As we all know, this decade has brought possibly the most far-reaching changes in the history of modern
financial markets and the international financial statement auditing environment. In the face of the
challenges presented during this unprecedented period, we are committed to providing lecturers and
students with the most complete and up-to-date materials possible so their hard work and energy in
teaching and studying represents an investment in the latest, most current concepts. We are confident that
the changes made in this edition will make it easier for lecturers to teach effectively and for students to
learn more efficiently.
What’s new in the Second International Edition?
Although the auditing environment has become even more complex and demanding, at the same time it is
increasingly important that students gain a deep understanding and working knowledge of fundamental
auditing concepts and how they are applied. We have worked hard to make this book the most
‘student-friendly’ auditing book on the market. In this new international edition we have focused on
making the book even clearer and easier to understand and on encouraging students to think more clearly
and deeply about what they are studying. This is accomplished primarily by:
(1) Introducing ‘stop and think’ and ‘pause to test your intuition’ phrases at key places throughout the
chapters to encourage students to internalize key concepts more fully
(2) Clarifying explanations and adding easy-to-understand examples throughout the book
(3) Making several chapters more concise, and enhancing the focus on key concepts by deleting
(4) Improving end-of-chapter and supplementary materials throughout the book and on the website by
clarifying or replacing existing questions and problems.
This Second International Edition also contains important updates to reflect the recent landmark changes in
the international professional standards. The International Federation of Accountants (IFAC) and its boards
are established as the global leaders in professional standards. The international professional standards are
the basis for the conduct of audits all over the world. In 2009 the International Auditing and Assurance
Standards Board (IAASB) completed its comprehensive programme to update and enhance the clarity of the
set of International Standards on Auditing (ISAs). The 36 updated and clarified ISAs include substantive
new requirements and introduced significant changes to audits. The implementation and appropriate
application of the clarified ISAs is critical for the success of the auditing profession in the coming years.
Education and professional training of auditors worldwide need to take action at the earliest opportunity
to deal with the new set of clarified ISAs and the clarified International Standard on Quality Control. The
new ISAs are integrated throughout all the chapters in this book. Because of their increasing complexity
and importance to the audit process, this Second International Edition also includes extended discussions
of auditing of accounting estimates, including fair value accounting estimates; and auditing of group
financial statements. Additionally, in 2009 the International Ethics Standards Board for Accountants (IESBA)
issued a revised and stringent Code of Ethics for Professional Accountants. The Code of Ethics clearly
identifies the requirements and establishes acceptable behaviour for professional accountants around the
How does Auditing & Assurance Services Second International Edition prepare
students for the accounting profession?
The recent implosion of financial markets has had a significant effect on the auditing profession. Upon
graduation students will need to operate in this new, ever-changing environment. It is therefore crucial to
learn from the most up-to-date resources. Once again, the author team of Auditing & Assurance Services
Second International Edition is dedicated to providing the most current professional content and real-world
application, as well as helping prepare students for the licensing requirements. This book combines a
genuine international perspective and relevant international regulatory requirements with the conceptual and systematic approach to auditing inherent in the 7th edition of Auditing & Assurance Services: A
Systematic Approach (Messier, Glover and Prawitt, 2010). In this Second International Edition we continue
to reinforce the fundamental values central to the first edition, as follows.
International Approach. The book has a genuine international perspective on auditing. Auditing network
firms operate globally and cross borders, and professional practice and regulation are driven by
international events and initiatives. Thus, students and practising auditors need to understand how the
international environment shapes the profession and international professional standards. The International
Federation of Accountants (IFAC) and its boards are consolidated as the global standard setter. In 2004 the
International Auditing and Assurance Standards Board (IAASB) launched an ambitious project designed to
improve the clarity of its pronouncements. In 2009 IAASB completed its clarity project and released
36 updated and clarified International Standards on Auditing (ISAs) and a clarified International Standard
on Quality Control. IAASB decided that all clarified standards would become effective for audits of
financial statements for periods beginning on or after 15 December 2009. Members of the Forum of Firms,
an association of over 20 of the largest international networks of audit firms, began to use the clarified ISAs
swiftly. Countries and jurisdictions all over the world implement and apply these clarified ISAs. The ISAs
are integrated into this book and numerous international real-world cases are inserted to illustrate concepts
and application of the standards. In addition, separate chapters cover international assurance and related
services engagement standards, and the revised Code of Ethics for Professional Accountants.
Student Engagement. The authors believe students are best served by acquiring a strong understanding of
the basic concepts that underlie the audit process and how to apply those concepts to various audit and
assurance services. The primary purpose for an auditing text is not to serve as a reference manual but to
facilitate student learning, and this text is written accordingly. The text is accessible to students through
straightforward writing and the use of engaging, relevant real-world examples, illustrations and analogies.
The text explicitly encourages students to think through fundamental concepts and to avoid trying to learn
auditing through rote memorization. New to this edition, students are prompted by the text to ′stop and
think′ at important points in the text, in order to help them apply the principles covered. Consistent with this aim, the text’s early chapters avoid immersing students in unnecessary detail about such topics as
independence and reporting requirements, focusing instead on students’ understanding of fundamental
audit concepts. Additionally, the case involving EarthWear Clothiers, a mail-order retailer, has been
updated and integrated throughout the book. Finally, the addition of ‘practice insights’ throughout the book
engages students and helps them understand the practical nature of auditing.
A Systematic Approach. The underlying concepts of auditing and the audit process are basically universal.
The text continues to take a systematic approach to the audit process by first introducing the three
underlying concepts: audit risk, materiality and evidence. The assessment of control risk is then described,
followed by discussion of the nature, timing and extent of evidence necessary to reach the appropriate
level of detection risk. These concepts are then applied to each major business process and related account
balances using a risk-based approach.
Decision Making. In covering these important concepts and their applications, the book focuses on critical
judgements and decision-making processes followed by auditors. Much of auditing practice involves the
application of auditor judgement. If a student understands these basic concepts and how to apply them to
an audit engagement, he or she will be more effective in today’s dynamic audit environment.
Thank you for your support of this text and the many compliments we have received regarding the First
International Edition. We are gratified by the enthusiastic response the text has received as we have done
our best to create a clear, easy-reading, student-friendly auditing textbook. We welcome your suggestions
and hope you will be impressed with the updates we have made in this Second International Edition.
Aasmund Eilifsen, William F. Messier Jr, Steven M. Glover, Douglas F. Prawitt