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

Full0Test0Bank0for0Principles0of0Auditing0and0Other0Assurance0Services022nd0E
dition0by0Ray0Whittington,0Kurt0Pany

Answers0are0at0the0end0of0each0chapter0Ch

apter01

Student0name:_0
1) Accountants0are0regulated0by0a0variety0of0organizations.0Match0the0statements0with0the0
most0directly0related0organization:
● Accounting0and0Review0Services0Committee.
● American0Institute0of0Certified0Public0Accountants.
● Auditing0Standards0Board.
● Federal0Accounting0Standards0Advisory0Board.
● Financial0Accounting0Standards0Board.
● General0Accounting0Office.
● Government0Accounting0Standards0Board.
● Public0Company0Accounting0Oversight0Board.
● Securities0and0Exchange0Commission.
● State0Boards0of0Accountancy.
Organizations0may0be0used0once,0more0than0once,0or0not0at0all.
Statements Organizations
A.0Develops0accounting0standards
for0public0and0nonpublic0c
ompanies.
B.0Develops0accounting0standards0f
or0the0U.S.0Government.
C.0Improves0standards0of0financial0a
ccounting0for0state0and0local
government0entities.
D.0Issues0auditing0standards0for0p
ublic0companies.
E.0Issues0CPA0certificates.

F.0Prepares0the0CPA0exam.

Organizations:0American0Institute0of0Certified0Public0Accountants,0Federal0Accounting0Standar
ds0Advisory0Board,0Financial0Accounting0Standards0Board,0Government0Accounting0Standards0
Board,0Public0Company0Accounting0Oversight0Board,0State0Boards0of0Accountancy.




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,2) The0Sarbanes-
Oxley0Act0of020020made0significant0reforms0for0public0companies0and0their0auditors.
a. Describe0the0events0that0led0up0to0the0passage0of0the0Act.
b. Describe0the0major0changes0made0by0the0Act.




3) Many0people0confuse0the0responsibilities0of0the0independent0auditors0and0the0client's0
management0 with0respect0to0 audited0financial0statements.
a. Describe0management's0responsibility0regarding0audited0financial0statements.
b. Describe0the0independent0auditors'0responsibility0regarding0audited0financial0statements.
c. Evaluate0the0following0statement:0"If0the0auditors0disagree0with0management0regarding0an0
accounting0principle0used0in0the0financial0statements,0the0auditors0should0express0their0views0in0
the0notes0to0the0financial0statements."


4) An0investor0is0considering0investing0in0one0of0two0companies.0The0companies0have0very0
similar0reported0financial0position0and0results0of0operations.0However,0only0one0of0the0companies0
has0its0financial0statements0audited.
a. Describe0what0creates0the0demand0for0an0audit0in0this0situation.0Include0a0discussion0of0how0
audited0financial0statements0facilitate0this0investment0transaction,0and0the0effect0of0the0audit0on0
business0risk0and0 information0risk.
b. Identify0the0potential0consequences0to0the0company0of0not0having0its0financial0statements0
audited.

5) A0summary0of0findings0rather0than0assurance0is0most0likely0to0be0included0in0a(n):

A) Agreed-upon0procedures0report.
B) Compilation0report.
C) Audit0report.
D) Review0report.




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,6) The0Statements0on0Auditing0Standards0have0been0issued0by0the:

A) Auditing0Standards0Board.
B) Financial0Accounting0Standards0Board.
C) Securities0and0Exchange0Commission.
D) Federal0Bureau0of0Investigation.




7) The0risk0that0a0company’s0financial0statements0will0materially0depart0from0generally0
accepted0accounting0principles0is0referred0to0as:

A) Business0Risk.
B) Information0Risk.
C) Detection0Risk.
D) Document0Risk.




8) Historically,0which0of0the0following0has0the0AICPA0been0most0concerned0with0
providing?

A) Auditing0standards.
B) Professional0guidance0for0regulating0financial0markets.
C) Internal0auditing0standards.
D) Staff0support0to0Congress.




9) The0organization0charged0with0protecting0investors0and0the0public0by0requiring0full0
disclosure0of0financial0information0by0companies0offering0securities0to0the0public0is0the:

A) Auditing0Standards0Board.
B) Financial0Accounting0Standards0Board.
C) Government0Accounting0Standards0Boards.
D) Securities0and0Exchange0Commission.



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, 10) An0engagement0in0which0a0CPA0firm0arranges0for0a0critical0review0of0its0practices0by0
another0CPA0firm0is0referred0to0 as0a(n):

A) Peer0Review0Engagement.
B) Quality0Control0Engagement.
C) Quality0Assurance0Engagement.
D) Attestation0Engagement.




11) The0sequentially-
numbered0pronouncements0issued0by0the0Auditing0Standards0Board0over0a0period0of0years0ar
e0known0as:

A) Auditing0Statements0of0Position0(ASPs).
B) Accounting0Series0Releases0(ASRs).
C) Statements0on0Auditing0Standards0(SASs).
D) Statements0on0Auditing0Principles0(SAPs).




12) Government0Accountability0Office0(GAO):

A) is0primarily0concerned0with0rapid0processing0of0all0accounts0payable0incurred0by0the0
federal0government.
B) responsibilities0include0audits0of0government0agencies.
C) is0an0organization0of0professional0accountants0whose0primary0interest0 is0in0the0
effectiveness0of0presidential0expenditures.
D) is0primarily0concerned0with0budgets0and0forecasts0approved0by0the0PCAOB.




13) The0risk0associated0with0survivability0and0profitability0is0referred0to0as:




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