Auditing & Assurance Services 7th Edition

Book Preface

As auditors, we are trained to investigate beyond appearances to determine the underlying facts—in other words, to look beneath the surface. From the Enron and WorldCom  scandals of the early 2000s to the financial crisis of 2007–2008 to present-day issues  and challenges related to significant estimation uncertainty, understanding the auditor’s  responsibility related to fraud, maintaining a clear perspective, probing for details, and  understanding the big picture are indispensable to effective auditing. With the availability of greater levels of qualitative and quantitative information (“big data”), the need  for technical skills and challenges facing today’s auditor is greater than ever. The author  team of Louwers, Blay, Sinason, Strawser, and Thibodeau has dedicated years of experience in the auditing field to this new edition of Auditing & Assurance Services, supplying the necessary investigative tools for future auditors.

Cutting-Edge Coverage
The seventh edition of Auditing & Assurance Services continues its tradition as the most  up-to-date auditing text on the market. All chapters and modules have been revised to  incorporate the latest professional standards, recodifications, and proposals from the International Auditing and Assurance Standards Board, Auditing Standards Board, and Public  Company Accounting Oversight Board. To acquaint students with the professional standards, each chapter or module begins with a list of the relevant professional standards that  are covered in that chapter. Importantly, this text incorporates the reorganized PCAOB  standards effective December 31, 2016.

As a team, we use a variety of contacts and resources to stay informed of ongoing developments that affect learning objectives in the financial statement auditing  course(s). In fact, changes to key learning goals and objectives are usually prompted by  interactions with colleagues from practice.

In that spirit, since the publication of our sixth edition, we have been working hard  to stay in touch with developments in practice so we can always respond to your needs  in the financial statement auditing classroom. Among our many observations, one trend  has emerged as a potential sea change in the financial statement auditing process, the  “big data” challenge.

Indeed, based on our collective observations, we believe that students should be  prepared to make the best use possible of relevant data using state-of-the art analytical  tools. In fact, the terms big data and data analytics are frequently being used to describe  a growing movement among audit professionals. Our collective view is that students  must be prepared to meet the “big data” challenge.

To help students be prepared, the seventh edition of Auditing & Assurance Services has been revised deliberately to help students critically think about the use of increased  data and analytical tools in the financial statement audit. In addition, we would like to  help students learn how to effectively document their conclusions in the current “big data” environment.

In a recent white paper, PwC (2015)1 lists five “new” skills that will be required of  auditors moving forward. Although many of these skills require special statistical or  programming knowledge, the first listed skill is one that is applicable to all auditors:
“Research and identify anomalies and risk factors in underlying data.” Although extraction and analysis from client accounting data are critical skills for newly minted  auditors, we are unaware of sufficient materials to assist professors in integrating data  analytics into the auditing classroom. Thus, an important goal of the seventh edition is  to provide a clear and implementable method to fully integrate a leading data analysis  tool, the IDEA data analysis software, into the auditing class.

To start, McGraw-Hill Education is excited to announce a partnership with the developers  of the IDEA software. We believe that IDEA provides an outstanding platform to illustrate  the steps that auditors need to take related to data and data analysis while completing the  financial statement audit. Leading auditing professionals have confirmed that using IDEA  is an outstanding way for an entry-level auditing professional to begin the journey into the  world of “big data” and “data analytics.” Simply stated, big data is manifested in the financial statement auditing process through the use of tools like IDEA.

Overall, our revisions related to the big data challenge were designed to provide  instructors a set of tools and mechanisms to bring data and analytics into the classroom  in a meaningful way. Through the use of these tools, students can be sure they are prepared to enter practice with an appreciation for and knowledge of the increasing importance of data and analytics in the auditing profession. We hope that everyone enjoys our attempts to help students get ready for the big data challenge.

Of course, and perhaps most importantly, the seventh edition of Auditing & Assurance  Services also continues to be the most up-to-date auditing text on the market. The book  has fully integrated the reorganized PCAOB Auditing Standards. In addition, all chapters and modules in the seventh edition have been revised to incorporate the  two new standards (AS 2701 and AS 2410) adopted by the PCAOB that relate to the  auditor’s work on supplementary information provided in the financial statements and  related parties. In addition, all chapters and modules have been revised to incorporate  the latest updates from the international standards of auditing (ISAs) and the Auditing  Standards Board (ASB). With Auditing & Assurance Services, seventh edition, students  are prepared to take on auditing’s latest challenges.

The Louwers author team uses a conversational, yet professional tone—hailed by  reviewers as a key strength of the book

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