Hong Kong Auditing: Economic Theory and Practice ( Revised Edition )

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This is the most comprehensive and up-to-date publication on the subject to appear in recent years. A major feature of the book is that it integrates economic theory and concepts with auditing practice. Given the rapid increase in E-commerce, the book addresses special problems arising from the computerization of accounting systems. By utilizing many graphics, tables and interesting cases, the author covers a full range of auditing topics, plus useful reference aids and indexes to:


  • Hong Kong standards: SAS, SAG, SSAP, PN, Professional Ethics
  • Foreign standards: AUS, AUP, AAS, AU, AICPA
  • Ordinances and Acts: Hong Kong and abroad
  • Law cases: Local and international
ISBN
978-962-937-083-1
Pub. Date
May 1, 2003
Weight
0.5kg
Paperback
852 pages
Dimension
185 x 260 mm


The business environment both in Hong Kong and globally is characterized by rapid changes in terms of E-commerce, information technology, and vast expansion of commerce and international markets. These changes and

The business environment both in Hong Kong and globally is characterized by rapid changes in terms of E-commerce, information technology, and vast expansion of commerce and international markets. These changes and the volatile nature of business as evidenced by the recent Asian financial crisis have created unprecedented challenges for the accounting profession. Repeated calls for more accountable corporate governance, and for higher quality in auditing services, are getting louder each day. This book is, in part, a response to these challenges and widely felt needs. It provides an up-to-date exposition of auditing, and in particular, electronic data processing (EDP) auditing, that is based on auditing standards, law, practice and experience in Hong Kong.


Integrating the economic theory, concepts and practice of auditing, this book is geared towards accounting students and practitioners not only in Hong Kong, but also in countries where auditing standards are similar to those in Hong Kong, such as Singapore and Malaysia.


A major feature of this book is that it boldly draws on economic theories to explain aspects of auditing — agency theory, the economics of ethical compliance behaviour, audit product differentiation, audit quality and corporate governance, to name a few. The book provides updated material on the auditor's legal duty and liability, statistical audit sampling and EDP auditing.


A brief description of the organization of the contents may be helpful. Chapters 1 and 2 provide an overview of the development and nature of auditing. Chapter 2 includes a discussion of the economic theory of auditing. Integrated within this framework is a discussion of the Hong Kong Auditing Standards. Chapter 3 covers the auditor's duty and legal liability, while Chapter 4 is concerned with the ethical dimensions of auditing.


The technical aspects of the audit process, including risk analysis, are treated in Chapters 5 through Chapter 18. Chapter 5 provides an overview of the audit process, describing the phases of the audit as well as an examination of evidential matter and working papers. Since there is a clear emphasis on the risk analysis approach to modern auditing, this approach is fully discussed in Chapter 6, where business risk and its relationship to audit risk are discussed; it also points out the importance of materiality in conjunction with the going assumption in evaluating audit evidence. The study and assessment of the internal control structure is covered in Chapter 7. Chapter 8 deals with audit sampling, where the basic concepts underlying statistical sampling and risk assessment are explained.


Chapters 9, 10 and 11 concentrate on EDP auditing and introduce updated ideas and material. Chapter 12 provides a discussion of tests of controls or compliance testing and substantive testing. Chapters 13 to 18 present a detailed treatment of the audit of the major accounting subsystems, paying special reference to risk analysis. Chapter 19 deals with the audit report which is the culmination of the audit process. Chapter 20 concludes the book by providing a detailed treatment of internal auditing and operational auditing.


A number of revision questions, cases and problems have been included at the end of each chapter. These can be used by the student or lecturer to determine whether the ideas contained in each chapter have been grasped.

Ferdinand A. Gul
March 2000
  1. Development of the Auditing Profession
  2. Economic Theory of Auditing and the Development of Standards
  3. Rights, Duties and Liabilities of Auditors in Hong Kong
  4. Professional Ethics and Auditor Independence
  5. Audit Overview and Evidential Matter
  6. Risk Analysis and Materiality
  7. Control Risk Assessment
  8. Auditing Sampling and Statistical Tests
  9. Internal Control in an EDP Environment
  10. The Study and Evaluation of EDP Controls
  11. Auditing in an EDP Environment Using CAATs
  12. Auditing Transactions and Account Balances
  13. Auditing the Revenue and Receipts Cycle
  14. Auditing the Purchases and Payments Cycle
  15. Auditing the Production Cycle
  16. Auditing the Payroll and Personnel Cycle
  17. Auditing Other Assets, Equities and Liabilities
  18. Profit and Loss Account Balances and Completing the Audit
  19. Audit Reporting Practices
  20. Internal and Operational Auditing