TEST BANK - Principles of Auditing and Other Assurance Services 22nd Edition by Ray Whittington, Kurt Pany

Test Bank for Principles of Auditing and Other Assurance Se
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rvices 22nd Edition by Ray Whittington, Kurt Pany
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Version 1
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,Full Test Bank for Principles of Auditing and Other Assurance Services 22ndEditio
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n by Ray Whittington, Kurt Pany
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Answers are at the end of each chapter
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Chapter 1 xz




Student name:_ xz xz




1) Accountants are regulated by a variety of organizations. Match the statements with t
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hemost directly related organization:
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● Accounting and Review Services Committee. xz xz xz xz


● American Institute of Certified Public Accountants.
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● Auditing Standards Board. xz xz


● Federal Accounting Standards Advisory Board.
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● Financial Accounting Standards Board. xz xz xz


● General Accounting Office. xz xz


● Government Accounting Standards Board. xz xz xz


● Public Company Accounting Oversight Board.
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● Securities and Exchange Commission. xz xz xz


● State Boards of Accountancy.
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Organizations may be used once, more than once, or not at all.
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Statements Organizations
A. Develops accounting standards
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for public and nonpublic
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companies.
B. Develops accounting standards
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for the U.S. Government.
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C. Improves standards of financiala
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ccounting for state and local xz xz xz xz


government entities. xz


D. Issues auditing standards for
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public companies. xz



E. Issues CPA certificates.
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F. Prepares the CPA exam.
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Organizations: American Institute of Certified Public Accountants, Federal Accounting Stan
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dards Advisory Board, Financial Accounting Standards Board, Government Accounting Stan
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dards Board, Public Company Accounting Oversight Board, State Boards of Accountancy.
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Version 1 xz 2

,2) The Sarbanes- xz



Oxley Act of 2002 made significant reforms for public companies and theirauditors.
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a. Describe the events that led up to the passage of the Act.
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b. Describe the major changes made by the Act. xz xz xz xz xz xz xz




3) Many people confuse the responsibilities of the independent auditors and the clien
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t'smanagement with respect to audited financial statements.
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a. Describe management's responsibility regarding audited financial statements.
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b. Describe the independent auditors' responsibility regarding audited financial statements.
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c. Evaluate the following statement: "If the auditors disagree with management regarding
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anaccounting principle used in the financial statements, the auditors should express their view
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s inthe notes to the financial statements."
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4) An investor is considering investing in one of two companies. The companies have ver
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y similar reported financial position and results of operations. However, only one of the compa
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nieshas its financial statements audited.
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a. Describe what creates the demand for an audit in this situation. Include a discussion of ho
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waudited financial statements facilitate this investment transaction, and the effect of the audit
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on business risk and information risk.
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b. Identify the potential consequences to the company of not having its financial statemen
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tsaudited.
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5) A summary of findings rather than assurance is most likely to be included in a(n):
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A) Agreed-upon procedures report. xz xz



B) Compilation report. xz


C) Audit report. xz



D) Review report. xz




Version 1 xz 3

, 6) The Statements on Auditing Standards have been issued by the:
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A) Auditing Standards Board. xz xz



B) Financial Accounting Standards Board.
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C) Securities and Exchange Commission.
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D) Federal Bureau of Investigation.
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7) The risk that a company’s financial statements will materially depart from general
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lyaccepted accounting principles is referred to as:
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A) Business Risk. xz



B) Information Risk. xz


C) Detection Risk. xz



D) Document Risk. xz




8) Historically, which of the following has the AICPA been most concerned wi
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thproviding?
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A) Auditing standards. xz



B) Professional guidance for regulating financial markets.
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C) Internal auditing standards.
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D) Staff support to Congress.
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9) The organization charged with protecting investors and the public by requiring fu
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lldisclosure of financial information by companies offering securities to the public is the:
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A) Auditing Standards Board. xz xz



B) Financial Accounting Standards Board.
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C) Government Accounting Standards Boards. xz xz xz


D) Securities and Exchange Commission.xz xz xz




Version 1xz 4