Über die Autorin bzw. den Autor

Graham Cosserat is now retired following a career that included 30 years’ experience in teaching auditing at Kingston University, the University of Technology, Sydney and Nottingham Trent University.  He also worked as an examiner in auditing for the ACCA (Association of Chartered Certified Accountants).

Neil Rodda is a Senior Lecturer at Manchester Metropolitan University where he has taught courses in auditing and financial reporting since 1991.  He also has considerable professional experience including work as an audit manager for KPMG and as a director of an enterprise agency. Neil Rodda has also worked with the ACCA both as a marker of professional examinations and as an author of various study materials.

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Modern Auditing has become established as one of the leading textbooks for students taking university and professional courses in auditing. This extensively revised third edition continues to provide the reader with a comprehensive and integrated coverage of the latest developments in the environment and methodology of auditing.

Aimed at introductory level courses in auditing at undergraduate, graduate and professional levels, it develops the auditing process in a logical and sequential manner enabling the reader to progressively consolidate their understanding of the concepts and process.

The book contains a strong pedagogical framework including: chapter overviews, learning objectives and checks, review questions, professional application questions, case studies and a glossary of technical terms.

New features include:

• Updated coverage of developments in companies legislation, regulation and corporate governance
• Discussion of new developments in ethical codes
• Coverage of the latest audit risk standards and the impact of the IAASB’s Clarity Project
• Focus on changes in professional statements and structure and the increasing influence of IFAC

Aus dem Klappentext

Modern Auditing has become established as one of the leading textbooks for students taking university and professional courses in auditing.  This extensively revised third edition continues to provide the reader with a comprehensive and integrated coverage of the latest developments in the environment and methodology of auditing.

Aimed at introductory level courses in auditing at undergraduate, graduate and professional levels, it develops the auditing process in a logical and sequential manner enabling the reader to progressively consolidate their understanding of the concepts and process.

The book contains a strong pedagogical framework including: chapter overviews, learning objectives and checks, review questions, professional application questions, case studies and a glossary of technical terms.

New features include:

• Updated coverage of developments in companies legislation, regulation and corporate governance
• Discussion of new developments in ethical codes
• Coverage of the latest audit risk standards and the impact of the IAASB’s Clarity Project
• Focus on changes in professional statements and structure and the increasing influence of IFAC

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Modern Auditing

John Wiley & Sons

Chapter One

* THE EVOLUTION OF AUDITING PRACTICES

* The traditional conformance role of auditing

* The development of an enhancing role

* Auditing - a shifting paradigm

* THE ACCOUNTING PROFESSION AND ITS ASSOCIATED ORGANIZATIONS

* Private sector organizations

* Standard setting bodies

* Statutory audit regulation

* SERVICES PROVIDED BY PUBLIC ACCOUNTANTS

* Assurance services

* Nonassurance services

* TYPES OF AUDIT ACTIVITY AND AUDITOR

* Types of audit activity

* Types of auditor

* REGULATORY FRAMEWORK FOR ENSURING QUALITY SERVICES

* Standard setting

* Firm regulation

* Self-regulation

* Independent regulation

* SUMMARY

* NOTES

* FURTHER READING

* MULTIPLE-CHOICE QUESTIONS

* DISCUSSION QUESTIONS

* PROFESSIONAL APPLICATION QUESTIONS

* LEARNING OBJECTIVES

After studying this chapter you should be able to:

1 appreciate how auditing developed

2 discuss the historical and other factors that influence the role of auditors, and the resulting complexities of meeting public expectations

3 explain the scope of auditing within the assurance framework and its relationship with other nonaudit services

4 describe the accounting profession in the United Kingdom and the constituencies that influence the profession and audit practices

5 explain the nature of and scope of assurance services performed by public accountants

6 explain the nature of nonaudit services, and describe several types performed by public accountants

7 distinguish different types of audit activity and auditor

8 explain the regulatory framework for ensuring quality services

9 state the elements of quality control applicable for audits and assurance services.

* PROFESSIONAL STATEMENTS

IAASB International Framework for Assurance Engagements

ISA 200 Objective and General Principles Governing an Audit of Financial Statements

ISA 240 The Auditor's Responsibility to Consider Fraud in an Audit of Financial Statements

ISA 250 Consideration of Laws and Regulations in an Audit of Financial Statements

ISA 220 Quality Control for Audits of Historical Financial Information

IAPS1010 The Consideration of Environmental Matters in the Audit of Financial Statements

ISQC 1 Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements

Audit (as well as other assurance services) plays a vital role in business, government and our economy. The nature of this role will be explained in Chapter 2. Evidence of its importance is provided by the fact that all of the following bodies are required to have an annual audit:

* all public and larger private companies

* government departments, local authorities, NHS Health Trusts and local authorities

* registered charities and other 'not-for-profit' organizations, including educational institutions.

It is estimated that well over a million audits annually are conducted in accordance with statutory requirements in the member states of the European Union.

Auditing services have been changing rapidly since the early 1990s. Audit practices have been evolving in response to growing public expectations of accountability and to the complexities in economic and technological advances being made in business organizations. An important recent development has been the challenge of globalization and the need for harmonization of financial reporting in facilitating the most efficient allocation of investment funds globally. Harmonization applies not only to the financial reporting standards applied in preparing financial statements but also to the credibility attached to the audit process. As a vocation, therefore, a career in audit and assurance offers the opportunity to work in a challenging and rewarding dynamic business environment as well as providing the opportunity to develop a thorough understanding of a wide range of professional services and serve the interests of users of financial information.

This chapter traces the conceptual development of auditing over the years. It also provides a broad framework of the accounting and auditing profession and its related associations, a description of the general types of audit activity and a review of the system of quality procedures prescribed for the profession.

The Evolution of Auditing Practices

Auditing has developed from what, in the twelfth century, was primarily a check of the accounting for stocks and revenues by authorized officers of the Exchequer of England into a sophisticated professional assurance service performed by independent accountants in the interests of their clients and other users of financial information. This section describes the development of the auditing role over the years, with particular reference to the nature and objectives of auditing, the responsibilities of auditors and the evolution of the accounting and auditing profession. This historical perspective is particularly relevant given the current shift away from traditional accounting and auditing services to a broad variety of assurance services more relevant to the emerging information revolution.

The traditional conformance role of auditing

The traditional conformance role of auditing first appeared in the United Kingdom during the 1800s. The nature of this role was articulated in major legal case decisions at the end of that century. In fact, the development of the auditing role is very much an outcome of court cases, as is seen in the following sections.

Auditing in the United Kingdom

The word 'auditing' comes from the Latin word audire, meaning 'to hear'. In the late Middle Ages in Britain, accounts of revenue (tax receipts) and expenditure for manors and estates were both 'heard' by an auditor, whose task was to examine such accounts. With the spread of double-entry book-keeping, first described by Luca Pacioli in 1494, associations of accountants were formed, and auditing gradually established an important role.

Auditing as we know it today can be traced back to the development of joint-stock corporations in the United Kingdom during the Industrial Revolution from the early 1800s. The increasing use of the company form of business organization led to growth of a professional class of managers who handled large sums of capital on behalf of shareholders. Recognizing the need for periodic reporting by managers to shareholders, the Joint Stock Companies Registration and Regulation (Joint Stock Companies Act) 1844 stipulated that 'Directors shall cause the Books of the Company to be balanced, and a full and fair Balance Sheet to be made up.' The Act provided for the appointment of auditors who were empowered to examine the accounts of the company.

Regulation 94 of the UK Companies Act 1862 required the auditors to state in their report.

... whether, in their Opinion, the Balance-Sheet is a full and fair Balance-Sheet, containing the particulars required by these Regulations, and properly...