MGT 101 FINAL QUESTIONS WITH VERIFIED
ACCURATE ANSWERS
What is the most common type of attest engagement? - Answers -financial statement
What is the most frequently being "asserted" by management on this type of
engagement? - Answers -Overall assertion, made by management, most frequently is
that the financial statements follow generally accepted accounting principles
What is the principal use & significance of an audit report to a large corporation with
securities listed on a stock exchange? - Answers -A large corporation with securities
listed on a stock exchange is required by the rules of the stock exchange and by the
rules of the SEC to provide an audit report with the annual financial statements
furnished to its stockholders. It also is required to engage the auditors to provide an
opinion on its internal control.
it must maintain investor confidence in the reliability of its financial statements and
internal control over financial reporting if it is to continue to be able to secure capital
from the public. The report by a firm of certified public accountants adds credibility to the
financial statements prepared by the corporation
What is the principal use & significance of an audit report to a family owned enterprise
with securities listed on a stock exchange? - Answers -When a small family-owned
enterprise elects to have an audit, the purpose usually is to use the auditors' report to
support an application for a bank loan.
Explain the following statement: One contribution of the independent auditor is to lend
credibility to financial statements - Answers -To add credibility to financial statements is
to increase the likelihood that they have been prepared following the appropriate
criteria, usually generally accepted accounting principles. As such, an increase in
credibility results in financial statements that can be believed and relied upon by third
parties.
Provide a brief overview of the legislation that altered the self-regulation process of the
accounting profession - Answers -The Sarbanes-Oxley Act of 2002 made significant
reforms in the regulation system for public accounting firms that audit public companies.
It contains provisions toughening penalties for corporate fraud, restricting the types of
consulting CPAs may perform for audit clients, and creating the Public Company
Accounting Oversight Board (PCAOB) to oversee the accounting profession.
Explain the regulation process for accounting firms that audit public companies -
Answers -provided by the PCAOB and the Securities and Exchange Commission
(SEC).
ACCURATE ANSWERS
What is the most common type of attest engagement? - Answers -financial statement
What is the most frequently being "asserted" by management on this type of
engagement? - Answers -Overall assertion, made by management, most frequently is
that the financial statements follow generally accepted accounting principles
What is the principal use & significance of an audit report to a large corporation with
securities listed on a stock exchange? - Answers -A large corporation with securities
listed on a stock exchange is required by the rules of the stock exchange and by the
rules of the SEC to provide an audit report with the annual financial statements
furnished to its stockholders. It also is required to engage the auditors to provide an
opinion on its internal control.
it must maintain investor confidence in the reliability of its financial statements and
internal control over financial reporting if it is to continue to be able to secure capital
from the public. The report by a firm of certified public accountants adds credibility to the
financial statements prepared by the corporation
What is the principal use & significance of an audit report to a family owned enterprise
with securities listed on a stock exchange? - Answers -When a small family-owned
enterprise elects to have an audit, the purpose usually is to use the auditors' report to
support an application for a bank loan.
Explain the following statement: One contribution of the independent auditor is to lend
credibility to financial statements - Answers -To add credibility to financial statements is
to increase the likelihood that they have been prepared following the appropriate
criteria, usually generally accepted accounting principles. As such, an increase in
credibility results in financial statements that can be believed and relied upon by third
parties.
Provide a brief overview of the legislation that altered the self-regulation process of the
accounting profession - Answers -The Sarbanes-Oxley Act of 2002 made significant
reforms in the regulation system for public accounting firms that audit public companies.
It contains provisions toughening penalties for corporate fraud, restricting the types of
consulting CPAs may perform for audit clients, and creating the Public Company
Accounting Oversight Board (PCAOB) to oversee the accounting profession.
Explain the regulation process for accounting firms that audit public companies -
Answers -provided by the PCAOB and the Securities and Exchange Commission
(SEC).
