Test bank for Principles of Auditing & Other Assurance Services all pages fully covered with test questions and answers graded A+

TEST BANK - Principles of Auditing and Other Assurance
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Services 22nd Edition by Ray Whittington, Kurt Pany
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,Table of Content
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Chapter 1 The Role of the Public Accountant in the American Economy Chapter
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ib 2 Professional Standards
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Chapter 3 Professional Ethics
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ib Chapter 4 Legal Liability of CPAs
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Chapter 5 Audit Evidence and Documentation
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Chapter 6 Audit Planning, Understanding the Client, Assessing Risks, and
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Responding
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Chapter 7 Internal Control
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Chapter 8 Consideration of Internal Control in an Information Technology
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Environment
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Chapter 9 Audit Sampling
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Chapter 10 Cash and Financial Investments
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Chapter 11 Accounts Receivable, Notes Receivable, and Revenue
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Chapter 12 Inventories and Cost of Goods Sold
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Chapter 13 Property, Plant, and Equipment: Depreciation and Depletion
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ib Chapter 14 Accounts Payable and Other Liabilities
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Chapter 15 Debt and Equity Capital
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Chapter 16 Auditing Operations and Completing the Audit
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ib Chapter 17 Auditors’ Reports
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Chapter 18 Integrated Audits of Public Companies
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Chapter 19 Additional Assurance Services: Historical Financial
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Information
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Chapter 20 Additional Assurance Services: Other Information
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Chapter 21 Internal, Operational, and Compliance Auditing
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, Full Test Bank for Principles of Auditing and Other Assurance
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Services 22ndEdition by Ray Whittington, Kurt Pany
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Answers are at the end of each chapterib ib ib ib ib ib ib




ib Chapter 1 ib




Student name: ib




1) Accountants are regulated by a variety of organizations. Match the statements ib ib ib ib ib ib ib ib ib ib




withthe most directly related organization:
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● Accounting and Review Services Committee. ib ib ib ib




● American Institute of Certified Public Accountants. ib ib ib ib ib




● Auditing Standards Board. ib ib




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




● General Accounting Office. ib ib




● Government Accounting Standards Board. ib ib ib




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




● State Boards of Accountancy.
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Organizations may be used once, more than once, or not at all. ib ib ib ib ib ib ib ib ib ib ib




Statements Organizations
A. Develops accounting standardsfor ib ib



public and nonpublic companies.
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B. Develops accounting standardsfor the ib ib ib



U.S. Government.
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C. Improves standards of financial ib ib ib



accounting for state and local
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government entities.
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D. Issues auditing standards forpublic
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companies.
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E. Issues CPA certificates. ib ib




F. Prepares the CPA exam. ib ib ib




Organizations: American Institute of Certified Public Accountants, Federal Accounting
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Standards Advisory Board, Financial Accounting Standards Board, Government
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Accounting Standards Board, Public Company Accounting Oversight Board, State Boards
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of Accountancy.
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, 2) The Sarbanes-Oxley Act of 2002 made significant reforms for public companies
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andtheir auditors.
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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. ib ib ib ib ib ib ib




3) Many people confuse the responsibilities of the independent auditors
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and theclient's management 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
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ib regarding an accounting principle used in the financial statements, the auditors should
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ib expresstheir views in the notes to the financial statements."
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4) An investor is considering investing in one of two companies. The companies have
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verysimilar reported financial position and results of operations. However, only one of
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the companies has its financial statements audited.
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a. Describe what creates the demand for an audit in this situation. Include a ib ib ib ib ib ib ib ib ib ib ib ib




discussion of how audited financial statements facilitate this investment transaction,
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and the effect of theaudit on business risk and information risk.
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b. Identify the potential consequences to the company of not having its ib ib ib ib ib ib ib ib ib ib




financialstatements audited.
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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. ib ib




B) Compilation report. ib




C) Audit report. ib




D) Review report. ib