Auditing and Assurance Services
Our system of capital formation relies upon the confidence of
millions of savers to invest in companies.
The auditors opinion is critical to that trust."
- James R. Doty, Chairman
Public Company Accounting Oversi
Variables sampling is used to estimate the amount (or value) of
Estimate account balance or misstatement
Compare estimated account balance or misstatement to recorded
amount or tolerable misstatem
Management Fraud and Audit Risk
Profit is the result of risks wisely selected
Frederick Barnard Hawley
Risk comes from not knowing what youre doing
Define business risk and understand
Revenue and Collection Cycle
What at first was plunder assumed the softer name of
revenue. Thomas Paine
1. Discuss inherent risks related to the revenue and
collection cycle with a focus on improper
Internal Control Evaluation
Bernie doesnt want you to use the words internal controls in any
more of your audit reportsit aggravates him.
- Cynthia Cooper referring to advice given her by a colleague on how to best deal with
Acquisition and Expenditure Cycle
Show those numbers to the damn auditors and I'll throw you out the $%*@
window.-(Buddy Yates, director of WorldCom, Inc. general accounting, to an
employee asking for an explanation of a large accounting discrep
In todays regulatory environment, its virtually impossible to
Bernard Madoff, money manager, approximately one year prior
to being arrested for embezzling $50 billion from investors in a
There is one rule for industrialists and that is: Make the best
quality of goods possible at the lowest cost possible, paying the
highest wages possible.Henry Ford
1. Describe the production cycle, inclu
Finance and Investment Cycle
Credit has done a thousand times more to enrich mankind than all
the goldmines in the world. It has exalted labor, stimulated manufacture
and pushed commerce over every sea.
Auditors must approach their jobs with independence and skepticism.
How do we instill those necessary traits in auditors? This may be the most
important auditing question of our time.
James Doty, PCOAB Chairman, remarks made a
Employee Fraud and the
Audit of Cash
"Rather fail with honor than succeed by fraud."
-Sophocles (496-406 BC)
Define and explain the differences among several kinds of employee fraud
that might occur
Completing the Audit
It aint over till its over.
Yogi Berra, former catcher for the New York Yankees
Timeline for Major Activities
(date of the financial
Interim testing (tests
When men are pure, laws are useless; when men are corrupt,
laws are broken.
Benjamin Disreali, Former British Prime Minister
Sources of Auditor Liability
Common law: Uses legal precedent to
Other Public Accounting Services
Report on subject matter or assertion about
Responsibility of another party
Types of Attestation Engagements
There are five kinds of lies: lies, damned lies, statistics, politicians
quoting statistics, and novelists quoting politicians on statistics.
Stephen K. Tagg, marketing faculty member, University of
Internal Audit, Governmental Audit,
and Fraud Examination
You have a chance to really learn and improve the business. You build
relationships with the board and major business leaders. You can move
internal audit to more value-added processes. An
Reports on Audited
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Enron Corp.
and subsidiaries as of December 31, 2000 and 1999, and the
Overview of Sampling
There are three kinds of lies: lies, damned lies, and statistics.
Popularized by Mark Twain (pseudonym of Samuel L. Clemens),
famous American writer (1835 1910)
Sampling is the process of making a statement