TEST BANK - Principles of Auditing and Other Assurance
Services 22nd Edition by Ray Whittington, Kurt Pany
i a
t h
b u
m
,Table of Content
Chapter 1 The Role of the Public Accountant in the American Economy
Chapter 2 Professional Standards
Chapter 3 Professional Ethics
Chapter 4 Legal Liability of CPAs
Chapter 5 Audit Evidence and Documentation
Chapter 6 Audit Planning, Understanding the Client, Assessing Risks, and
Responding
Chapter 7 Internal Control
a
Chapter 8 Consideration of Internal Control in an Information Technology
Environment
i h
Chapter 9 Audit Sampling
Chapter 10 Cash and Financial Investments
t
Chapter 11 Accounts Receivable, Notes Receivable, and Revenue
u
Chapter 12 Inventories and Cost of Goods Sold
b
Chapter 13 Property, Plant, and Equipment: Depreciation and Depletion
Chapter 14 Accounts Payable and Other Liabilities
m
Chapter 15 Debt and Equity Capital
Chapter 16 Auditing Operations and Completing the Audit
Chapter 17 Auditors’ Reports
Chapter 18 Integrated Audits of Public Companies
Chapter 19 Additional Assurance Services: Historical Financial
Information
Chapter 20 Additional Assurance Services: Other Information
Chapter 21 Internal, Operational, and Compliance Auditing
, Full Test Bank for Principles of Auditing and Other Assurance
Services 22ndEdition by Ray Whittington, Kurt Pany
Answers are at the end of each chapter
Chapter 1
Student name:
1) Accountants are regulated by a variety of organizations. Match the statements
withthe most directly related organization:
● Accounting and Review Services Committee.
a
● American Institute of Certified Public Accountants.
● Auditing Standards Board.
● Federal Accounting Standards Advisory Board.
i
● Financial Accounting Standards Board.
● General Accounting Office.
h
● Government Accounting Standards Board.
t
● Public Company Accounting Oversight Board.
● Securities and Exchange Commission.
u
● State Boards of Accountancy.
Statements
b
Organizations may be used once, more than once, or not at all.
Organizations
A. Develops accounting standardsfor
public and nonpublic companies.
B. Develops accounting standardsfor the
m
U.S. Government.
C. Improves standards of financial
accounting for state and local government
entities.
D. Issues auditing standards forpublic
companies.
E. Issues CPA certificates.
F. Prepares the CPA exam.
Organizations: American Institute of Certified Public Accountants, Federal Accounting
Standards Advisory Board, Financial Accounting Standards Board, Government
Accounting Standards Board, Public Company Accounting Oversight Board, State Boards
of Accountancy.
, 2) The Sarbanes-Oxley Act of 2002 made significant reforms for public companies
andtheir auditors.
a. Describe the events that led up to the passage of the Act.
b. Describe the major changes made by the Act.
i a
3)
h
Many people confuse the responsibilities of the independent auditors
and theclient's management with respect to audited financial statements.
t
a. Describe management's responsibility regarding audited financial statements.
c.
u
b. Describe the independent auditors' responsibility regarding audited financial statements.
Evaluate the following statement: "If the auditors disagree with management
b
regarding an accounting principle used in the financial statements, the auditors should
expresstheir views in the notes to the financial statements."
4)
m
An investor is considering investing in one of two companies. The companies have
verysimilar reported financial position and results of operations. However, only one of
the companies has its financial statements audited.
a. Describe what creates the demand for an audit in this situation. Include a
discussion of how audited financial statements facilitate this investment transaction,
and the effect of theaudit on business risk and information risk.
b. Identify the potential consequences to the company of not having its
financialstatements audited.
5) A summary of findings rather than assurance is most likely to be included in a(n):
A) Agreed-upon procedures report.
B) Compilation report.
C) Audit report.
D) Review report.
Services 22nd Edition by Ray Whittington, Kurt Pany
i a
t h
b u
m
,Table of Content
Chapter 1 The Role of the Public Accountant in the American Economy
Chapter 2 Professional Standards
Chapter 3 Professional Ethics
Chapter 4 Legal Liability of CPAs
Chapter 5 Audit Evidence and Documentation
Chapter 6 Audit Planning, Understanding the Client, Assessing Risks, and
Responding
Chapter 7 Internal Control
a
Chapter 8 Consideration of Internal Control in an Information Technology
Environment
i h
Chapter 9 Audit Sampling
Chapter 10 Cash and Financial Investments
t
Chapter 11 Accounts Receivable, Notes Receivable, and Revenue
u
Chapter 12 Inventories and Cost of Goods Sold
b
Chapter 13 Property, Plant, and Equipment: Depreciation and Depletion
Chapter 14 Accounts Payable and Other Liabilities
m
Chapter 15 Debt and Equity Capital
Chapter 16 Auditing Operations and Completing the Audit
Chapter 17 Auditors’ Reports
Chapter 18 Integrated Audits of Public Companies
Chapter 19 Additional Assurance Services: Historical Financial
Information
Chapter 20 Additional Assurance Services: Other Information
Chapter 21 Internal, Operational, and Compliance Auditing
, Full Test Bank for Principles of Auditing and Other Assurance
Services 22ndEdition by Ray Whittington, Kurt Pany
Answers are at the end of each chapter
Chapter 1
Student name:
1) Accountants are regulated by a variety of organizations. Match the statements
withthe most directly related organization:
● Accounting and Review Services Committee.
a
● American Institute of Certified Public Accountants.
● Auditing Standards Board.
● Federal Accounting Standards Advisory Board.
i
● Financial Accounting Standards Board.
● General Accounting Office.
h
● Government Accounting Standards Board.
t
● Public Company Accounting Oversight Board.
● Securities and Exchange Commission.
u
● State Boards of Accountancy.
Statements
b
Organizations may be used once, more than once, or not at all.
Organizations
A. Develops accounting standardsfor
public and nonpublic companies.
B. Develops accounting standardsfor the
m
U.S. Government.
C. Improves standards of financial
accounting for state and local government
entities.
D. Issues auditing standards forpublic
companies.
E. Issues CPA certificates.
F. Prepares the CPA exam.
Organizations: American Institute of Certified Public Accountants, Federal Accounting
Standards Advisory Board, Financial Accounting Standards Board, Government
Accounting Standards Board, Public Company Accounting Oversight Board, State Boards
of Accountancy.
, 2) The Sarbanes-Oxley Act of 2002 made significant reforms for public companies
andtheir auditors.
a. Describe the events that led up to the passage of the Act.
b. Describe the major changes made by the Act.
i a
3)
h
Many people confuse the responsibilities of the independent auditors
and theclient's management with respect to audited financial statements.
t
a. Describe management's responsibility regarding audited financial statements.
c.
u
b. Describe the independent auditors' responsibility regarding audited financial statements.
Evaluate the following statement: "If the auditors disagree with management
b
regarding an accounting principle used in the financial statements, the auditors should
expresstheir views in the notes to the financial statements."
4)
m
An investor is considering investing in one of two companies. The companies have
verysimilar reported financial position and results of operations. However, only one of
the companies has its financial statements audited.
a. Describe what creates the demand for an audit in this situation. Include a
discussion of how audited financial statements facilitate this investment transaction,
and the effect of theaudit on business risk and information risk.
b. Identify the potential consequences to the company of not having its
financialstatements audited.
5) A summary of findings rather than assurance is most likely to be included in a(n):
A) Agreed-upon procedures report.
B) Compilation report.
C) Audit report.
D) Review report.
