TEST BANK - Principles of Auditing and Other Assurance
Services 22nd Edition by Ray Whittington, Kurt Pany
,Table of Content
4 4
Chapter414The4Role4of4the4Public4Accountant4in4the4American4Economy4 Ch
apter424Professional4Standards
Chapter434Professional4Ethics4 Chapt
er444Legal4Liability4of4CPAs
Chapter454Audit4Evidence4and4Documentation
Chapter464Audit4Planning,4Understanding4the4Client,4Assessing4Risks,4and4
Responding
Chapter474Internal4Control
Chapter484Consideration4of4Internal4Control4in4an4Information4Technolog
y4 Environment
Chapter494Audit4Sampling
Chapter4104Cash4and4Financial4Investments
Chapter4114Accounts4Receivable,4Notes4Receivable,4and4Revenue4 Cha
pter4124Inventories4and4Cost4of4Goods4Sold
Chapter4134Property,4Plant,4and4Equipment:4Depreciation4and4Depletion4
Chapter4144Accounts4Payable4and4Other4Liabilities
Chapter4154Debt4and4Equity4Capital
Chapter4164Auditing4Operations4and4Completing4the4Audit
Chapter4174Auditors’4Reports
Chapter4184Integrated4Audits4of4Public4Companies
Chapter4194Additional4Assurance4Services:4Historical4Financial4 Informati
on
Chapter4204Additional4Assurance4Services:4Other4Information4 Chapt
er4214Internal,4Operational,4and4Compliance4Auditing
, Full Test Bank for Principles of Auditing and Other Assurance
4 4 4 4 4 4 4 4 4
Services 22ndEdition by Ray Whittington, Kurt Pany
4 4 4 4 4 4
Answers4are4at4the4end4of4each4chapter4 Chapt
er41
Student4name:4
1) Accountants4are4regulated4by4a4variety4of4organizations.4Match4the4statement
s4 withthe4most4directly4related4organization:
● Accounting4and4Review4Services4Committee.
● American4Institute4of4Certified4Public4Accountants.
● Auditing4Standards4Board.
● Federal4Accounting4Standards4Advisory4Board.
● Financial4Accounting4Standards4Board.
● General4Accounting4Office.
● Government4Accounting4Standards4Board.
● Public4Company4Accounting4Oversight4Board.
● Securities4and4Exchange4Commission.
● State4Boards4of4Accountancy.
Organizations4may4be4used4once,4more4than4once,4or4not4at4all.
Statements Organizations
A. Develops4accounting4standardsfor
4 public4and4nonpublic4companies.
B. Develops4accounting4standardsfor4the
U.S.4Government.
C. Improves4standards4of4financial4 acco
unting4for4state4and4local4government4 en
tities.
D. Issues4auditing4standards4forpubli
c4 companies.
E. Issues4CPA4certificates.
F. Prepares4the4CPA4exam.
Organizations:4American4Institute4of4Certified4Public4Accountants,4Federal4Accounting4
Standards4Advisory4Board,4Financial4Accounting4Standards4Board,4Government4 Account
ing4Standards4Board,4Public4Company4Accounting4Oversight4Board,4State4Boards4 of4Acco
untancy.
, 2) The4Sarbanes-
Oxley4Act4of420024made4significant4reforms4for4public4companies4 andtheir4auditors.
a. Describe4the4events4that4led4up4to4the4passage4of4the4Act.
b. Describe4the4major4changes4made4by4the4Act.
3) Many4people4confuse4the4responsibilities4of4the4independent4auditor
s4 and4theclient's4management4with4respect4to4audited4financial4statements.
a. Describe4management's4responsibility4regarding4audited4financial4statements.
b. Describe4the4independent4auditors'4responsibility4regarding4audited4financial4statements.
c. Evaluate4the4following4statement:4"If4the4auditors4disagree4with4management
4 regarding4an4accounting4principle4used4in4the4financial4statements,4the4auditors4sho
uld4 expresstheir4views4in4the4notes4to4the4financial4statements."
4) An4investor4is4considering4investing4in4one4of4two4companies.4The4companies4hav
e4 verysimilar4reported4financial4position4and4results4of4operations.4However,4only4one4o
f4 the4companies4has4its4financial4statements4audited.
a. Describe4 what4 creates4 the4 demand4 for4 an4 audit4 in4this4 situation.4 Include4
a4 discussion4of4 how4 audited4 financial4 statements4 facilitate4 this4 investment4 transacti
on,4 and4the4effect4of4theaudit4on4business4risk4and4information4risk.
b. Identify4 the4 potential4 consequences4 to4 the4 company4 of4 not4 having4 it
s4 financialstatements4audited.
5) A4summary4of4findings4rather4than4assurance4is4most4likely4to4be4included4in4a(n):
A) Agreed-upon4procedures4report.
B) Compilation4report.
C) Audit4report.
D) Review4report.
Services 22nd Edition by Ray Whittington, Kurt Pany
,Table of Content
4 4
Chapter414The4Role4of4the4Public4Accountant4in4the4American4Economy4 Ch
apter424Professional4Standards
Chapter434Professional4Ethics4 Chapt
er444Legal4Liability4of4CPAs
Chapter454Audit4Evidence4and4Documentation
Chapter464Audit4Planning,4Understanding4the4Client,4Assessing4Risks,4and4
Responding
Chapter474Internal4Control
Chapter484Consideration4of4Internal4Control4in4an4Information4Technolog
y4 Environment
Chapter494Audit4Sampling
Chapter4104Cash4and4Financial4Investments
Chapter4114Accounts4Receivable,4Notes4Receivable,4and4Revenue4 Cha
pter4124Inventories4and4Cost4of4Goods4Sold
Chapter4134Property,4Plant,4and4Equipment:4Depreciation4and4Depletion4
Chapter4144Accounts4Payable4and4Other4Liabilities
Chapter4154Debt4and4Equity4Capital
Chapter4164Auditing4Operations4and4Completing4the4Audit
Chapter4174Auditors’4Reports
Chapter4184Integrated4Audits4of4Public4Companies
Chapter4194Additional4Assurance4Services:4Historical4Financial4 Informati
on
Chapter4204Additional4Assurance4Services:4Other4Information4 Chapt
er4214Internal,4Operational,4and4Compliance4Auditing
, Full Test Bank for Principles of Auditing and Other Assurance
4 4 4 4 4 4 4 4 4
Services 22ndEdition by Ray Whittington, Kurt Pany
4 4 4 4 4 4
Answers4are4at4the4end4of4each4chapter4 Chapt
er41
Student4name:4
1) Accountants4are4regulated4by4a4variety4of4organizations.4Match4the4statement
s4 withthe4most4directly4related4organization:
● Accounting4and4Review4Services4Committee.
● American4Institute4of4Certified4Public4Accountants.
● Auditing4Standards4Board.
● Federal4Accounting4Standards4Advisory4Board.
● Financial4Accounting4Standards4Board.
● General4Accounting4Office.
● Government4Accounting4Standards4Board.
● Public4Company4Accounting4Oversight4Board.
● Securities4and4Exchange4Commission.
● State4Boards4of4Accountancy.
Organizations4may4be4used4once,4more4than4once,4or4not4at4all.
Statements Organizations
A. Develops4accounting4standardsfor
4 public4and4nonpublic4companies.
B. Develops4accounting4standardsfor4the
U.S.4Government.
C. Improves4standards4of4financial4 acco
unting4for4state4and4local4government4 en
tities.
D. Issues4auditing4standards4forpubli
c4 companies.
E. Issues4CPA4certificates.
F. Prepares4the4CPA4exam.
Organizations:4American4Institute4of4Certified4Public4Accountants,4Federal4Accounting4
Standards4Advisory4Board,4Financial4Accounting4Standards4Board,4Government4 Account
ing4Standards4Board,4Public4Company4Accounting4Oversight4Board,4State4Boards4 of4Acco
untancy.
, 2) The4Sarbanes-
Oxley4Act4of420024made4significant4reforms4for4public4companies4 andtheir4auditors.
a. Describe4the4events4that4led4up4to4the4passage4of4the4Act.
b. Describe4the4major4changes4made4by4the4Act.
3) Many4people4confuse4the4responsibilities4of4the4independent4auditor
s4 and4theclient's4management4with4respect4to4audited4financial4statements.
a. Describe4management's4responsibility4regarding4audited4financial4statements.
b. Describe4the4independent4auditors'4responsibility4regarding4audited4financial4statements.
c. Evaluate4the4following4statement:4"If4the4auditors4disagree4with4management
4 regarding4an4accounting4principle4used4in4the4financial4statements,4the4auditors4sho
uld4 expresstheir4views4in4the4notes4to4the4financial4statements."
4) An4investor4is4considering4investing4in4one4of4two4companies.4The4companies4hav
e4 verysimilar4reported4financial4position4and4results4of4operations.4However,4only4one4o
f4 the4companies4has4its4financial4statements4audited.
a. Describe4 what4 creates4 the4 demand4 for4 an4 audit4 in4this4 situation.4 Include4
a4 discussion4of4 how4 audited4 financial4 statements4 facilitate4 this4 investment4 transacti
on,4 and4the4effect4of4theaudit4on4business4risk4and4information4risk.
b. Identify4 the4 potential4 consequences4 to4 the4 company4 of4 not4 having4 it
s4 financialstatements4audited.
5) A4summary4of4findings4rather4than4assurance4is4most4likely4to4be4included4in4a(n):
A) Agreed-upon4procedures4report.
B) Compilation4report.
C) Audit4report.
D) Review4report.
