Principles of Auditing & Other Assurance Services Chapter 2 Exam Bank Solution Manual Already Passed

Principles of Auditing & Other Assurance Services Chapter 2 Exam Bank Solution Manual Already Passed What are the appropriate standard use for audit guidance for: Nonpublic companies in the United States Public Company in the United States International companies - Answers Nonpublic companies in the United States - AICPA Standards Public Company in the United States - PCAOB Standards International companies - IAASB Standards A financial reporting framework is a set of criteria used to prepare: - Answers financial statements An auditor's personal responsibility to maintain a questioning mind, be alert to conditions that may indicate possible misstatement due to fraud or error, and a critical assessment of audit evidence is called: - Answers professional skepticism To obtain reasonable assurance, the auditor should: - Answers plan the work and properly supervise assistants determine and apply appropriate materiality levels throughout the audit. The auditor's standard of independence is violated when an auditor: - Answers holds shares of stock in the company that he audits The highest authoritative guidance in the GAAS Hierarchy are: - Answers Statements on Auditing Standards Jones, CPA samples a large amount of the clients invoices to reduce the risk that auditors may unknowingly fail to modify the opinion on financial statements that are materially misstated. This is known as _______ risk. - Answers audit Auditing standards define unintentional misstatements or omissions of amounts or disclosures in the financial statements as_______. - Answers errors An intentional misstatement of inventory to overstate net income is considered: - Answers fraud Materiality depends on the _______ and the nature of the item. - Answers dollar amount The PCAOB audit "Basis for Opinion" paragraph describes or alludes to: - Answers registration requirements independence requirements the nature of a PCAOB audit Preparing proper financial statements for the use of stockholders and creditors is the responsibility of _______ . - Answers management Because of the various types of evidence obtained, it is appropriate for the auditors to state they have audited the _______ of a company. - Answers financial statements Effective in 2019 (large public companies) and 2020 (other public companies) the PCAOB requires the auditors to present _______ _______ matters in their report - Answers critical audit Blane, an auditor for Femi & Co. LLP, has been asked to draft an auditors' report for Sole Shoes Inc., a nonpublic company. The report should include: - Answers Auditor's Opinion Management's Responsibility Auditor's Responsibility True or false: Generally Accepted Accounting Principles are the most frequently used financial reporting framework in the United States. - Answers True Maria needs to research an issue for a nonpublic company. Identify which source she is most likely to search first: - Answers FASB Codification A company failed to report in its financial statements a current lawsuit with a probable negative outcome that will harm the company. This is a violation of the _______ concept. - Answers adequate disclosure When an item in the financial statements is not presented in accordance with applicable accounting principles, but not significant or material enough to overshadow an overall opinion or misstate the financial statements, the auditor will issue a(n) _______ opinion. - Answers qualified If the auditors deem that the financial statement are not fairly presented, they will issue a(n) _______ opinion. - Answers adverse The concept of using the same accounting principles from year to year so that the successive financial statements issued by a business entity will be comparable is called: - Answers consistency Which of the following is not included as a level of service in the AICPA attestation standards? - Answers audit Which of the following are PCAOB Attestation General Standards? - Answers The engagement shall be performed by a practitioner having adequate knowledge of the subject matter. Due professional care shall be exercised in the planning and performance of the engagement. Standards that provide CPA firms with guidance to provice reasonable assurance that the firm's engagements are conducted in accordance with applicable professional standards are called: - Answers quality control standards monitoring - Answers the policies and procedures related to quality control are relevant, adequate, and operating efficiently leadership responsibilities for Quality - Answers promotes an internal culture based on the recognition that quality is essential in performing engagements acceptance of client relationships - Answers the firm will undertake engagements only where the firm is competent to perform the engagement In performing an audit, the auditors determine that the allowance for uncollectible accounts is not sufficient. If management does not agree, the auditors will likely: - Answers qualify their opinion True or false: The only difference between a public company and nonpublic company standard audit report is the identification of the standards used to conduct the audit (PCAOB vs. GAAP) - Answers false: this is one difference but there are other organizational and detail differences True or false: If additional information is required, an auditor cannot issue an unmodified opinion. - Answers False If the auditors are unable to determine the overall fairness of the financial statements, they will issue a(N) _______ opinion. - Answers disclaimer of The auditors states that there is a limitation on the scope of the audit, but not so far as to overshadow an overall opinion when issuing a(n) _______ opinion - Answers qualified Which of the following is a PCAOB Attestation Standard of Fieldwork? - Answers The work shall be adequately planned and assistants shall to be properly supervised. True or false: The AICPA requires specific quality control procedures. - Answers False : The AICPA states that specific procedures depend upon the size and nature of the firm's practice. Which is more difficult to detect during an audit? - Answers Fraud Auditors have the same responsibility regarding ______ as they have for material errors and fraud. - Answers laws having a direct effect on the financial statements Auditors are responsible to obtain reasonable assurance that clients are in compliance with: - Answers only laws having a direct effect on financial statements During an audit, Jose becomes aware that the client has violated an environmental law by disposing of waste inappropriately. Jose feels that the violation is intentional and material; and therefore has an obligation to communicate the matter to: - Answers those charged with governance In a(n) _______ audit report the auditors are taking no exceptions and inserting no modifications in the report. - Answers standard Auditors of large publicly traded companies perform a(n) _______ audit which includes providing assurance on both the financial statements and the effectiveness of _______ _______ over financial reporting. - Answers integrated internal control Which of the following organizations can revoke the right of an individual to practice as a CPA? - Answers The applicable state board of accountancy The AICPA over time has played an important role in standards setting. Which of the following standards are currently established by the AICPA? - Answers Auditing standards applicable to audits of nonpublic companies. Which of the following does the FASB consider a source of nonauthoritative guidance for use when there is no authoritative guidance available? - Answers FASB Concepts Statements Financial statement audits performed under PCAOB requirements are designed to provide which type(s) of assurance with respect to the detection of material misstatements due to errors or fraud? Reasonable Absolute