February 2000


By Vincent M. O'Reilly, Barry N. Winograd, James S. Gerson, and Henry R. Jaenicke

Published by John Wiley and Sons

Reviewed by Vincent J. Love, CPA, Kramer & Love, NYSSCPA Auditing Standards and Procedures Committee chair

This text is ideal for practitioners that would like a less detailed version of its "big brother," Montgomery's Auditing, 12th ed. (Montgomery's) and may want to earn eight hours of CPE credit. (A $59 fee is required when the answer sheet to the self-study exam is mailed in to be scored and filed.)

This CPE edition is easier to read than Montgomery's but contains far less guidance for the application of audit procedures, particularly on procedures to use on specific accounts or cycles. Also missing are many of the helpful illustrations in Montgomery's.

However, the two editions have different purposes. Montgomery's is one of the premier reference books on auditing and has been used as a reference by auditing professionals since before any of us practicing today were born. This new CPE edition is excellent, and superior to many texts currently being used to teach auditing.

Like every auditing and accounting text I have read or referenced, this one lacks sufficient guidance on determining materiality, particularly adequate examples of how to use quantitative and qualitative measures to assess materiality. However, so many auditing texts share this deficiency that my criticism is more a plea to authors of auditing and accounting books for more in-depth guidance on this elusive concept. Otherwise, Chapter 6 of the CPE edition is an excellent overview of how to conduct an audit.

Chapters 7 through 11 guide the reader through planning and managing the audit, understanding the concept of reliance on internal accounting controls, assessing control risk, and developing an audit strategy. The chapters that follow address auditing the different operating cycles; substantive tests, including analytical review procedures; and audit sampling.

The section on the application of analytical review procedures in an audit engagement is exceptional. The chapter on audit sampling gives the reader a passable understanding of how and when to apply statistical approaches in conducting an audit.

The chapter on completing the audit is very helpful, especially as an overview and checklist of what must be done when closing the audit fieldwork. This chapter contains a good discussion about an auditor's assessment of management's policy and procedures for identifying, evaluating, and accounting for litigation and related contingencies. The last chapter, relating to audit engagements, gives ample guidance on preparing reports on audited financial statements.

The remainder of the book addresses the other audit-related services and attest engagements performed by CPAs. However, the review of these areas is very cursory, covered in only 48 pages (out of 651 for the entire text).

Needless to say, the audit engagement portion, not the nonaudit guidance, gives the CPE edition its value. This book is a worthwhile addition to a practitioner's auditing library, but while it may be more readable than the original Montgomery's, it is no substitute. *

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