 经营审计➢fixed time audit 定期审计➢flexible time audit 不定期审计➢auditing at the client’s company 就地审计➢auditing at CPA firms 报送审计➢Micro-audit 微观审计➢Macro-audit 宏观审计Glossary➢domestic audit 国内审计➢overseas audit 海外审计➢international audit 国际审计➢Accounting number-based audit approach 账项基础审计➢System-based audit approach 制度基础审计➢Risk-oriented audit approach 风险导向审计➢There are many ways to classify the audit. First, according to the different auditors, there are three main auditing, and they are CPA firmsauditing, government auditing, and internal control auditing. The CPAfirms usually have four types, proprietorship, general partnership,limited liability company, and limited liability partnership.Proprietorship is organized by one CPA (Certified Public Accountant),and the owner will bear all the liabilities of the company. If the assets of company cannot offset the liabilities, the owner has to use his or her own property to pay off the obligations. The general partnership is organized by two or more than two CPAs, and all the owners bear the liabilities of company according to the share of assets. If the assets cannot offset the liabilities, they also must use their own property to pay off the obligations.➢The limited liability company is organized by buying share stock of company and the owners have limited responsibilities for the liabilities of company according to how many stocks they hold. Their own properties will not be used to offset the liabilities of company. The limited liability partnership has the characteristics of partnership and corporation. The CPA firms are responsible for all the liabilities, but only the partner who brought up the loss for CPA firms will undertake all the obligations. The big four CPA firms in USA are all partnership corporations. In China, only two types of firms are allowed-general partnership and limited liability company.➢The government audit is implemented by the members in the government and the audit department is a department of government.➢The internal audit is operated by employees within the company and the audit department is a department in the company.“The Big Four”➢Deloitte & Touche 德勤➢Price Waterhouse Coopers 普华永道;➢Ernst & Young 安永;➢KPMG 毕马威➢Second, according to the objects of auditing, the audit can be divided into three types-financial statement audit, compliance audit, and operational audit.➢Financial statement audit is conducted to determine whether all the material aspects in the overall financial statements are stated in accordance with specified criteria. The financial statements include balance sheet, income statement, the statement of cash flows, as well as accompanying footnotes. This is the main engagement for CPA firms.➢The operational audit is a review of any part of an organization’s operating procedures and methods for the purpose of evaluating efficiency and effectiveness. In operational auditing, the reviews are not limited to accounting. They can include the evaluation of organization structure, computer operations, production methods, marketing, and any other area in which the auditor is qualified. After the completion of an operational audit, the auditors will give some recommendations for improving the operations to the managers. The government audit and internal audit focus on the operational audit. Internal audit also includescompliance audit.➢The compliance audit is to determine whether the auditee is following specific procedures, rules, or regulations set by some higher authority.➢Third, according to the time to perform the engagement, the audit can be divided into two types-fixed time audit and flexible time audit.➢The fixed time audit means that the auditors perform the auditing at the fixed time every year. The typical example is financial statement audit and CPA firms audit. The financial statement audit starts after the balance sheet date.➢The other one is flexible time audit, which is to be performed in flexible time. It usually depends on higher authorities’ or manager’s determination. For example, the internal audit is performed when the manager thinks it is necessary.➢Forth, according to the place to conduct the auditing, there are two types of audit-auditing at the client’s company, auditing at CPA firms.➢Auditing at th e client’s company means that the auditors go to client’s company and perform the auditing there. This type is suitable for thosecompanies which have complex business and a large amount of accounting documents. So it is impossible to take these documents to CPA firms. This is a common way to conduct the auditing.➢Auditing at CPA firms means that the client sends the documents toCPA firms and auditors conduct auditing at CPA firms. This type is applicable for those companies which have simple business and a small number of accounting documents.➢There are also other classifications of audit. According to the scope of auditing functions, there are Micro-audit and Macro-audit. According to the boundary of country, there are domestic audit, overseas audit, and international audit.According to auditing approaches➢Accounting number-based audit approach 账项基础审计➢System-based audit approach 制度基础审计➢Risk-oriented audit approach 风险导向审计1.5 Types of auditorsGlossary➢External auditors 外部审计人员➢Internal auditors 内部审计人员➢Government auditors 政府审计人员➢GAO(the General Accounting Office) 审计总署External auditors➢External auditors are often referred to as independent auditors or certified public accountants. They audit financial statements for publicly traded and private companies, partnerships, individuals and other types of entities. They may also conduct compliance, operational audits forsuch entities. Professional standards require that external auditors maintain their objectivity and independence when providing auditing or other attestation services for clients.Internal auditors➢Nearly every large corporation maintains an internal auditing staff. Internal auditors are also employed extensively by governmental and non-profit organizations. A principal goal of the internal auditors is to investigate and appraise the effectiveness with which the various organizational units of the company are carrying out their assigned functions. Much attention is given by internal auditors to the study and appraisal of internal control.➢A large part of the work of the internal auditors consists of operational audits; in addition, they may conduct numerous compliance audits. The number and kind of investigative projects vary from year to year. Unlike the CPAs, who are committed to verify each significant item in the annual financial statements, the internal auditors are not obligated to repeat their audits on an annual basis.Government auditors➢Government auditors are employed by federal, state, and local agencies. At the federal lever, two agencies use auditors extensively: the General Accounting Office (GAO) and the Internal Revenue Service (IRS). The GAO is under the direction of the comptroller general of the United States and is responsible to Congress. The majority of the audits conducted by GAO auditors are compliance and operational audits.。
Chapter24CompletingtheAudit(审计学-英文版)
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▪ Income tax disputes ▪ Product warranties ▪ Notes receivable discounted ▪ Guarantees of obligations of others ▪ Unused balances of outstanding letters of credit
Review current and previous years’ internal revenue reports for income tax settlements.
Review the minutes of directors’ and stockholders’ meetings for indications of lawsuits or other contingencies.
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Audit Procedures for Finding Contingencies
Inquire of management (orally and in writing) about the possibility of unrecorded contingencies.
Chapter24CompletingtheAudit(审计学-英文版)-文档资料
Adjust financial statements or note disclosure
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Auditor’s Concerns
▪ Pending litigation for patent infringement, product liability, or other actions
date
Audit Date client report issues financial date statements
12-31-05
3-11-06
3-26-06
Period to which review for subsequent events applies
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Contingent Liabilities
A contingent liability is a potential future obligation to an outside party for an unknown amount resulting from activities that have already taken place.
Chapter 10 Auditing Revenue and Related Accounts 审计学-基于环境变化的概念英文版课件
If control risk is lower, develop procedures to test operation of controls
Perform tests of controls, document results Based on the results of testing, reassess
unexpected relationships Develop understanding of internal controls Analyze business risk for motivations and
methods to misstate sales
Review Assessment of
control risk
Discuss Inherent Risk with Regard to Sales
While sales transactions are routine for most organizations and do not represent an abnoห้องสมุดไป่ตู้mally high risk, for other organizations, revenue recognition may be complicated
审计学-一种整合的方法-文档资料
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Learning Objective 2
Distinguish management’s
responsibility for the financial
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Management’s Responsibilities
Management is responsible for the financial statements and for internal control.
The Sarbanes-Oxley Act increases management’s responsibility for the financial statements.
➢ Actions when the auditor knows of an illegal act
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Learning Objective 4
Learning Objective 1
Explain the objective of conducting an audit of financial statements and an audit of internal controls.
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审计学-一种整合的方法
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Learning Objective 4
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Transaction Flow Example
Transactions
Cash disbursements
Payroll services and disbursements
Journals Cash
disbursements journal
Payroll journal
Ledgers, Trial Balance, and Financial
General ledger and subsidiary
records
General ledger trial balance
Acquisition of goods
and services
Acquisitions journal
Financial statements
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Management’s Responsibilities
Management is responsible for the financial statements and for internal control.
The Sarbanes-Oxley Act increases management’s responsibility for the financial statements.
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Determine extent of testing controls.
Design tests of controls and substantive tests of transactions for payroll and personnel to meet transactionrelated audit objectives.
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Learning Objective 3
Understand internal control and design and perform tests of controls and substantive tests of transactions for the payroll and personnel cycle.
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Payment of Payroll
Payroll check
Payroll bank account reconciliation
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Direct Labor
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Accounts in the Payroll and Personnel Cycle
Cash in Bank Payment for salaries Payment for payroll taxes Payroll Tax Expense Withheld Income Taxes and Other Deductions Payment Beginning balance
Timekeeping and Payroll Preparation
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Payroll Master File
A payroll master file is used for recording each payroll transaction for each employee and maintaining total employee wages paid for the year to date.
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Accounts in the Payroll and Personnel Cycle
Cash in Bank Payment for salaries Payment for payroll taxes Accrued Wages, Salaries, Bonuses, and Commissions Payment Beginning balance Earned wages, salaries, etc. Ending balance Withheld Income Taxes and Other Deductions Payment Beginning balance Payroll withholding Ending balance
Phase I
Identify client business risks affecting payroll liability accounts. Set tolerable misstatement and assess inherent risk for payroll liability accounts.
Rate authorization form
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Timekeeping and Payroll Preparation
Time Card
Job Time Ticket Payroll Transaction File Payroll Journal
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Preparation of Payroll Tax Returns and Payment of Taxes
W-2 Form
Payroll tax returns
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• • • • • Adequate separation of duties Proper authorization Adequate documents and records Physical control over assets and records Independent checks on performance
Payroll withholding Ending balance
Accrued Payroll Tax Expense Payment Beginning balance Payroll tax expense Ending balance
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Accounts in the Payroll and Personnel Cycle
In most systems the accrued wages and salaries account is used only at the end of an accounting period.
Tests for nonexistent payroll
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Methodology for Designing Tests of Balances for Payroll Liabilities
Accounts in the Payroll and Personnel Cycle
The overall objective in the audit of the payroll and personnel cycle is to evaluate whether the account balances affected by the cycle are fairly stated in accordance with generally accepted accounting principles.
Audit of the Payroll and Personnel Cycle
Chapter 18
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Payroll Tax Forms and Payments
Preparation of payroll tax forms
Payment of the payroll taxes withheld and other withholdings on a timely basis
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Methodology for Designing Controls and Substantive Tests
Understand internal control – payroll and personnel. Assess planned control risk – payroll and personnel.
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Personnel and Employment
Personnel records
Deduction authorization form
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Business Functions in the Cycle and Related Documents and Records
The payroll and personnel cycle begins with the hiring of personnel and ends with payment to the employees for the services performed and to the government and other institutions for the withheld and accrued payroll taxes and benefits.