【正文】 information. 169。2021 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 6 12 Auditor’s Responsibilities for Discovering Illegal Acts ? Evidence accumulation and other actions when there is reason to believe direct or indirecteffect illegal acts may exist ? Actions when the auditor knows of an illegal act 169。2021 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 6 4 Steps to Develop Audit Objectives 1. Understand objectives and responsibilities for the audit. 2. Divide financial statements into cycles. 3. Know management assertions about accounts. 169。2021 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 6 3 Objective of Conducting an Audit of Financial Statements The objective of the ordinary audit of financial statements is the expression of an opinion of the fairness with which they present fairly, in all respects, financial position, result of operations, and its cash flows in conformity with GAAP. 169。2021 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 6 11 Auditor’s Responsibilities for Discovering Illegal Acts ? Directeffect illegal acts ? Indirecteffect illegal acts ? Evidence accumulation when there is no reason to believe indirecteffect illegal act exists 169。2021 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 6 19 Balance and Transactions Affecting Balances Example Beginning balance Sales $ 17,521 $144,328 $137,087 Cash receipts $ 1,242 Sales returns and allowances Chargeoff of uncollectible accounts Ending balance $ 20,197 $ 3,323 Accounts Receivable (in thousands) 169。2021 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 6 27 Management Assertions and Transactionrelated Audit Objectives Accuracy Posting and summarization Sales transactions are properly included in the master file and are correctly summarized Classification Classification Sales transactions are properly classified Cutoff Timing Sales transactions are recorded on the correct dates. Management Assertions About Classes of Transactions and Events General Transaction related Audit Objectives Specific Sales Transaction related Audit Objectives Hillsburg Hardware Company: As Applied to Sales Transactions 169。2021 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 6 35 Management Assertions and Transactionrelated Audit Objectives Management Assertions About Account Balances General Balance related Audit Objectives Valuation and allocation Detail tiein Realizable value Total of inventory items agrees with general ledger Inventories have been written down where realizable value is impaired Hillsburg Hardware Company: As Applied to Inventory Specific Balancerelated Audit Objectives Applied to Inventory Rights and obligations Rights and obligations The pany has title to all inventory items listed Inventories are not pledged as collateral