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Principles of Auditing and Other Assurance Services.

O. RAY WHITTINGTON, and KURT PANY, Principles of Auditing and Other Assurance Services, Fourteenth edition (Boston, MA: McGraw-Hill/Irwin, 2004, pp., xxvii, 763).

This classic auditing textbook has been in print for over a half century and continues to retain a loyal following. This is attributable in part to the authors' tenacity in keeping the text current and completely aligned with professional standards. This edition adds many new questions, problems, and cases and provides an excellent foundation for those intending to sit for the CPA exam. The text has an easily grasped organization and is quite well written as expected from a book in its 14th edition.

Among competing auditing texts, it is distinctive in that it is relatively svelte, covering financial auditing in only 17 chapters. Also, the authors use an account or balance-sheet-based approach rather than a cycle- or risk-based approach. Three chapters cover planning the audit and, excluding statistical sampling, 6-1/2 chapters cover the testing of accounts. To appreciate the variety of choices available, note that Knechel's auditing text reverses this allocation.

Chapter 1 provides a historical context for auditing and discusses problems relating to the Sarbanes-Oxley Act. It introduces assurance services, but postpones an in-depth discussion to a final chapter. The modular approach's flexibility is useful in the post-Enron environment, where practitioners are likely to refocus on delivering quality audits and billing accordingly rather than on developing and marketing new products to management.

Chapter 2 excellently covers the ten GAAS and provides students with a good perspective on the objectives and output of a financial statement audit. Chapters 3 and 4 concisely and effectively provide technical knowledge on professional ethics and the law necessary to pass the CPA exam. A missed opportunity is the lack of explanation for the stricken 400 section of the Code of Professional Conduct. The implications of increased competition to satisfy the fee-paying client over the past several decades are worth pondering.

Chapter 4's opening case raises many troubling political and economic questions that should be explicitly posed to students. Similar to other auditing texts, it could put auditor litigation in better perspective, such as how it compares to other countries, or today versus the past. The literature is replete with descriptive statistics on auditor's experience, with litigation and these could be incorporated into the text by illustrative graphs.

Chapter 5 wisely integrates the need for evidence with the output of the audit risk model. However, the text spends little time on evidence concepts but thoroughly describes evidence types and working papers. Evidence categories use nontraditional terminology. Chapter 6 first describes the means to obtain clients, but should add how auditors lose clients (e.g., by citing evidence from 8-Ks in the literature). Its coverage of SAS No. 99 is excellent and concise; still there is enough information here to fill two chapters.

Chapter 9 distinctly covers classical variable sampling approaches, but relegates (more than adequately) probability proportional to size sampling (PPS) to an appendix. Chapters 10-17 cover audit procedures, surprisingly in depth, by moving account by account through the balance sheet. Given the CPA exam's new electronic format and the growing importance of financial research, I recommend adding additional research cases of this type.

In summary, this classic text contains many strengths that, given the right context, allow it to dominate its competitors in supporting an introductory auditing course. The text is better than most at supporting the CPA exam content. Furthermore, its high level of coverage of audit procedures combined with the integrated Keystone Case, provide the needed ingredients to prepare junior auditors for a successful first year. This text should appeal especially to professors who work on a quarter or short-semester basis, want students to obtain great textbook support for the CPA exam material, or face audit firms that recruit students who possess more hands-on experience and who can be immediately productive for them without additional formal training. The strong supplementary materials also facilitate an easy transition for those who have not taught the course previously.


Associate Professor of Accounting

Fordham University
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Title Annotation:Book Reviews
Author:Tucker, Robert
Publication:Issues in Accounting Education
Article Type:Book Review
Date:May 1, 2004
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