MODERN AUDITING 7th Edition California State 现代审计第七版加利福尼亚州.pptVIP

MODERN AUDITING 7th Edition William C. Boynton California Polytechnic State University at San Luis Obispo Raymond N. Johnson Portland State University Walter G. Kell University of Michigan CHAPTER 17AUDITING THE INVESTING AND FINANCING CYCLES Nature of the Investing and Financing Cycles The Investing Cycle Substantive Tests of Plant Asset Balances The Financing Cycle CHAPTER 17AUDITING THE INVESTING AND FINANCING CYCLES Substantive Tests of Long- Term Debt Balances Substantive Tests of Stockholders Equity Balances Value-Added Services in the Investing and Financing Cycles Nature of the Investing and Financing Cycles The auditor usually wants to obtain answers to the following questions when auditing investing and financing activities: 1. What assets are necessary to support the operations of the entity, and what are management’s long-range plans for growing the entity’s asset base? 2. What assets were acquired, or disposed of, during the period? 3. How were newly acquired assets financed and what are management’s long-range plans for financing the entity’s growth? Nature of the Investing and Financing Cycles Investing activities are the purchase and sale of land, buildings, equipment, and other assets not generally held for resale. In addition, investing activities include the purchase and sale of financial instruments not intended for trading purposes. Nature of the Investing and Financing Cycles Financing activities include transactions and events whereby cash is obtained from or repaid to creditors (debt financing) or owners (equity financing). Financing activities would include acquiring debt, capital leases, issuing bonds, or issuing preferred or common stock. Financing activities would also include payments to retire debt, reacquiring stock (treasury stock), and the payment of dividends. Nature of the Investing and Financing Cycles Using the Understanding of the Business and Industry to Develop Audit Strategy When an auditor