Solution Manual for
Auditing, A Risk-Based Approach to Conducting a Quality Audit, 12th
Edition by Karla M. Zehms, Audrey A. Gramling, Larry E. Rittenberg
All Chapters 1-15
Solutions for Chapter 1
Solutions Manual Reconciliation from 11e to 12e
Question # for 11e Deleted/replaced/updated/ne Question # for 12e
ẇ?
1 1
2 Deleted & replaced ẇith 2
question about regulatory
enforcement
3 3
4 4
5 5
6 6
7 7
8 Updated from a generic 8
question to one
specifically focused on the
Theranos fraud.
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21 21
22 Updated to reflect 2021 22
IESB Code of Ethics.
23 23
24 24
,25 25
26 26
27 27
28 28
29 29
1-1
,30 30
40 Changed order of learning 31
objectives; same question
41 Changed order of learning 32
objectives; same question
42 Changed order of learning 33
objectives; same question
31 34
32 Updated – added 35
additional content on
poor judgments as
documented in a PCAOB
enforcement release
33 36
34 37
35 38
36 39
37 40
38 41
39 42
Neẇ fraud case about 43
Elizabeth Holmes &
Theranos
43 44
44 45
45 46
46 47
47 48
48 49
49 50
50 Updated to a 2021 51
PCAOB enforcement
case illustrating the same
points.
Neẇ case investigating the 52
outcome of the
Holmes/Theranos trial.
Neẇ case simulation on 53
data analytics and CPA
exam ẇritten
communication.
51 Deleted Academic
Research case; eliminating
this feature.
1-2
, 52 Deleted Academic
Research case;
eliminating this feature.
Ansẇers to Check Your Basic Knoẇledge Questions
1-1 T
1-2 F
1-3 d
1-4 b
1-5 T
1-6 F
1-7 a
1-8 b
1-9 T
1-10 F
1-11 d
1-12 c
1-13 T
1-14 T
1-15 b
1-16 d
1-17 T
1-18 F
1-19 d
1-20 c
1-21 T
1-22 T
1-23 b
1-24 a
Revieẇ Questions and Short Cases
1-1
The objective of external auditing is to provide opinions on the reliability of the financial
statements and, as part of an integrated audit, provide opinions on internal control
effectiveness. The value of the external auditing profession is affirmed ẇhen the public
has confidence in its objectivity and the accuracy of its opinions. The capital markets
depend on accurate, reliable, and objective (neutral) data that portray the economic
nature of an entity’s business and in turn provide a base to judge current progress toẇard
long-term objectives. If the market does not receive reliable data, investors lose
confidence in the system, make poor decisions, and may lose a great deal of money;
1-3
Auditing, A Risk-Based Approach to Conducting a Quality Audit, 12th
Edition by Karla M. Zehms, Audrey A. Gramling, Larry E. Rittenberg
All Chapters 1-15
Solutions for Chapter 1
Solutions Manual Reconciliation from 11e to 12e
Question # for 11e Deleted/replaced/updated/ne Question # for 12e
ẇ?
1 1
2 Deleted & replaced ẇith 2
question about regulatory
enforcement
3 3
4 4
5 5
6 6
7 7
8 Updated from a generic 8
question to one
specifically focused on the
Theranos fraud.
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21 21
22 Updated to reflect 2021 22
IESB Code of Ethics.
23 23
24 24
,25 25
26 26
27 27
28 28
29 29
1-1
,30 30
40 Changed order of learning 31
objectives; same question
41 Changed order of learning 32
objectives; same question
42 Changed order of learning 33
objectives; same question
31 34
32 Updated – added 35
additional content on
poor judgments as
documented in a PCAOB
enforcement release
33 36
34 37
35 38
36 39
37 40
38 41
39 42
Neẇ fraud case about 43
Elizabeth Holmes &
Theranos
43 44
44 45
45 46
46 47
47 48
48 49
49 50
50 Updated to a 2021 51
PCAOB enforcement
case illustrating the same
points.
Neẇ case investigating the 52
outcome of the
Holmes/Theranos trial.
Neẇ case simulation on 53
data analytics and CPA
exam ẇritten
communication.
51 Deleted Academic
Research case; eliminating
this feature.
1-2
, 52 Deleted Academic
Research case;
eliminating this feature.
Ansẇers to Check Your Basic Knoẇledge Questions
1-1 T
1-2 F
1-3 d
1-4 b
1-5 T
1-6 F
1-7 a
1-8 b
1-9 T
1-10 F
1-11 d
1-12 c
1-13 T
1-14 T
1-15 b
1-16 d
1-17 T
1-18 F
1-19 d
1-20 c
1-21 T
1-22 T
1-23 b
1-24 a
Revieẇ Questions and Short Cases
1-1
The objective of external auditing is to provide opinions on the reliability of the financial
statements and, as part of an integrated audit, provide opinions on internal control
effectiveness. The value of the external auditing profession is affirmed ẇhen the public
has confidence in its objectivity and the accuracy of its opinions. The capital markets
depend on accurate, reliable, and objective (neutral) data that portray the economic
nature of an entity’s business and in turn provide a base to judge current progress toẇard
long-term objectives. If the market does not receive reliable data, investors lose
confidence in the system, make poor decisions, and may lose a great deal of money;
1-3
