Test Bank for -Principles of Auditing and Other Assurance Services 22nd Edition by Ray Whittington, Kurt Pany,newest version 2024|25 A+

Full2Test2Bank2for2Principles2of2Auditing2and2Other2Assurance2Services222nd2E
dition2by2Ray2Whittington,2Kurt2Pany

Answers2are2at2the2end2of2each2chapter2Ch

apter21

Student2name:_2
1) Accountants2are2regulated2by2a2variety2of2organizations.2Match2the2statements2with2the2
most2directly2related2organization:
● Accounting2and2Review2Services2Committee.
● American2Institute2of2Certified2Public2Accountants.
● Auditing2Standards2Board.
● Federal2Accounting2Standards2Advisory2Board.
● Financial2Accounting2Standards2Board.
● General2Accounting2Office.
● Government2Accounting2Standards2Board.
● Public2Company2Accounting2Oversight2Board.
● Securities2and2Exchange2Commission.
● State2Boards2of2Accountancy.
Organizations2may2be2used2once,2more2than2once,2or2not2at2all.
Statements Organizations
A.2Develops2accounting2standards
for2public2and2nonpublic2c
ompanies.
B.2Develops2accounting2standards2f
or2the2U.S.2Government.
C.2Improves2standards2of2financial2a
ccounting2for2state2and2local
government2entities.
D.2Issues2auditing2standards2for2p
ublic2companies.
E.2Issues2CPA2certificates.

F.2Prepares2the2CPA2exam.

Organizations:2American2Institute2of2Certified2Public2Accountants,2Federal2Accounting2Standar
ds2Advisory2Board,2Financial2Accounting2Standards2Board,2Government2Accounting2Standards2
Board,2Public2Company2Accounting2Oversight2Board,2State2Boards2of2Accountancy.




Version21 1

,2) The2Sarbanes-
Oxley2Act2of220022made2significant2reforms2for2public2companies2and2their2auditors.
a. Describe2the2events2that2led2up2to2the2passage2of2the2Act.
b. Describe2the2major2changes2made2by2the2Act.




3) Many2people2confuse2the2responsibilities2of2the2independent2auditors2and2the2client's2
management2 with2respect2to2 audited2financial2statements.
a. Describe2management's2responsibility2regarding2audited2financial2statements.
b. Describe2the2independent2auditors'2responsibility2regarding2audited2financial2statements.
c. Evaluate2the2following2statement:2"If2the2auditors2disagree2with2management2regarding2an2
accounting2principle2used2in2the2financial2statements,2the2auditors2should2express2their2views2in2
the2notes2to2the2financial2statements."


4) An2investor2is2considering2investing2in2one2of2two2companies.2The2companies2have2very2
similar2reported2financial2position2and2results2of2operations.2However,2only2one2of2the2companies2
has2its2financial2statements2audited.
a. Describe2what2creates2the2demand2for2an2audit2in2this2situation.2Include2a2discussion2of2how2
audited2financial2statements2facilitate2this2investment2transaction,2and2the2effect2of2the2audit2on2
business2risk2and2 information2risk.
b. Identify2the2potential2consequences2to2the2company2of2not2having2its2financial2statements2
audited.

5) A2summary2of2findings2rather2than2assurance2is2most2likely2to2be2included2in2a(n):

A) Agreed-upon2procedures2report.
B) Compilation2report.
C) Audit2report.
D) Review2report.




Version21 2

,6) The2Statements2on2Auditing2Standards2have2been2issued2by2the:

A) Auditing2Standards2Board.
B) Financial2Accounting2Standards2Board.
C) Securities2and2Exchange2Commission.
D) Federal2Bureau2of2Investigation.




7) The2risk2that2a2company’s2financial2statements2will2materially2depart2from2generally2
accepted2accounting2principles2is2referred2to2as:

A) Business2Risk.
B) Information2Risk.
C) Detection2Risk.
D) Document2Risk.




8) Historically,2which2of2the2following2has2the2AICPA2been2most2concerned2with2
providing?

A) Auditing2standards.
B) Professional2guidance2for2regulating2financial2markets.
C) Internal2auditing2standards.
D) Staff2support2to2Congress.




9) The2organization2charged2with2protecting2investors2and2the2public2by2requiring2full2
disclosure2of2financial2information2by2companies2offering2securities2to2the2public2is2the:

A) Auditing2Standards2Board.
B) Financial2Accounting2Standards2Board.
C) Government2Accounting2Standards2Boards.
D) Securities2and2Exchange2Commission.



Version21 3

, 10) An2engagement2in2which2a2CPA2firm2arranges2for2a2critical2review2of2its2practices2by2
another2CPA2firm2is2referred2to2 as2a(n):

A) Peer2Review2Engagement.
B) Quality2Control2Engagement.
C) Quality2Assurance2Engagement.
D) Attestation2Engagement.




11) The2sequentially-
numbered2pronouncements2issued2by2the2Auditing2Standards2Board2over2a2period2of2years2ar
e2known2as:

A) Auditing2Statements2of2Position2(ASPs).
B) Accounting2Series2Releases2(ASRs).
C) Statements2on2Auditing2Standards2(SASs).
D) Statements2on2Auditing2Principles2(SAPs).




12) Government2Accountability2Office2(GAO):

A) is2primarily2concerned2with2rapid2processing2of2all2accounts2payable2incurred2by2the2
federal2government.
B) responsibilities2include2audits2of2government2agencies.
C) is2an2organization2of2professional2accountants2whose2primary2interest2 is2in2the2
effectiveness2of2presidential2expenditures.
D) is2primarily2concerned2with2budgets2and2forecasts2approved2by2the2PCAOB.




13) The2risk2associated2with2survivability2and2profitability2is2referred2to2as:




Version21 4