Dwnload Full Auditing and Assurance Services A Systematic Approach 9th Edition Messier Solutions Manual PDF
Dwnload Full Auditing and Assurance Services A Systematic Approach 9th Edition Messier Solutions Manual PDF
Dwnload Full Auditing and Assurance Services A Systematic Approach 9th Edition Messier Solutions Manual PDF
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CHAPTER 2
THE FINANCIAL STATEMENT AUDITING ENVIRONMENT
2-1 Auditors can be classified under four types: (1) external auditors, (2) internal auditors, (3)
government auditors, and (4) forensic auditors.
2-2 Examples of compliance audits include (1) internal auditors determining whether
corporate rules and policies are being followed by departments within the organization, (2)
an examination of tax returns of individuals and companies by the Internal Revenue
Service for compliance with the tax laws, and (3) an audit under the Single Audit Act of
1984 to determine whether an entity receiving federal assistance is in compliance with
applicable laws and regulations.
Examples of operational audits include (1) an audit by the GAO of the Food and Drug
Administration to determine the efficiency and effectiveness of procedures for introducing
new drugs to the market, (2) internal auditors examining the effectiveness and efficiency
of funds being spent on the entity’s computer resources, and (3) a university hiring an
external auditor to examine the effectiveness and efficiency of student advisory services.
Student answers will likely be less detailed but should capture the general idea of each
type of audit.
2-3 During the late 1990s and early 2000s, accounting firms aggressively sought opportunities
to expand their business in nonaudit services such as consulting. This expansion from their
core audit practice, combined with allegations of auditors refusing to challenge
management’s actions, resulted in conflict between regulators and the accounting
profession. Subsequent financial fiascos such as those at Enron, WorldCom, Tyco, and
many others caused investors to doubt the fundamental integrity of the financial reporting
system. Under pressure to restore the public’s confidence, Congress passed the Sarbanes-
Oxley Act and created the PCAOB in 2002.
2-4 The accounting profession’s expansion into new areas, combined with changes in the
overall business environment, resulted in new regulations and guidelines. The scandals of
the late 1990s and early 2000s brought into question the profession’s ability to self-
regulate, resulting in new legislation. While these changes have caused pain and turmoil,
they highlight the essential importance of auditing in our economic system. Ultimately,
the “back to basics” emphasis, along with auditing firms’ renewed focus on thorough and
effective financial statement audits, will likely prove healthy for the U.S. financial
2-1
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
reporting system and for the profession. Further, somewhat ironically, the SOX-mandated
audit of internal control over financial reporting has brought significant new revenues to
accounting firms.
2-5 Management is responsible to prepare financial statements that fairly present the
company’s financial condition and operations in accordance with established accounting
standards. Note that the auditor’s opinion explicitly states that the financial statements are
the responsibility of management. The auditor is responsible to issue an opinion in regards
to the financial statements prepared by management. In order to issue this opinion, the
auditor must plan and perform the audit in accordance with established standards to obtain
reasonable assurance that the financial statements are free of material misstatement,
whether caused by error or fraud. However, it is important to note that an auditor’s
unqualified opinion does not mean that errors or fraud do not exist but rather that there is
reasonable assurance that they do not exist in material amounts.
2-6 The essential components of the high-level model of business offered in the chapter are:
corporate governance, objectives, strategies, processes, controls, transactions, and
financial statements. Corporate governance is carried out by management and the board of
directors in order to ensure that business objectives are carried out and that company
assets are safeguarded. To achieve its objectives, management must formulate strategies
and implement various processes which are in turn carried out through business
transactions. The entity’s information and internal control systems must be designed to
ensure that these transactions are properly executed, captured, and processed in order to
produce accurate financial statements. It is important that the auditor obtain a firm
understanding of these components in order to understand relevant risks and to plan the
nature, timing, and extent of the audit so that it is efficient and effective.
2-7 The information system must maintain a record of all businesses transactions. It should be
capable of producing accurate financial reports to summarize the effects of the entity’s
transactions. Among other things, internal control is required to ensure that a proper
environment is established and that transactions are appropriately conducted and recorded
by the information system and company employees. Effective internal control provides
safeguards to ensure the (1) reliability of financial reporting, (2) compliance with laws and
regulations, and (3) the effectiveness and efficiency of operations. Auditing standards
require that the auditor obtain an understanding of the client’s environment, including its
internal control, in planning the nature, timing, and extent of testing.
2-2
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 02 - The Financial Statement Auditing Environment
2-9 The PCAOB is a quasi-governmental organization overseen by the SEC. It was formed to
provide governmental regulation of the standards used in conducting public company
audits because of a perceived failure of the profession to adequately regulate itself.
2-10 The SEC has congressional authority from the original Securities Acts of 1933 and 1934
to establish accounting and auditing standards for publicly traded companies; however, in
the past the SEC has largely delegated this authority to other bodies, including the FASB
and the AICPA’s Auditing Standards Board. The Sarbanes-Oxley Act of 2002 gave the
SEC the mandate to actively regulate the public accounting profession by establishing and
overseeing the PCAOB and its standard-setting process relating to the audits of public
companies. The SEC has authority to implement and oversee standards relating to all
aspects of the audits of public companies, including standards relating to auditor
independence (such as the requirement for audit firms to rotate audit partners off audit
engagements every five years).
2-11 The documents most frequently encountered by auditors under the Securities Exchange
Act of 1934 are forms 10-K, 10-Q, and 8-K. Forms 10-K and 10-Q are, respectively,
annual and quarterly reports, which include the audited financial statements periodically
filed with the SEC by a publicly traded entity. An 8-K is filed whenever a significant event
occurs which may be of interest to investors, such as a change of independent auditors.
2-12 The four categories of Principles Underlying an Audit Conducted in Accordance with
GAAS are the purpose and premise of an audit, personal responsibilities of the auditor,
auditor actions in performing the audit, and reporting. The Principles Underlying an
Audit include all of the key concepts conveyed in the 10 GAAS, but do so in a more
organized and coherent manner. They also address other key concepts that are not
addressed in the 10 GAAS, such as explicitly identifying the fundamental purpose of an
audit and management’s responsibilities.
2-13 GAAS is composed of three categories of standards: general standards, standards of field
work, and standards of reporting. The ten GAAS and the SAS are minimum standards of
performance because circumstances of individual engagements may require the auditor to
perform audit work beyond that specified in GAAS and the SAS in order to appropriately
issue an opinion that a set of financial statements is fairly presented. As a result, the
auditor needs to use professional judgment in following all standards.
2-3
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
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The Project Gutenberg eBook of John G.
Paton, missionary to the New Hebrides
This ebook is for the use of anyone anywhere in the United
States and most other parts of the world at no cost and with
almost no restrictions whatsoever. You may copy it, give it away
or re-use it under the terms of the Project Gutenberg License
included with this ebook or online at www.gutenberg.org. If you
are not located in the United States, you will have to check the
laws of the country where you are located before using this
eBook.
Language: English
An Autobiography.
FIRST PART.
JOHN G. PATON,
MISSIONARY TO THE NEW HEBRIDES.
AN AUTOBIOGRAPHY.
EDITED BY HIS BROTHER.
NEW HEBRIDES.
An Autobiography.
FIRST PART.
CHAPTER II.
AT SCHOOL AND COLLEGE.
A Typical Scottish School 31
An Unacknowledged Prize 32
A Wayward Master 33
Learning a Trade 33
My Father’s Prayers 34
“Jehovah Jireh” 34
With Sappers and Miners 36
The Harvest Field 38
On the Road to Glasgow 39
A Memorable Parting 40
Before the Examiners 42
Killing Work 43
Deep Waters 44
Maryhill School 45
Rough School Scenes 46
“Aut Cæsar Aut Nullus” 48
My Wages 49
CHAPTER III.
IN GLASGOW CITY MISSION.
“He Leadeth Me” 53
A Degraded District 55
The Gospel in a Hay-Loft 56
New Mission Premises 58
At Work for Jesus 59
At War with Hell 62
Sowing Gospel Seed 64
Publicans on the War Path 65
Marched to the Police Office 67
Papists and Infidels 69
An Infidel Saved 70
An Infidel in Despair 71
A Brand from the Burning 72
A Saintly Child 75
Papists in Arms 77
Elder and Student 81
CHAPTER IV.
FOREIGN MISSION CLAIMS.
The Wail of the Heathen 85
A Missionary Wanted 85
Two Souls on the Altar 87
Lions in the Path 89
The Old Folks at Home 92
Successors in Green Street Mission 95
Old Green Street Hands 97
A Father in God 97
CHAPTER V.
THE NEW HEBRIDES.
License and Ordination 101
At Sea 102
From Melbourne to Aneityum 102
Settlement on Tanna 105
Our Mission Stations 106
Diplomatic Chiefs 107
Painful First Impressions 108
Bloody Scenes 109
The Widow’s Doom 111
CHAPTER VI.
LIFE AND DEATH ON TANNA.
Our Island Home 115
Learning the Language 116
A Religion of Fear 118
With or Without a God 119
Ideas of the Invisible 120
Gods and Demons 121
My Companion Missionary 122
Pioneers in New Hebrides 123
Missionaries of Aneityum 125
The Lord’s Arrowroot 126
Unhealthy Sites 127
The Great Bereavement 129
Memorial Tributes 131
Selwyn and Patteson at a Tanna Grave 133
Her Last Letter 134
Last Words 137
Presentiment and Mystery 138
CHAPTER VII.
MISSION LEAVES FROM TANNA.
Tannese Natives 141
“Tabooed” 142
Jehovah’s Rain 143
“Big Hays” 144
War and Cannibalism 145
The Lot of Woman 146
Sacred Days 148
Preaching in Villages 149
Native Teachers 150
The War Shell 151
Deadly Superstitions 152
A League of Blood 154
Chiefs in Council 155
Defence of Women 157
A League of Peace 157
Secret Disciples 159
A Christo-Heathen Funeral 159
Clever Thieves 160
Ships of Fire 164
H.M.S. Cordelia 166
Captain Vernon and Miaki 167
The Captain and the Chiefs 168
The John Williams 169
Evanescent Impressions 170
A House on the Hill 171
In Fever Grips 171
“Noble Old Abraham” 172
Critics in Easy Chairs 174
CHAPTER VIII.
MORE MISSION LEAVES FROM TANNA.
The Blood-Fiend Unleashed 179
In the Camp of the Enemy 180
A Typical South Sea Trader 182
Young Rarip’s Death 183
The Trader’s Retribution 185
Worship and War 186
Saved from Strangling 187
Wrath Restrained 188
Under the Axe 191
The Clubbing of Namuri 193
A Native Saint and Martyr 195
Bribes Refused 197
Widows Rescued 197
The Sinking of a Well 198
Church-Building on Tanna 199
Ancient Stone God 201
Printing First Tannese Book 201
A Christian Captain 203
Levelled Muskets 204
A French Refugee 205
A Villainous Captain 208
Like Master—Like Men 209
Wrecked on Purpose 212
The Kanaka Traffic 213
A Heathen Festival 215
Sacrifices to Idols 218
Heathen Dance and Sham Fight 219
Six Native Teachers 221
A Homeric Episode 222
Victims for Cannibal Feast 223
The Jaws of Death 224
Nahak or Sorcery 226
Killing me by Nahak 227
Nahak Defied 229
Protected by Jehovah 230
“Almost Persuaded” 231
Escorted to the Battle-Field 232
Praying for Enemies 233
Our Canoe on the Reef 233
A Perilous Pilgrimage 236
Rocks and Waters 237
CHAPTER IX.
DEEPENING SHADOWS.
Welcome Guests 243
A Fiendish Deed 244
The Plague of Measles 245
A Heroic Soul 246
Horrors of Epidemic 247
A Memorable New Year 248
A Missionary Attacked 249
In the Valley of the Shadow 251
Blow from an Adze 252
A Missionary’s Death 253
Mrs. Johnston’s Letter 255
A Heavy Loss 256
The Story of Kowia 256
Kowia’s Soliloquy 258
The Passing of Kowia 259
Mortality of Measles 261
Fuel to the Fire 262
Hurricanes 262
A Spate of Blood and Terror 263
Nowar Vacillates 265
The Anger of the Gods 265
Not Afraid to Die 266
Martyrs of Erromanga 267
Visit to the Gordons 268
Their Martyrdom 269
Vindication of the Gordons 270
Gordon’s Last Letter 272
Plots of Murder 273
Death by Nahak 275
Nowar Halting Again 275
Old Abraham’s Prayer 277
Miaki and the Mission House 278
Satanic Influences 280
Perplexity Deepening 280
Bishop Selwyn’s Testimony 281
Rotten Tracts 283
Captain and Mate of Blue Bell 285
My Precious Dog 287
Fishing Nets and Kawases 288
The Taro Plant 290
The Kava Drink 290
Katasian and the Club Scene 291
The Yams 292
Sunshine and Shadow 292
Teachers Demoralized 293
The Chief’s Alphabet 294
Our Evil Genius 295
Ships of Fire Again 295
Commodore Seymour’s Visit 296
Nouka and Queen ’Toria 297
The Dog to his Vomit Again 298
CHAPTER X.
FAREWELL SCENES.
The War Fever 303
Forced to the War Council 305
A Truce Among the Chiefs 306
Chiefs and People 308
The Kiss of Judas 309
The Death of Ian 309
The Quivering Knife 310
A War of Revenge 312
In the Thick of the Battle 313
Tender Mercies of the Wicked 315
Escape for Life 316
The Loss of All 317
Under the Tomahawk 318
Jehovah is Hearing 318
The Host Turned Back 320
The War Against Manuman 320
Traps Laid 321
House Broken Up 322
War Against Our Friends 322
A Treacherous Murderer 323
On the Chestnut Tree 324
Bargaining for Life 325
Five Hours in a Canoe 328
Kneeling on the Sands 329
Faimungo’s Farewell 330
“Follow! Follow!” 331
A Race for Life 332
Ringed Round with Death 334
Faint yet Pursuing 336
Out of the Lion’s Jaws 337
Brothers in Distress 339
Intervening Events 341
A Cannibal’s Taste 341
Pillars of Cloud and Fire 342
Passing by on the Other Side 344
Kapuku and the Idol Gods 344
A Devil Chief 344
“In Perils Oft” 345
Through Fire and Water 345
“Sail O! Sail O!” 349
“Let Me Die” 350
In Perils on the Sea 351
Tannese Visitors 352
The Devil Chief Again 353
Speckled and Spotted 354
Their Desired Haven 355
“I am Left Alone” 355
My Earthly All 356
Eternal Hope 356
Australia to the Rescue 357
For My Brethren’s Sake 358
A New Holy League 358
The Uses of Adversity 359
Arm-chair Critics Again 360
Concluding Note 361
Prospectus of Part Second 362
APPENDIX.
A. The Prayer of the Chiefs of Tanna 367
B. Notes on the New Hebrides 371
LIST OF ILLUSTRATIONS.
What I write here is for the glory of God. For more than twenty years
have I been urged to record my story as a missionary of the Cross;
but always till now, in my sixty-fourth year, my heart has shrunk
from the task, as savouring too much of self. Latterly the conviction
has been borne home to me that if there be much in my experience
which the Church of God ought to know, it would be pride on my
part, and not humility, to let it die with me. I lift my pen, therefore,
with that motive supreme in my heart; and, so far as memory and
entries in my note-books and letters of my own and of other friends
serve or help my sincere desire to be truthful and fair, the following
chapters will present a faithful picture of the life through which the
Lord has led me. If it bows any of my readers under as deep and
certain a confidence as mine, that in “God’s hand our breath is, and
His are all our ways,” my task will not be fruitless in the Great Day.