Test Bank For Auditing & Assurance Services: A Systematic Approach 12E
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Approach 10th Edition Messier
Chapter 02
The Financial Statement Auditing Environment
True / False Questions
1. A series of business and related auditing failures led to the passage of the Sarbanes-Oxley Act
(2002).
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True False
2. The primary audit context with which an auditor is concerned is the auditee's industry or business.
True False
3. The audit committee generally includes senior executives of the organization.
True False
4. A financial statement audit is generally organized based on the five basic business processes or
cycles.
True False
5. One of the five basic business processes is the warehousing cycle.
True False
6. The IAASB and the ASB collaborated on a replacement for the 10 GAAS standards which include
principles underlying an audit conducted in accordance with generally accepted auditing standards.
True False
2-1
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Approach 10th Edition Messier
7. PCAOB auditing standards must be followed on all financial statement audits performed in the U.S.
True False
8. A financial statement audit must be conducted based on GAAP.
True False
9. Generally, the financial statements of U.S. companies must be prepared based on GAAP.
True False
10. PCAOB auditing standards must be followed on all audits of public companies' financial statements.
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True False
Multiple Choice Questions
11. The Audit Committee consists of
A. Members of management.
B. A subcommittee of the AICPA who establish the SAS.
C. Members of the Board of Directors.
D. Appointed government overseers.
2-2
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Education.
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Approach 10th Edition Messier
12. What organization is responsible for setting auditing standards for audits of publicly-traded
companies in the U.S.?
A. AICPA.
B. FASB.
C. GASB.
D. PCAOB.
13. The Public Company Accounting Oversight Board's role is to
A. Conduct the final review of auditors' work before the auditor's opinion is issued.
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B. Oversee the auditors of public companies in order to protect the interests of investors.
C. Conduct audits of governmental entities.
D. Sanction auditors who fail to follow GAAS.
14. The authoritative body designed to promulgate standards concerning a CPA's association with
audited financial statements of an entity that is required to file financial statements with the SEC is
the
A. Financial Accounting Standards Board.
B. General Accounting Office.
C. Public Company Accounting Oversight Board.
D. Auditing Standards Board.
15. The auditor must be independent of the auditee unless
A. The lack of independence does not influence his or her professional judgment.
B. Both parties agree that the independence issue is not a problem.
C. The lack of independence is insignificant.
D. None of the above—the auditor cannot lack independence.
2-3
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
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primedocs
All Chapters Covered | Rated A+ | Latest Exam Version
primedocs primedocs primedocs
,DOWNLOAD THE Test Bank for Auditing and Assurance Services Systematic
Approach 10th Edition Messier
Chapter 02
The Financial Statement Auditing Environment
True / False Questions
1. A series of business and related auditing failures led to the passage of the Sarbanes-Oxley Act
(2002).
primedocs
True False
2. The primary audit context with which an auditor is concerned is the auditee's industry or business.
True False
3. The audit committee generally includes senior executives of the organization.
True False
4. A financial statement audit is generally organized based on the five basic business processes or
cycles.
True False
5. One of the five basic business processes is the warehousing cycle.
True False
6. The IAASB and the ASB collaborated on a replacement for the 10 GAAS standards which include
principles underlying an audit conducted in accordance with generally accepted auditing standards.
True False
2-1
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
primedocs primedocs
mynursytest.store primedocs
,DOWNLOAD THE Test Bank for Auditing and Assurance Services Systematic
Approach 10th Edition Messier
7. PCAOB auditing standards must be followed on all financial statement audits performed in the U.S.
True False
8. A financial statement audit must be conducted based on GAAP.
True False
9. Generally, the financial statements of U.S. companies must be prepared based on GAAP.
True False
10. PCAOB auditing standards must be followed on all audits of public companies' financial statements.
primedocs
True False
Multiple Choice Questions
11. The Audit Committee consists of
A. Members of management.
B. A subcommittee of the AICPA who establish the SAS.
C. Members of the Board of Directors.
D. Appointed government overseers.
2-2
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
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, DOWNLOAD THE Test Bank for Auditing and Assurance Services Systematic
Approach 10th Edition Messier
12. What organization is responsible for setting auditing standards for audits of publicly-traded
companies in the U.S.?
A. AICPA.
B. FASB.
C. GASB.
D. PCAOB.
13. The Public Company Accounting Oversight Board's role is to
A. Conduct the final review of auditors' work before the auditor's opinion is issued.
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B. Oversee the auditors of public companies in order to protect the interests of investors.
C. Conduct audits of governmental entities.
D. Sanction auditors who fail to follow GAAS.
14. The authoritative body designed to promulgate standards concerning a CPA's association with
audited financial statements of an entity that is required to file financial statements with the SEC is
the
A. Financial Accounting Standards Board.
B. General Accounting Office.
C. Public Company Accounting Oversight Board.
D. Auditing Standards Board.
15. The auditor must be independent of the auditee unless
A. The lack of independence does not influence his or her professional judgment.
B. Both parties agree that the independence issue is not a problem.
C. The lack of independence is insignificant.
D. None of the above—the auditor cannot lack independence.
2-3
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
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