TEST BANK For Principles of Auditing and Other
Assurance Services 22nd Edition by Whittington &
Pany, All 21 Chapters Covered
What are the appropriate standard use for audit guidance for:
Nonpublic companies in the United States
Public Company in the United States
International companies - ANSWER: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: -
ANSWER: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: - ANSWER:professional skepticism
To obtain reasonable assurance, the auditor should: - ANSWER: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: - ANSWER:holds
shares of stock in the company that he audits
The highest authoritative guidance in the GAAS Hierarchy are: - ANSWER: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. - ANSWER:audit
Auditing standards define unintentional misstatements or omissions of amounts or
disclosures in the financial statements as_______. - ANSWER:errors
An intentional misstatement of inventory to overstate net income is considered: -
ANSWER:fraud
, Materiality depends on the _______ and the nature of the item. - ANSWER:dollar
amount
The PCAOB audit "Basis for Opinion" paragraph describes or alludes to: -
ANSWER: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 _______ . - ANSWER:management
Because of the various types of evidence obtained, it is appropriate for the auditors
to state they have audited the _______ of a company. - ANSWER:financial
statements
Effective in 2019 (large public companies) and 2020 (other public companies) the
PCAOB requires the auditors to present _______ _______ matters in their report -
ANSWER: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: -
ANSWER: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. - ANSWER:True
Maria needs to research an issue for a nonpublic company. Identify which source she
is most likely to search first: - ANSWER: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. - ANSWER: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. - ANSWER:qualified
If the auditors deem that the financial statement are not fairly presented, they will
issue a(n) _______ opinion. - ANSWER: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: - ANSWER:consistency
Assurance Services 22nd Edition by Whittington &
Pany, All 21 Chapters Covered
What are the appropriate standard use for audit guidance for:
Nonpublic companies in the United States
Public Company in the United States
International companies - ANSWER: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: -
ANSWER: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: - ANSWER:professional skepticism
To obtain reasonable assurance, the auditor should: - ANSWER: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: - ANSWER:holds
shares of stock in the company that he audits
The highest authoritative guidance in the GAAS Hierarchy are: - ANSWER: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. - ANSWER:audit
Auditing standards define unintentional misstatements or omissions of amounts or
disclosures in the financial statements as_______. - ANSWER:errors
An intentional misstatement of inventory to overstate net income is considered: -
ANSWER:fraud
, Materiality depends on the _______ and the nature of the item. - ANSWER:dollar
amount
The PCAOB audit "Basis for Opinion" paragraph describes or alludes to: -
ANSWER: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 _______ . - ANSWER:management
Because of the various types of evidence obtained, it is appropriate for the auditors
to state they have audited the _______ of a company. - ANSWER:financial
statements
Effective in 2019 (large public companies) and 2020 (other public companies) the
PCAOB requires the auditors to present _______ _______ matters in their report -
ANSWER: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: -
ANSWER: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. - ANSWER:True
Maria needs to research an issue for a nonpublic company. Identify which source she
is most likely to search first: - ANSWER: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. - ANSWER: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. - ANSWER:qualified
If the auditors deem that the financial statement are not fairly presented, they will
issue a(n) _______ opinion. - ANSWER: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: - ANSWER:consistency
