- •Chapter I accounting as a career. The basic accounting concepts
- •Text a the field of accounting
- •Exercises
- •VII. Read the text and describe four major accounting job categories.
- •Internal auditors
- •Becoming an accountant
- •Text b accounting concepts
- •Exercises
- •I. Find in the text the words to complete the following phrases and use them in the sentences of your own to illustrate their meaning.
- •II. Find in the text English equivalents to the following words and word combinations. Make sentences of your own with these phrases.
- •III. What do the following abbreviations mean? Check the answers in the article below.
- •International accounting
- •IV. The article in Ex. III mentions four basic principles of accounting. Match them to the definitions below.
- •V. Complete the following statements and explain your choice.
- •VI Answer the following questions.
- •VII. Translate into English.
- •VIII. Revise the information given in Unit 1 and test yourself. Discuss your choice with your partner.
- •IX. Summarize the following texts in 50 words.
- •Situations for discussion
- •Chapter II the accounting process
- •Text a starting an accounting system
- •Exercises
- •I. Find in the text Ukrainian equivalents to the following words and word combinations and translate the sentences in which they are used.
- •II. Find in the text English equivalents to the following words and word combinations. Make sentences of your own with these phrases.
- •III. Task 1. Complete the text using the words and translate it into Ukrainian.
- •IV. Fill in the missing prepositions. Translate the passages into Ukrainian.
- •V. Complete the following words.
- •VI. Fill in the missing words (choose from the box). Translate the passage into Ukrainian.
- •VIII. Answer the following questions.
- •IX. Translate into English.
- •Text b double-entry bookkeeping system
- •Exercises
- •II. Test yourself.
- •IV. Summarize the text in 50 words
- •Situations for discussion
- •Chapter III financial statements
- •Text a the balance sheet
- •Intangible Assets
- •Exercises
- •I. Find in the text Ukrainian equivalents to the following words and word combinations and translate the sentences in which they are used.
- •II. Find in the text English equivalents to the following words and word combinations. Make sentences of your own with these phrases.
- •III. Answer the following questions.
- •IV. What kind of assets is each of the following? Which three are not assets? Explain your choice.
- •V. Accountants use different terms to denote the same notions. Match these accounting terms with the definitions below and translate them into English.
- •Intangible assets
- •VI. Fill in the missing entries in the Balance Sheet below. Choose from the following.
- •In the company’s books:
- •VIII. Translate into English.
- •Text b the profit and loss account (the income statement) the cash-flow statement
- •Exercises
- •I. Give Ukrainian equivalents to the following phrases and translate the sentences in which they are used.
- •II. Find in the text English equivalents to the following words and word combinations. Make sentences of your own with these phrases.
- •III Answer the following questions.
- •IV. Match the terms to their definitions.
- •V. Fill in the missing words in the sentences below. Choose from the box.
- •VI. Here is a letter from a firm of accountants to a client. Complete the letter by inserting the missing phrases. Choose from the box below.
- •VII Task 1. Insert the following words in the gaps in the text and translate it into Ukrainian.
- •VIII. Insert the following expressions in the gaps in the text and translate it into Ukrainian.
- •IX. Match up the following British and American terms.
- •X. Task 1. Read the text and say what the best way to make the meaning of a company’s ratios clear is.
- •XI. Match the ratios listed in the text with their main functions.
- •Figure 3-3. The general scheme of interrelation of the Chart of Accounts and basic forms of financial reporting
- •XIII. Translate into English.
- •XIV. Revise the information given in Chapter III and decide which of these statements are true or false. Discuss the answers with your partner.
- •Situations for discussion
- •I. Read what different people say about financial statements and fill in the gaps with the words which are given below.
- •II. Which do you think are the two or three most important financial ratios? Why? chapter IV auditing
- •Introduction to auditing
- •Exercises
- •I. Find in the text Ukrainian equivalents to the following words and word combinations and translate the sentences in which they are used.
- •II. Find in the text English equivalents to the following words and word combinations. Make sentences of your own with these phrases.
- •III Answer the following questions.
- •IV. What does an auditor do? Look at the following activities and decide which ones are normally done internally or externally.
- •V. Read passages describing some important aspects of general technology of auditing and answer the following questions.
- •VI. Read and translate the text. Say what risks an auditor must consider and what each type of the risks involve.
- •VII. Task 1. Read the text and answer the questions: What is the role of evidence? How are different kinds of evidence classified?
- •Task 1. Number the following words or expressions given in the box with their underlined equivalents in the text and translate the text into Ukrainian.
- •IX. Translate into English.
- •Text b auditor’s report
- •Auditor’s report on financial statements
- •Unqualified Opinion report
- •Qualified Opinion report
- •Disclaimer of Opinion report
- •Exercises
- •I. Find in the text Ukrainian equivalents to the following words and word combinations and translate the sentences in which they are used.
- •II. Find in the text English equivalents to the following words and word combinations. Make sentences of your own with these phrases.
- •III. Answer the following questions.
- •IV. Fill in the missing prepositional phrases in the following sentences. Choose from the box.
- •V. Uncertainty Expression Terminology.
- •VI. Match the following terms (1-14) with the correct definition (a-n) on the right.
- •VII Read this example of an extract from an independent auditors’ report in the usa and answer the questions.
- •VIII. Translate into English.
- •IX. Summaries the text in about 50 words.
- •Situations for discussion
V. Read passages describing some important aspects of general technology of auditing and answer the following questions.
What benefits are obtained by an engagement letter?
What are the five types of general analytical review procedures?
Engagement letter
An audit engagement begins with decisions about client acceptance and retention. When a new audit client is accepted, an engagement letter should be prepared. (The letter should be obtained each year from continuing clients.) This letter sets forth the terms of the engagement, including an agreement about the fee to be charged. In effect it is the audit contract. It may contain special requests to be undertaken by the auditors, or it may be a rather standard letter that an audit of financial statements will be performed in accordance with generally accepted auditing standards. An engagement letter is highly recommended as a means of reducing the risk of misunderstandings with the client and as a means of avoiding legal liability for claims that the auditor did not perform the work promised.
Analytical review procedures
Analytical review procedures are the methods of deriving information by studying and comparing relationship among data.
There are five types of such procedures:
Comparison of the financial information with information for comparable prior periods.
Comparison of the financial information with anticipated results (e.g., budgets and forecasts).
Study of the relationship of elements of financial information that would be expected to conform to a predictable pattern based on the entity’s experience.
Comparison of the financial information with similar information regarding the industry in which the entity operates.
Study of relationship of the financial information with relevant nonfinancial information.
In the planning stage, analytical review procedures are used to identify potential problem areas so the audit work can be planned to reduce the risk of missing something important.
VI. Read and translate the text. Say what risks an auditor must consider and what each type of the risks involve.
Assessment of audit risk
Knowledge of the client’s business from a preliminary analytical review can help auditors identify problem areas and make broad risk assessments. However some more technical risks need to be assessed. These are known as inherent risk, internal control risk, detection risk, and audit risk.
Inherent risk is the probability that material errors or irregularities have entered the data processing system used to develop financial statements. Inherent risk is a characteristic of a client’s business, the major types of transactions, and the effectiveness of its accountants. Auditors do not create or control inherent risk. They can try to assess it.
Internal control risk is the probability that the client’s internal control procedures will fail to detect material errors and irregularities, provided any enter the data processing system in the first place. Auditors do not create or control internal control risk. They can only evaluate a company’s control system and assess the probability of failure to detect errors and irregularities. An auditor’s assessment of internal control risk is based on the study and evaluation of internal control.
Detection risk is the probability that the audit procedures will fail to produce evidence of material errors and irregularities, provided any have entered the data processing system in the first place and have not been detected and corrected by the client’s internal control procedures. In contrast to inherent and internal control risk, auditors are responsible for performing the evidence gathering procedures that manage and control detection risk. These audit procedures represent the auditor’s opportunity to detect material errors and irregularities that can cause financial statements to be misleading.
In an overall sense, audit risk is the probability that an auditor will give an inappropriate opinion on financial statements. For example, the worst manifestation of this risk is giving an unqualified opinion on financial statements that are misleading because of material errors and irregularities the auditor failed to discover. Such a risk always exists, even when audits are well planned and carefully performed. The risk is much greater in poorly planned and carelessly performed audits.