Chapter 22 Instructor's Guide

Chapter 22 Instructor's Guide - Chapter 22 Audit of the...

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Chapter 22 Audit of the Capital Acquisition and Repayment Cycle We have only rarely covered the material in this chapter. Our students have had enough of the detail testing at this point. When we do cover it, it does not get much time. The following are the major things to discuss: Chapter opening vignette Nature of and accounts in the capital acquisition and repayment cycle Audit of notes payable Audit of owners' equity Chapter Opening Vignette – “A Dishonest Client Will Get the Best of the Auditor Almost Every Time” This vignette represents an example of how much auditors must rely on client representations, and where those representations can't be corroborated, the auditor is essentially at the client's mercy. This leads to a discussion of several concepts: What is the nature of representations, how can they be corroborated, what does the auditor do when they can't be corroborated, the importance of new client investigation, and the importance of being skeptical. Nature of and Accounts in the Capital Acquisition and Repayment Cycle (page 728) We start by identifying the four characteristics affecting the audit of the capital acquisition and repayment cycle that are discussed in the chapter:
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Chapter 22 Instructor's Guide - Chapter 22 Audit of the...

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