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

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, Full Test Bank for Principles of Auditing and Other Assurance Services 22nd
Edition by Ray Whittington, Kurt Pany

Answers are at the end of each chapter

Chapter 1

Student name:__________
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1) Accountants are regulated by a variety of organizations. Match the statements with the
most directly related organization:
● Accounting and Review Services Committee.
● American Institute of Certified Public Accountants.
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● Auditing Standards Board.
● Federal Accounting Standards Advisory Board.
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● Financial Accounting Standards Board.
● General Accounting Office.
● Government Accounting Standards Board.
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● Public Company Accounting Oversight Board.
● Securities and Exchange Commission.
● State Boards of Accountancy.
Organizations may be used once, more than once, or not at all.
Statements Organizations
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A. Develops accounting standards
for public and nonpublic
companies.
B. Develops accounting standards
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for the U.S. Government.
C. Improves standards of financial
accounting for state and local
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government entities.
D. Issues auditing standards for
public companies.
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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.




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, 2) The Sarbanes-Oxley Act of 2002 made significant reforms for public companies and their
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auditors.
a. Describe the events that led up to the passage of the Act.
b. Describe the major changes made by the Act.
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3) Many people confuse the responsibilities of the independent auditors and the client's
management with respect to audited financial statements.
a. Describe management's responsibility regarding audited financial statements.
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b. Describe the independent auditors' responsibility regarding audited financial statements.
c. Evaluate the following statement: "If the auditors disagree with management regarding an
accounting principle used in the financial statements, the auditors should express their 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 very
similar reported financial position and results of operations. However, only one of the companies
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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 the audit on
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business risk and information risk.
b. Identify the potential consequences to the company of not having its financial statements
audited.
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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.




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, 6) The Statements on Auditing Standards have been issued by the:

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




8) Historically, which of the following has the AICPA been most concerned with
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providing?

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

A) Auditing Standards Board.
B) Financial Accounting Standards Board.
C) Government Accounting Standards Boards.
D) Securities and Exchange Commission.



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