STUDY UNIT ONE 1
1.1 ATTEST ENGAGEMENTS(AT 101) 1
1.2 AUDIT ENGAGEMENTS 7
1.3 AUDIT PROGRAMS 9
1.4 COMPILATIONS AND REVIEWS(AR 100) 10
1.5 FINANCIAL FORECASTS AND PROJECTIONS(AT 301) 11
1.6 REPORTING ON PRO FORMA FINANCIAL INFORMATION(AT 401) 13
1.7 ASSURANCE SERVICES 14
1.8 QUALITY CONTROL 17
STUDY UNIT TWO 22
2.1 PRE-ENGAGEMENT ACCEPTANCE ACTIVITIES 23
2.2 STEPS OF AN AUDIT 28
2.3 PLANNING AND SUPERVISION(AU 311) 28
2.4 UNDERSTANDING THE ENTITY'S BUSINESS(AU 311) 30
2.5 ANALYTICAL PROCEDURES(AU 329) 30
2.6 OVERALL AUDIT STRATEGY AND AUDIT PLAN 34
2.7 FINANCIAL STATEMENT ASSERTIONS 35
2.8 AUDIT RISK AND MATERIALITY(AU 312) 36
2.9 CONSIDERATION OF FRAUD IN A FINANCIAL STATEMENT AUDIT 38
2.10 ILLEGAL ACTS BY CLIENTS(AU 317) 44
2.11 OBTAINING UNDERSTANDING OF THE ENTITY AND ITS ENVIRONMENT 46
2.12 ASSESS RISKS OF MISSTATMENT AND DESIGN FURTHER TEST PROCEDURES 47
STUDY UNIT THREE 50
3.1 THE AUDITOR'S CONSIDERATION OF THE INTERNAL AUDIT FUNCTION(AU 322) 50
3.2 USING THE WORK OF A SPECIALIST(AU 336) 53
3.3 RELATED PARTIES(AU 334) 55
3.4 ACCOUNTING ESTIMATES AND FAIR VALUES(AU 342 AND AU 328) 58
STUDY UNIT FOUR 63
4.1 DEFINITION OF INTERNAL CONTROL(AU 319) 63
4.2 INTERNAL CONTROL COMPONENTS AND CONSIDERATIONS 64
4.3 INTERNAL CONTROL FOR COMPUTER SYSTEMS 69
STUDY UNIT FIVE 83
5.1 RESPONSIBILITIES/ORGANIZATIONAL STRUCTURE 83
5.2 SALES-RECEIVABLES FLOWCHART 85
5.3 CASH RECEIPTS FLOWCHART 88
5.4 CONTROLS IN A CASH SALE ENVIRONMENT 91
5.5 OTHER SALES-RECEIVABLES RELATED TRANSACTIONS 91
5.6 TECHNOLOGY CONSIDERATIONS FOR THE SALES-RECEIVABLES-CASH RECEIPTS CYCLE 91
STUDY UNIT SIX 94
6.1 RESPONSIBILITIES/ORGANIZATIONAL STRUCTURE 94
6.2 PURCHASES-PAYABLES-CASH DISBURSEMENTS MANUAL SYSTEM FLOWCHART 95
6.3 TECHNOLOGY CONSIDERATIONS FOR THE PURCHASES-PAYABLES-CASH DISBURSEMENTS CYCLE 100
6.4 ELECTRONIC DATA INTERCHANGE(EDI) 101
STUDY UNIT SEVEN 104
7.1 RESPONSIBILITIES AND ORGANIZATIONAL STRUCTURE 104
7.2 PAYROLL MANUAL SYSTEM FLOWCHART 105
7.3 TECHNOLOGY CONSIDERATIONS FOR THE PAYROLL CYCLE 107
7.4 OTHER CYCLES 109
STUDY UNIT EIGHT 113
8.1 ASSESSING CONTROL RISK(AU 319) 113
8.2 EVIDENCE TO SUPPORT THE ASSESSED LEVEL OF CONTROL RISK(AU 319) 116
8.3 CORRELATION OF CONTROL RISK AND DETECTION RISK 119
8.4 ASSESSING CONTROL RISK IN A COMPUTER ENVIRONMENT 121
STUDY UNIT NINE 126
9.1 COMMUNICATION OF INTERNAL CONTROL RELATED MATTERS NOTED IN AN AUDIT(AU 325) 126
9.2 COMMUNICATION WITH AUDIT COMMITTEES(AU 380) 128
9.3 REPORTING ON AN ENTITY'S INTERNAL CONTROL UNDER THE SARBANES-OXLEY ACT OF 2002 131
9.4 SERVICE ORGANIZATIONS(AU 324) 142
STUDY UNIT TEN 147
10.1 NATURE,COMPETENCE,AND SUFFICIENCY(AU 326) 147
10.2 THE CONFIRMATION PROCESS(AU 330) 150
10.3 AUDIT DOCUMENTATION(AU 339) 154
10.4 THE COMPUTER AS AN AUDIT TOOL 157
STUDY UNIT ELEVEN 160
11.1 SUBSTANTIVE TESTING OF SALES AND RECEIVABLES 160
11.2 SUBSTANTIVE TESTING OF CASH 164
STUDY UNIT TWELVE 171
12.1 SUBSTANTIVE TESTING OF ACCOUNTS PAYABLE AND PURCHASES 171
12.2 SUBSTANTIVE TESTING OF INVENTORY 174
STUDY UNIT THIRTEEN 178
13.1 SUBSTANTIVE TESTING OF PROPERTY,PLANT,AND EQUIPMENT 178
13.2 SUBSTANTIVE TESTING OF INVESTMENTS(AU 332) 181
13.3 SUBSTANTIVE TESTING OF LONG-TERM DEBT 185
13.4 SUBSTANTIVE TESTING OF EQUITY 186
13.5 SUBSTANTIVE TESTING OF PAYROLL 188
STUDY UNIT FOURTEEN 191
14.1 SUBSTANTIVE TESTS PRIOR TO THE BALANCE SHEET DATE(AU 313) 191
14.2 INQUIRY OF A CLIENT'S LAWYER CONCERNING LITIGATION,CLAIMS,AND ASSESSMENTS(AU 337) 193
14.3 SUBSEQUENT EVENTS(AU 560) 196
14.4 SUBSEQUENT DISCOVERY OF FACTS EXISTING AT THE DATE OF THE AUDITOR'S REPORT(AU 561) 198
14.5 MANAGEMENT REPRESENTATIONS(AU 333) 199
14.6 AUDITOR'S CONSIDERATION OF AN ENTITY'S ABILITY TO CONTINUE AS A GOING CONCERN(AU 341) 203
14.7 CONSIDERATION OF OMITTED PROCEDURES AFTER THE REPORT DATE(AU 390) 207
STUDY UNIT FIFTEEN 208
15.1 SAMPLING FUNDAMENTALS(AU 350) 208
15.2 STATISTICAL SAMPLING IN TESTS OF CONTROLS(ATTRIBUTE SAMPLING) 213
15.3 CLASSICAL VARIABLES SAMPLING 219
15.4 PROBABILITY-PROPORTIONAL-TO-SIZE(PPS)OR DOLLAR-UNIT SAMPLING(DUS) 222
STUDY UNIT SIXTEEN 231
16.1 GAAS-THE REPORTING STANDARDS 231
16.2 THE AUDITOR'S STANDARD REPORT(AU 508) 233
16.3 ADDRESSING AND DATING THE REPORT(AU 508 AND AU 530) 236
16.4 QUALIFIED OPINIONS(AU 508) 237
16.5 ADVERSE OPINIONS(AU 508) 242
16.6 DISCLAIMERS OF OPINION(AU 508) 244
STUDY UNIT SEVENTEEN 247
17.1 PART OF AUDIT PERFORMED BY OTHER INDEPENDENT AUDITOR(AU 543 AND AU508) 247
17.2 CONSISTENCY OF APPLICATION OF GAAP(AU 420) 251
17.3 UNCERTAINTIES AND GOING CONCERN(AU 508 AND AU 314) 255
17.4 COMPARATIVE FINANCIAL STATEMENTS(AU 508) 256
17.5 EMPHASIS OF A MATTER(AU 508) 262
STUDY UNIT EIGHTEEN 264
18.1 COMPILATION 264
18.2 REVIEW 267
18.3 OTHER CONSIDERATIONS 271
18.4 USES OF SPECIAL REPORTS(AU 623.01-.04) 273
18.5 FINANCIAL STATEMENTS PREPARED IN CONFORMITY WITH AN OTHER BASIS OF ACCOUNTING(OCBOA)(AU 623.05-.10) 275
18.6 SPECIFIED ELEMENTS,ACCOUNTS,OR ITEMS OF A FINANCIAL STATEMENT(AU 623.11-.1 S) 277
18.7 OTHER PRESENTATIONS(AU 623.19-.30) 278
STUDY UNIT NINETEEN 280
19.1 INTERIM FINANCIAL INFORMATION(AU 722) 280
19.2 LETTERS FOR UNDERWRITERS AND CERTAIN OTHER REQUESTING PARTIES(AU 634) 284
19.3 FILINGS UNDER FEDERAL SECURITIES STATUTES(AU 711) 286
19.4 OTHER INFORMATION IN DOCUMENTS CONTAINING AUDITED FINANCIAL STATEMENTS(AU 550) 288
19.5 REQUIRED SUPPLEMENTARY INFORMATION(RSI)(AU 558) 288
19.6 REPORTING ON INFORMATION ACCOMPANYING THE BASIC FINANCIAL STATEMENTS IN AUDITOR-SUBMITTED DOCUMENTS(AU 551) 290
19.7 REPORTING ON CONDENSED FINANCIAL STATEMENTS AND SELECTED FINANCIAL DATA(AU 552) 291
19.8 REPORTING ON FINANCIAL STATEMENTS PREPARED FOR USE IN OTHER COUNTRIES(AU 534) 293
19.9 REPORTS ON THE APPLICATION OF ACCOUNTING PRINCIPLES(AU 625) 294
19.10 COMPLIANCE ATTESTATION(AT 601) 296
19.11 ENGAGEMENTS TO APPLY AGREED-UPON PROCEDURES(AT 201) 300
STUDY UNIT TWENTY 303
20.1 OVERVIEW 303
20.2 AUDITS IN ACCORDANCE WITH AU 801,COMPLIANCE AUDITING CONSIDERATIONS IN AUDITS OF GOVERNMENTAL ENTITLES AND RECIPIENTS OF GOVERNMENTAL FINANCIAL ASSISTANCE 305
20.3 ADDITIONAL GOVERNMENT AUDITING STANDARDS 307
20.4 FEDERAL AUDIT REQUIREMENTS AND THE SINGLE AUDIT ACT 314
Glossary 318