Table of Contents
Chapter 1 - Auditing Developments - Part 1 - Section 1........................................................................ 10
General Developments............................................................................................................................ 10
I. Introduction...................................................................................................................................... 10
II. Implications
of the Current Economic Environment- Economic Issues Peculiar to Auditors.......... 10
1. Status of the U.S. economy in 2018 and its
impact on auditors:................................................. 12
2. Specific accounting risks.............................................................................................................. 13
Chapter 1 - Part 1 - Section 1 Review
Questions.................................................................................... 39
Chapter 1 - Auditing Developments - Part 1 -
Section 2........................................................................ 41
III. Client
and Employee Fraud.............................................................................................................. 41
1. General......................................................................................................................................... 41
2. Report to the Nations on Occupational
Fraud and Abuse........................................................... 42
Chapter 1 - Part 1 - Section 2 Review
Questions.................................................................................... 56
Chapter 1 - Auditing Developments - Part 1 -
Section 3........................................................................ 57
3. Types of Fraud............................................................................................................................. 57
4. Small Business Fraud................................................................................................................... 69
5. Evaluating an Entity’s Fraud Environment.................................................................................. 74
Chapter 1 - Part 1 - Section 3 Review
Questions.................................................................................... 80
Chapter 1 - Auditing Developments - Part 1 -
Section 4........................................................................ 81
6. Time Theft.................................................................................................................................... 81
7. Employee Background Checks and Credit
Reports.................................................................... 82
8. The Auditor's Role in Dealing with Fraud................................................................................... 83
9. Specific Fraud Issues................................................................................................................... 92
10. Anti-Fraud Measures.............................................................................................................. 105
11. Sentences for Fraudsters........................................................................................................ 108
12. A Fraud Scorecard................................................................................................................. 109
13. Computer Crime and Theft.................................................................................................... 112
14. Integrity Survey...................................................................................................................... 113
15. Correlation Between Bankruptcy and Fraud......................................................................... 115
16. The CFO Perspective on their Outside
Auditors and Fraud.................................................. 116
17. Madoff and the Single Auditor Issue.................................................................................... 116
Chapter 1 - Part 1 - Section 4 Review
Questions.................................................................................. 120
Chapter 2 - Auditing Developments - Part 2 -
Section 5...................................................................... 121
IV. Attempting
to Limit Auditor’s Liability......................................................................................... 121
V. The
Viability of the Big Four.......................................................................................................... 133
VI. The
Effect of Enron- 17 Years Later.............................................................................................. 139
VII. Going-Concern
Issues.................................................................................................................. 143
Chapter 2 - Part 2 - Section 5 Review
Questions.................................................................................. 146
Chapter 2 - Auditing Developments - Part 2 -
Section 6...................................................................... 147
VIII. Retaliation
Against Auditors Who Issue Adverse Opinions....................................................... 147
IX. AICPA's
Top Technology Initiatives.............................................................................................. 147
X. Anti-Sarbanes-Oxley
Continues After 16 Years............................................................................. 148
XI. The
Impact of Dodd-Frank on Auditors into 2018........................................................................ 166
XII. Whistleblowing-
The New Profession Acts Like the Oldest Profession..................................... 172
XIII. Auditor
Rotation.......................................................................................................................... 178
Chapter 2 - Part 2 - Section 6 Review
Questions.................................................................................. 180
Chapter 2 - Auditing Developments - Part 2 -
Section 7...................................................................... 182
XIV. Peer
Review................................................................................................................................. 182
Chapter 2 - Part 2 - Section 7 Review
Questions.................................................................................. 193
Chapter 3 - Accounting and Auditing in
Volatile Times - Section 8.................................................... 195
XV. Key
Focus Areas for the Auditor................................................................................................. 195
Chapter 3 - Section 8 Review Questions.............................................................................................. 208
Chapter 3 - Accounting and Auditing in
Volatile Times - Section 9.................................................... 209
XVI. Lessons
from Litigation............................................................................................................... 209
Chapter 3 - Section 9 Review Questions.............................................................................................. 228
Chapter 3 - Accounting and Auditing in
Volatile Times - Section 10.................................................. 229
XVII. Efficient
Engagements- Reduce Time, Make More Money Without Increasing Risk............... 229
XVIII. Practice
Issues Relating to Auditing......................................................................................... 237
XIX. Study on Public Perception of Accountants in
Jury Trials........................................................... 258
Chapter 3 - Section 10 Review Questions............................................................................................ 260
Chapter 3 - Accounting and Auditing in
Volatile Times - Section 11.................................................. 262
XX. Communicating
Internal Control Related Matters Identified in an Audit AU-C 265................ 262
XXI. Watch Out
for the DOL and Audits of Employee Benefit Plans................................................ 271
XXII. Why Do
Individuals Cheat and Commit Fraud?....................................................................... 276
XXIII. Signing
at the Beginning of a Document- Decreasing Dishonest Self Reports........................ 280
XXIV. Client Deadline Concentration in Audit
Offices and Audit Quality........................................ 286
XXV. Auditing
Standards Board (ASB) Agenda................................................................................ 287
XXVI. PCAOB and
SEC Approve Naming Engagement Partners in Audit Engagements................. 288
XXVII. Auditor-Provided
Tax Services.............................................................................................. 289
XXVIII. ASB’s
Six-Point Plan to Improve Audits.............................................................................. 290
XXIX. Proposed
Change to Audit Report of Employee Benefit Plans Subject to ERISA................. 291
XXX. Proposed
Selected Procedures Engagement............................................................................... 296
Chapter 3 - Section 11 Review Questions............................................................................................ 300
Chapter 4 - Recent Auditing and Attestation
Standards - Section 12................................................. 302
XXXI. SAS Nos.
131-133 and SSAE No. 18...................................................................................... 302
XXXII. SSAE
No. 18: Attestation Standards: Clarification and Recodification............................... 329
Chapter 4 - Section 12 Review Questions............................................................................................ 337
Suggested Solutions.............................................................................................................................. 339
Glossary 381
Index 384
Final Examination................................................................................................................................. 388