Test Bank for Principles of Auditing & Other Assurance Services (2024 Evergreen Release) by Ray Whittington & Kurt Pany – Multiple-Choice Questions with Verified Answers

TEST BANK
PRINCIPLES OF AUDITING AND OTHER ASSURANCE SERVICES
2024 EVERGREEN RELEASE

CHAPTER NO. 1: THE ROLE OF THE PUBLIC ACCOUNTANT IN THE AMERICAN
ECONOMY


1) Although independent audits of today place more emphasis on sampling than did the
audits of the 19th century, in increasing circumstances, changes in information
technology are again making possible audits of aspects of all transactions in large
populations.
⊚ true
⊚ false


ANS: true
2) The American Institute of Certified Public Accountants prepares the CPA Exam and
issues CPA certificates, while individual states issue permits for CPAs to practice.
⊚ true
⊚ false


ANS: false
3) The GAO is limited by statute to performing only compliance audits.
⊚ true
⊚ false


ANS: false
4) The SEC does not pass on the merits of the securities that are registered with the
agency.
⊚ true
⊚ false


ANS: true

,5) The American Institute of Certified Public Accountants has the primary authority to
establish accounting standards.
⊚ true
⊚ false


ANS: false
6) When a CPA firm enrolls in the AICPA Peer Review Program, it agrees to comply
with the AICPA’s Quality Management Standards and to have a peer review of its
accounting and auditing practice every seven years.
⊚ true
⊚ false


ANS: false
7) Despite the high cost, virtually all small companies have their financial statements
audited by a CPA firm, so they can obtain a loan.
⊚ true
⊚ false


ANS: false
8) Senior auditors in CPA firms may be responsible for planning and coordinating
audits on smaller engagements.
⊚ true
⊚ false


ANS: true
9) The Sarbanes-Oxley Act requires that auditors of certain publicly traded companies
in the United States perform an integrated audit that includes providing assurance
on both the financial statements and on compliance with laws and regulations.
⊚ true
⊚ false


ANS: false

,10) Auditing is frequently only a small part of the practice of local CPA firms.
⊚ true
⊚ false


ANS: true
11) 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.


ANS: A
12) 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.


ANS: A
13) The risk that a company’s financial statements will materially depart from generally
accepted accounting principles is referred to as:
A) Business Risk.
B) Information Risk.
C) Detection Risk.
D) Document Risk.


ANS: B

, 14) Historically, which of the following has the AICPA been most concerned with
providing?
A) Auditing standards.
B) Professional guidance for regulating financial markets.
C) Internal auditing standards.
D) Staff support to Congress.


ANS: A
15) 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.


ANS: D
16) An engagement in which a CPA firm arranges for a critical review of its practices by
another CPA firm is referred to as a(n):
A) Peer Review Engagement.
B) Quality Management Engagement.
C) Quality Assurance Engagement.
D) Attestation Engagement.


ANS: A
17) The sequentially-numbered pronouncements issued by the Auditing Standards
Board over a period of years are known as:
A) Auditing Statements of Position (ASPs).
B) Accounting Series Releases (ASRs).
C) Statements on Auditing Standards (SASs).
D) Statements on Auditing Principles (SAPs).


ANS: C