Solution Manual For Principles of Auditing and Other Assurance Services, 21st Edition

Solution Manual For Principles of Auditing and Other Assurance Services, 21st Edition condenses the most important textbook information into clear points.

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Solutions Manual, Chapter1, Page1of13CHAPTER 1The Role of thePublic Accountant in theAmerican EconomyReview Questions1-1The “crisis of credibility” largely arose from the number of companies that restated their previouslyissued financial statements as a result of accounting irregularities and fraud. Especially responsiblewere the very visible Enron and WorldCom fraud cases. Both companies filed for bankruptcy andconstituted the largest companies in American history to do so. The extent of the accountingirregularities and fraud being investigated and disclosed brought into question the effectiveness offinancial statement audits. In addition, the criminal conviction of Arthur Andersen, LLP, one of thethen Big 5 accounting firms, on charges of destroying documentsrelated tothe Enron case broughtinto question the ethical standards of the profession.1-2Assurance services are professional services that enhance the quality of information, or its context,for decision-making. The two types are: (a) those that increasethereliability of information and (b)those that involve putting information in a form or context thatfacilitates decision-making.1-3A financial statement audit is, by far, the most common type of attest engagement. The overallassertion, made by management, most frequently is that the financial statements follow generallyaccepted accounting principles.1-4A large corporation with securities listed on a stock exchange is required by the rules of the stockexchange and by the rules of the SecuritiesandExchange Commission to provide an audit report withthe annual financial statements furnished to its stockholders.It also is required to engage the auditorsto provide an opinion on its internal control.Apart from legal requirements, however, a large listedcorporation recognizes that it must maintain investor confidence inthe reliability ofits financialstatementsand internal control over financial reportingif it is to continue to be able to secure capitalfrom the public. The report by a firm of certified public accountants adds credibility to the financialstatements prepared by the corporation. When a small family-owned enterprise elects to have anaudit, the purpose usually is to use the auditors' report to support an application for a bank loan.

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Principles Of Auditing And Other As...

Solution Manual For Principles of Auditing and Other Assurance Services, 21st Edition

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