Solutions Manual for Auditing, A Risk-Based Approach to
Conducting a Quality Audit, 12th Edition by Karla
Johnstone-Zehms.
,Solutions for Chapter 1
Solutions Manual Reconciliation from 11e to 12e
Question # for 11e Deleted/replaced/updated/n Question # for 12e
ew?
1 1
2 Deleted & replaced with 2
question about
regulatoryenforcement
3 3
4 4
5 5
6 6
7 7
8 Updated from a generic 8
question to one
specificallyfocused on the
Theranos fraud.
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21 21
22 Updated to reflect 22
2021IESB Code of
Ethics.
23 23
24 24
25 25
26 26
27 27
28 28
29 29
1-1
30 30
40 Changed order of 31
learningobjectives; same
question
,41 Changed order of 32
learningobjectives; same
question
42 Changed order of 33
learningobjectives; same
question
31 34
32 Updated – added 35
additionalcontent on poor
judgments as documented
in a PCAOB enforcement
release
33 36
34 37
35 38
36 39
37 40
38 41
39 42
New fraud case 43
aboutElizabeth
Holmes & Theranos
43 44
44 45
45 46
46 47
47 48
48 49
49 50
50 Updated to a 2021 PCAOB 51
enforcement case
illustrating the same points.
New case investigating 52
theoutcome of the
Holmes/Theranos trial.
New case simulation 53
ondata analytics and
CPAexam written
communication.
51 Deleted Academic
Research case;
eliminatingthis feature.
1-3
, 52 Deleted Academic
Research case;
eliminatingthis feature.
Answers to Check Your Basic Knowledge Questions
1-1 T
1-2 F
1-3 d
1-4 b
1-5 T
1-6 F
1-7 a
1-8 b
1-9 T
1-10F
1-11d
1-12c
1-13T
1-14T
1-15b
1-16d
1-17T
1-18F
1-19d
1-20c
1-21T
1-22T
1-23b
1-24a
Review Questions and Short Cases
1-1
The objective of external auditing is to provide opinions on the reliability of the financial
statements and, as part of an integrated audit, provide opinions on internal control effectiveness.
The value of the external auditing profession is affirmed when the public has confidence in its
objectivity and the accuracy of its opinions. The capital markets depend on accurate, reliable,
and objective (neutral) data that portray the economic nature of an entity’s business and in turn
provide a base to judge current progress toward long-term objectives. If the market does not
receive reliable data, investors lose confidence in the system, make poor decisions, and may
losea great deal of money; ultimately, the system may fail. By providing an independent audit
opinion, the capital markets have assurance that the financial data that they are basing
theirdecisions on are accurate.
1-4
Conducting a Quality Audit, 12th Edition by Karla
Johnstone-Zehms.
,Solutions for Chapter 1
Solutions Manual Reconciliation from 11e to 12e
Question # for 11e Deleted/replaced/updated/n Question # for 12e
ew?
1 1
2 Deleted & replaced with 2
question about
regulatoryenforcement
3 3
4 4
5 5
6 6
7 7
8 Updated from a generic 8
question to one
specificallyfocused on the
Theranos fraud.
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21 21
22 Updated to reflect 22
2021IESB Code of
Ethics.
23 23
24 24
25 25
26 26
27 27
28 28
29 29
1-1
30 30
40 Changed order of 31
learningobjectives; same
question
,41 Changed order of 32
learningobjectives; same
question
42 Changed order of 33
learningobjectives; same
question
31 34
32 Updated – added 35
additionalcontent on poor
judgments as documented
in a PCAOB enforcement
release
33 36
34 37
35 38
36 39
37 40
38 41
39 42
New fraud case 43
aboutElizabeth
Holmes & Theranos
43 44
44 45
45 46
46 47
47 48
48 49
49 50
50 Updated to a 2021 PCAOB 51
enforcement case
illustrating the same points.
New case investigating 52
theoutcome of the
Holmes/Theranos trial.
New case simulation 53
ondata analytics and
CPAexam written
communication.
51 Deleted Academic
Research case;
eliminatingthis feature.
1-3
, 52 Deleted Academic
Research case;
eliminatingthis feature.
Answers to Check Your Basic Knowledge Questions
1-1 T
1-2 F
1-3 d
1-4 b
1-5 T
1-6 F
1-7 a
1-8 b
1-9 T
1-10F
1-11d
1-12c
1-13T
1-14T
1-15b
1-16d
1-17T
1-18F
1-19d
1-20c
1-21T
1-22T
1-23b
1-24a
Review Questions and Short Cases
1-1
The objective of external auditing is to provide opinions on the reliability of the financial
statements and, as part of an integrated audit, provide opinions on internal control effectiveness.
The value of the external auditing profession is affirmed when the public has confidence in its
objectivity and the accuracy of its opinions. The capital markets depend on accurate, reliable,
and objective (neutral) data that portray the economic nature of an entity’s business and in turn
provide a base to judge current progress toward long-term objectives. If the market does not
receive reliable data, investors lose confidence in the system, make poor decisions, and may
losea great deal of money; ultimately, the system may fail. By providing an independent audit
opinion, the capital markets have assurance that the financial data that they are basing
theirdecisions on are accurate.
1-4
