Chapter 7 Instructors GuideWord格式.docx

1、 （See Table 7-1）Audit Evidence Decisions （page 173）The four audit evidence decisions are explained throughout the course. List them on the overhead, define and discuss them. （See T-7-1）Also define an audit procedure. For the audit procedure, obtain accounts receivable confirmations, ask students to

2、tell how and under what circumstances sample size, items to select, and timing should vary. The purpose is to get students to think about decision making.Persuasiveness of Evidence （page 174）We spend a few minutes discussing what persuasiveness means and its distinction from certainty （and conclusiv

3、e）. We then cover the distinction between appropriateness and sufficiency. We also discuss the factors affecting reliability. （See T-7-2）It is also worthwhile to discuss the reliability of various types of evidence.Types of Audit Evidence （page 177）Define and distinguish between procedures, types of

4、 evidence, and generally accepted auditing standards. （See Figure 7-1）At that point, list on the overhead, ask questions, or make observations about each type of evidence: （See T-7-3） Physical Examination （page 178） Define Applies only to tangible assets Assets applicable to （cash, fixed assets, sec

5、urities, etc.） Reliability For what purposes it is useful and not useful Provides an opportunity to have direct contact with businessWith regard to the last point, a useful teaching technique is to select an industry （e.g., cement manufacturing） and describe how it works and what assets the auditor

6、might examine. The goal is to get the students to realize how important knowledge of the business is to performing rudimentary audit procedures in a proper fashion.Confirmation （page 179） Four characteristics -1. Receipt （Note negative confirmation of receivables as an exception.）2. Oral or in writi

7、ng3. From independent third party4. Information requested by auditor Type of information confirmed （Table 7-3, page 180） Reliability and cost Why it is not usually used for tests of controls and substantive tests of transactions （See Table 7-3）Documentation （page 180） Examples Distinguish from physi

8、cal examination Internal versus external documents- Reliability- Examples Where it is likely to be used Electronic evidenceProblem 7-31 is useful at this point.Analytical Procedures （page 181） We believe analytical procedures are an essential part of auditing. Students are introduced to the purposes

9、 of analytical procedures in this chapter. More detailed coverage of ratios and the use of analytical procedures in understanding the clients business and assessing risk is included in the next chapter on audit planning. Analytical procedures for specific accounts are discussed throughout subsequent

10、 chapters. When they are used Purposes （ T-7-4, T-7-6） Examples （T-7-5） （See T-7-4, T-7-5 and T-7-6）For T-7-6, the answers are: 1. A, D 6. B 2. B 7. A, D 3. C 8. C 4. A, E 9. A, D 5. C 10. BInquiries of the Client （page 182） Oral and written Define letter of representation （which will be discussed i

11、n Chapter 24） Why they are used Legal implications if corroborative evidence not added Tie into Bar Chris case in Chapter 5Recalculation （page 182）Reperformance （page 182） Need for other evidence to test details even if no misstatementsObservation （page 182） Distinguish from physical examination and

12、 documentation When it is used Define corroborative evidence and why neededProblem 7-32 is one we always use to test students knowledge of types of evidence. Problems 7-33, 7-34, and 7-37 are also good ones at this point. Problem 7-37 is especially useful to discuss reliability of evidence in differ

13、ent situations. If there is time, it is also useful to summarize this discussion by having the students develop a hierarchy of evidence in terms of its probable reliability. We suggest they should arrive at the three-level hierarchy shown in T-7-7. （See T-7-7）After discussing types of evidence, it i

14、s desirable to return to the appropriateness of each type of evidence. Table 7-4 （page 183） is useful for that. （See Table 7-4）If you have time, relate the types of evidence to balance-related audit objectives in Chapter 6. This can be done conveniently with Problem 7-36.Terms Used in Audit Procedur

15、es （page 185）We cover the terms for definitional purposes. First, go over the terms briefly. Problem 7-38 is useful to help students learn the correct use of terms. Audit Documentation （page 185）The end of the chapter vignette on page 193 “Will it Stand Up in Court?” is a good starting point for you

16、r discussion of audit documentation. The vignette is an excerpt from the deposition of an auditor who was in charge of an audit six years ago. It illustrates what can happen when audit files do not adequately document the audit procedures performed.We spend little time on audit documentation format

17、because firms have their own techniques. Students often have difficulty understanding what each type of audit schedule means. Briefly cover the following: Purposes Relationship of audit documentation to financial statements Common characteristics of audit documentation Ownership of audit files Confi

18、dentiality of audit filesIf you wish to assign problem material for audit documentation, Problem 7-40 is a good one. We discuss how information technology has changed the nature of the evidence available to auditors, and the way audits are conducted and documented. We note that the term “audit docum

19、entation” is now used instead of the term “working papers”, although the latter term is still acceptable. We like to give a few examples of how information technology has made the audit more efficient. If many of the students in your class have internship experience, you can ask them to give example

20、s of how they documented their audit testing. Requirements for Retention of Audit Documentation （page 187） Be sure to emphasize the new Sarbanes-Oxley requirements for auditors of public companies to prepare and retain audit working papers and other information related to any audit report for a peri

21、od of seven years. This component of the Sarbanes-Oxley Act is largely in response to the alleged document shredding by Andersen employees related to the Enron audit. We like to discuss the different types of documentation that now must be maintained. Students find it interesting to learn that even

22、email related documentation may be subject to the retention requirements. CHAPTER 7 CROSS-REFERENCE OF LEARNING OBJECTIVES AND PROBLEM MATERIAL Learning Objectives Review Questions Multiple Choice Discussion Questions and ProblemsACL Problem and Cases7-1 Contrast audit evidence with evidence used by

23、 other professions. 7-1 7-2 Identify the four audit evidence decisions that are needed to create an audit program.7-2, 7-3, 7-47-67-3 Specify the characteristics that determine the persuasiveness of evidence.7-5, 7-6, 7-7,7-87-297-377-4 Identify and apply the eight types of evidence used in auditing

24、. 7-9, 7-10,7-11, 7-12, 7-13, 7-14,7-15, 7-167-31, 7-32, 7-33, 7-34,7-35, 7-36, 7-37, 7-387-41, 7-437-5 Understand the purposes of audit documentation.7-17, 7-18,7-19, 7-25,7-26 7-307-39, 7-407-427-6 Prepare organized audit documentation.7-18, 7-19,7-20, 7-21,7-22, 7-23,7-24 7-7 Describe how e-comme

25、rce affects audit evidence and audit documentation.7-27, 7-28 FOUR EVIDENCE DECISIONS Audit procedures Sample size for a given procedure Items to select from the population Timing FACTORS AFFECTING RELIABILITY OF EVIDENCE Independence of provider Effectiveness of clients internal control Auditors di

26、rect knowledge Qualifications of provider Objectivity Timeliness TYPES OF EVIDENCE Physical examination Confirmation Documentation Analytical procedures Inquiries of the client Recalculation Reperformance Observation PURPOSES OF ANALYTICAL PROCEDURES Understand the clients industry and business Assess going concern Indicate possible misstatements （attention directing） Reduce detailed tests USE OF INTERNAL RATIOSExplain how each of the following analytical procedures can be useful to the auditor in determining evidence to accumulate. When would each one be most