Modern Auditing

Modern Auditing offers the reader a thorough coverage of the practice of auditing in context of auditing theory and concepts, and the professional responsibilities of the independent auditor. The structure of the book develops the auditing process in a logical and sequential manner, enabling students to progressively consolidate their understanding of the concepts and processes without excessive detail or repetition.

Preface vii

Chapter 1

Auditing and the Public Accounting Profession 1

Chapter 2

Financial Statement Audits 37

Chapter 3

Professional Ethics 71

Chapter 4

Auditors’ Legal Liability 111

Chapter 5

Audit Risk and Audit Evidence 141

Chapter 6

Accepting the Engagement and Planning the Audit 183

Chapter 7

Internal Control and Control Risk Assessment 225

Chapter 8

Audit Sampling 269

Chapter 9

Designing Substantive Procedures 307

Chapter 10

Auditing Sales and Trade Receivables (Debtors) 341

Chapter 11

Auditing Purchases, Trade Payables (Creditors) and Payroll 383

Chapter 12

Auditing Inventories (Stocks) and Tangible Noncurrent Assets (Fixed Assets) 421

Chapter 13

Auditing Cash and Investments 461

Chapter 14

Completing the Audit 501

Chapter 15

Reporting on Audited Financial Statements 529

Chapter 16

E-Commerce and Auditing 575

Chapter 17

Contemporary Issues in Auditing 603

Answers to Multiple-Choice Questions 639

Suggested Answers to Professional Application Questions 651

The IAASB’s Glossary of Terms 703

Index 719

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.

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