Essentials of Auditing, Assurance Services & Ethics in Australia: An Integrated Approach

Citation

Botica Redmayne, N. (2012), "Essentials of Auditing, Assurance Services & Ethics in Australia: An Integrated Approach", Journal of Accounting & Organizational Change, Vol. 8 No. 1, pp. 120-122. https://doi.org/10.1108/18325911211205766

Education provides for foundations of a profession. Auditors, as part of the accountancy profession, generally demand education which is complex and ever‐changing. Auditors' education is expected to be adaptable to changes in business environment, to changes in regulation and performance standards and to changes and advancements in technology (Bryan and Smith, 1997). So there is an on‐going discussion amongst the experts and researchers (Scheiwe and Radich, 1997; Chaffey et al., 2010) on what should be included in audit education. Over the last ten or so years, there has been a greater demand for a less theoretical approach and more practical approach in audit education (Johnson et al., 2003). To that end, there is now a plethora of textbooks and resources from a number of countries providing support for and the means of curriculum delivery for auditing educators. A new edition to these resources is the Essentials of Auditing, Assurance & Ethics in Australia: An Integrated Approach by Arens, Best, Schailer, Feiedler, Elder and Beasley (hereafter the Essentials) (Arens et al., 2007, 2010, 2011).

One can be excused to think, on first encounter with this book, that this is either a “light” or perhaps “just condensed” version of the eighth edition of Auditing and Assurance Services and Ethics in Australia: An Integrated Approach (hereafter eighth Australian edition) or of the 12th, US edition of the Auditing and Assurance Services: An Integrated Approach. That it is not the case.

The Essentials is a combination of carefully selected and composed material and chapters from those books so to provide a concise but still comprehensive textbook for accounting majors studying auditing. According to the authors and based on their market research more concise and streamlined textbooks are now in demand. So in response this book has been tailored with one‐semester auditing courses in mind, particularly those introducing principles of auditing, but still providing resources for understanding the key issues in the auditing process. The result is a good textbook that has the primary emphasis on auditor's decision‐making process with both theoretical auditing concepts and practical auditing aspects presented in a logical manner making the book a quicker and easier to read resource.

This improvement was achieved by merging or removing several chapters from the eighth Australian edition. For example, the material on auditors' legal environment, audit quality and ethics, presented in separate chapters in the eighth Australian edition is combined in one, comprehensive chapter on audit regulation and quality in the Essentials. Similarly, technology, e‐commerce and fraud issues are integrated throughout the chapters in the Essentials. A separate chapter on theoretical aspects of fraud auditing, a very good feature of the eighth Australian edition, remains in the Essentials. More rationalisation is performed in later chapters on auditing transaction cycles and balances, where, for example, auditing of sales and collection cycle is in the Essentials combined with auditing accounts receivable, while that material was presented in two separate chapters in the eighth Australian edition. The result is a more logical and less compartmentalised approach to teaching sales, collection and receivables. The end of chapters' revision questions and problems, although somewhat reduced in quantity as a result of chapters' changes, still remain very relevant and possibly more focused.

The deletion of material from the eighth edition so to fit into the rationalised Essentials format mainly occurs in the areas of audit of payroll and personnel cycle, cash balances and transactions, property, plant and equipment, prepayments and capital acquisitions and repayments. Consequently, the Essentials is an adequate resource for auditing students to get a taste of auditing issues and procedures used on auditing a couple of major transaction cycles, such as revenue, purchases and inventory. However, for a more comprehensive learning of detailed audit procedures over the all transactions cycles, the eighth Australian edition or US 12th editions are a better resource.

Overall, the Essentials consist of 16 chapters. The first three chapters set the scene for auditing by discussing demand for audit and assurance services, audit reports and audit regulation and quality (with emphasis on the Australian professional and legal environment). Chapters four to 15 describe auditing process; from establishing auditors' and management responsibilities through to the completion of an audit. This part of the book also contains separate chapters on fraud auditing, the impact of information technology (IT) on the audit process and audit sampling. One wonders whether, in the name of further streamlining and similarly to the way that other material is integrated throughout the chapters, some of the material in sampling and IT chapters could have possibly been incorporated in other chapters, particularly the chapters on internal control and control risk and audit of transactions cycles. That way sampling and IT would feature as integral parts of the auditing process, which is what they are in the “real life” auditing practice.

The Essentials book retains the final chapter on other assurance engagements and environments including an important feature on assurance services over carbon emissions reporting.

Additional features of the book are two running cases, Hillsburg Hardware Annual Report and Pinnacle Manufacturing Integrated Case Example. These integrated cases allow students to better understand how different parts of an audit are interrelated. Another feature, consistent with the eighth Australian edition, is the ACL 9 Education Edition Student Software Supplement that provides students with some exposure to audit software in order for students to better understand how CAATs can assist the auditor in performing an audit.

The remaining deficiency, as it is the situation with the eighth Australian edition, is that Essentials only refers to Australian Auditing Standards. That can be partially remedied with use of Auditing Clarity Standards Update Booklet, which is designed to accompany both the Essentials and the eighth Australian edition. However, references to International Standards on Auditing (ISAs), in addition to Australian standards, throughout the Essentials book, would enable easier and wider use of this text outside Australia.

In summary, Essentials is a good quality textbook, concise and well structured, appropriately designed to cater for learning needs of auditing students studying auditing as part of their accounting majors and particularly so if studying auditing in one‐semester courses.