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

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




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,Answers are at the end of each chapter Chapter 1
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Student name: #




1) Accountants are regulated by a variety of organizations. Match the statements with the
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# most directly related organization:
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● Accounting and Review Services Committee. # # # #




● American Institute of Certified Public Accountants. # # # # #




● Auditing Standards Board. # #




● Federal Accounting Standards Advisory Board.
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● Financial Accounting Standards Board. # # #




● General Accounting Office. # #




● Government Accounting Standards Board. # # #




● Public Company Accounting Oversight Board.
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● Securities and Exchange Commission. # # #




● State Boards of Accountancy.
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Organizations may be used once, more than once, or not at all.
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Statements Organizations
A. Develops accounting standards
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for public and nonpublic companies.
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B. Develops accounting standards for the U.S. Government.
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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.
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F. Prepares the CPA exam.
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Organizations: American Institute of Certified Public Accountants, Federal Accounting Standards
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# Advisory Board, Financial Accounting Standards Board, Government Accounting Standards
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# 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.

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,a. Describe the events that led up to the passage of the Act.
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b. Describe the major changes made by the Act. # # # # # # #




3) Many people confuse the responsibilities of the independent auditors and the client's
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# management with respect to audited financial statements.
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a. Describe management's responsibility regarding audited financial statements.
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b. Describe the independent auditors' responsibility regarding audited financial statements.
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c. Evaluate the following statement: "If the auditors disagree with management regarding an
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# accounting principle used in the financial statements, the auditors should express their views in the
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# notes to the financial statements."
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4) An investor is considering investing in one of two companies. The companies have very
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# similar reported financial position and results of operations. However, only one of the companies
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# has its financial statements audited.
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a. Describe what creates the demand for an audit in this situation. Include a discussion of how
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# audited financial statements facilitate this investment transaction, and the effect of the audit on
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# business risk and information risk.
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b. Identify the potential consequences to the company of not having its financial statements
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# audited.


5) A summary of findings rather than assurance is most likely to be included in a(n):
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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:
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, A) Auditing Standards Board. # #




B) Financial Accounting Standards Board.
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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. #




D) Document Risk. #




8) Historically, which of the following has the AICPA been most concerned with providing?
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A) Auditing standards. #




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