TEST BANK - Principles of Auditing and Other Assurance
Services 22nd Edition by Ray Whittington, Kurt Pany
,Table of Content
w w
Chapterw1wThewRolewofwthewPublicwAccountantwinwthewAmericanwEconomyw
Chapterw2wProfessionalwStandards
Chapterw3wProfessionalwEthicsw Chapt
erw4wLegalwLiabilitywofwCPAs
Chapterw5wAuditwEvidencewandwDocumentation
Chapterw6wAuditwPlanning,wUnderstandingwthewClient,wAssessingwRisks,wan
dw Responding
Chapterw7wInternalwControl
Chapterw8wConsiderationwofwInternalwControlwinwanwInformationwTechnolo
gyw Environment
Chapterw9wAuditwSampling
Chapterw10wCashwandwFinancialwInvestments
Chapterw11wAccountswReceivable,wNoteswReceivable,wandwRevenuew C
hapterw12wInventorieswandwCostwofwGoodswSold
Chapterw13wProperty,wPlant,wandwEquipment:wDepreciationwandwDepletion
w Chapterw14wAccountswPayablewandwOtherwLiabilities
Chapterw15wDebtwandwEquitywCapital
Chapterw16wAuditingwOperationswandwCompletingwthewAudit
Chapterw17wAuditors’wReports
Chapterw18wIntegratedwAuditswofwPublicwCompanies
Chapterw19wAdditionalwAssurancewServices:wHistoricalwFinancialw Informat
ion
Chapterw20wAdditionalwAssurancewServices:wOtherwInformationw Chap
terw21wInternal,wOperational,wandwCompliancewAuditing
, Full Test Bank for Principles of Auditing and Other Assuranc
w w w w w w w w w
e
Services 22ndEdition by Ray Whittington, Kurt Pany
w w w w w w
Answerswarewatwthewendwofweachwchapterw Chap
terw1
Studentwname:w
1) Accountantswarewregulatedwbywawvarietywofworganizations.wMatchwthewstatem
entsw withthewmostwdirectlywrelatedworganization:
● AccountingwandwReviewwServiceswCommittee.
● AmericanwInstitutewofwCertifiedwPublicwAccountants.
● AuditingwStandardswBoard.
● FederalwAccountingwStandardswAdvisorywBoard.
● FinancialwAccountingwStandardswBoard.
● GeneralwAccountingwOffice.
● GovernmentwAccountingwStandardswBoard.
● PublicwCompanywAccountingwOversightwBoard.
● SecuritieswandwExchangewCommission.
● StatewBoardswofwAccountancy.
Organizationswmaywbewusedwonce,wmorewthanwonce,worwnotwatwall.
Statements Organizations
A. Developswaccountingwstandardsfo
rw publicwandwnonpublicwcompanies.
B. Developswaccountingwstandardsforwthe
U.S.wGovernment.
C. Improveswstandardswofwfinancialw acco
untingwforwstatewandwlocalwgovernmentw e
ntities.
D. Issueswauditingwstandardswforpubli
cw companies.
E. IssueswCPAwcertificates.
F. PrepareswthewCPAwexam.
Organizations:wAmericanwInstitutewofwCertifiedwPublicwAccountants,wFederalwAccountin
gw StandardswAdvisorywBoard,wFinancialwAccountingwStandardswBoard,wGovernmentw Acc
ountingwStandardswBoard,wPublicwCompanywAccountingwOversightwBoard,wStatewBoardsw
ofwAccountancy.
, 2) ThewSarbanes-
OxleywActwofw2002wmadewsignificantwreformswforwpublicwcompaniesw andtheirwauditor
s.
a. DescribewtheweventswthatwledwupwtowthewpassagewofwthewAct.
b. DescribewthewmajorwchangeswmadewbywthewAct.
3) Manywpeoplewconfusewthewresponsibilitieswofwthewindependentwaudit
orsw andwtheclient'swmanagementwwithwrespectwtowauditedwfinancialwstatem
ents.
a. Describewmanagement'swresponsibilitywregardingwauditedwfinancialwstatements.
b. Describewthewindependentwauditors'wresponsibilitywregardingwauditedwfinancialwstatement
s.
c. Evaluatewthewfollowingwstatement:w"Ifwthewauditorswdisagreewwithwmanagem
entw regardingwanwaccountingwprinciplewusedwinwthewfinancialwstatements,wthewauditor
swshouldw expresstheirwviewswinwthewnoteswtowthewfinancialwstatements."
4) Anwinvestorwiswconsideringwinvestingwinwonewofwtwowcompanies.wThewcompaniesw
havew verysimilarwreportedwfinancialwpositionwandwresultswofwoperations.wHowever,wonly
wonewofw thewcompanieswhaswitswfinancialwstatementswaudited.
a. Describew whatw createsw thew demandw forw anw auditw inwthisw situation.w Includ
ew aw discussionwofw howw auditedw financialw statementsw facilitatew thisw investmentw tran
saction,w andwtheweffectwofwtheauditwonwbusinesswriskwandwinformationwrisk.
b. Identifyw thew potentialw consequencesw tow thew companyw ofw notw having
w itsw financialstatementswaudited.
5) Awsummarywofwfindingswratherwthanwassurancewiswmostwlikelywtowbewincludedwinwa(n):
A) Agreed-uponwprocedureswreport.
B) Compilationwreport.
C) Auditwreport.
D) Reviewwreport.
Services 22nd Edition by Ray Whittington, Kurt Pany
,Table of Content
w w
Chapterw1wThewRolewofwthewPublicwAccountantwinwthewAmericanwEconomyw
Chapterw2wProfessionalwStandards
Chapterw3wProfessionalwEthicsw Chapt
erw4wLegalwLiabilitywofwCPAs
Chapterw5wAuditwEvidencewandwDocumentation
Chapterw6wAuditwPlanning,wUnderstandingwthewClient,wAssessingwRisks,wan
dw Responding
Chapterw7wInternalwControl
Chapterw8wConsiderationwofwInternalwControlwinwanwInformationwTechnolo
gyw Environment
Chapterw9wAuditwSampling
Chapterw10wCashwandwFinancialwInvestments
Chapterw11wAccountswReceivable,wNoteswReceivable,wandwRevenuew C
hapterw12wInventorieswandwCostwofwGoodswSold
Chapterw13wProperty,wPlant,wandwEquipment:wDepreciationwandwDepletion
w Chapterw14wAccountswPayablewandwOtherwLiabilities
Chapterw15wDebtwandwEquitywCapital
Chapterw16wAuditingwOperationswandwCompletingwthewAudit
Chapterw17wAuditors’wReports
Chapterw18wIntegratedwAuditswofwPublicwCompanies
Chapterw19wAdditionalwAssurancewServices:wHistoricalwFinancialw Informat
ion
Chapterw20wAdditionalwAssurancewServices:wOtherwInformationw Chap
terw21wInternal,wOperational,wandwCompliancewAuditing
, Full Test Bank for Principles of Auditing and Other Assuranc
w w w w w w w w w
e
Services 22ndEdition by Ray Whittington, Kurt Pany
w w w w w w
Answerswarewatwthewendwofweachwchapterw Chap
terw1
Studentwname:w
1) Accountantswarewregulatedwbywawvarietywofworganizations.wMatchwthewstatem
entsw withthewmostwdirectlywrelatedworganization:
● AccountingwandwReviewwServiceswCommittee.
● AmericanwInstitutewofwCertifiedwPublicwAccountants.
● AuditingwStandardswBoard.
● FederalwAccountingwStandardswAdvisorywBoard.
● FinancialwAccountingwStandardswBoard.
● GeneralwAccountingwOffice.
● GovernmentwAccountingwStandardswBoard.
● PublicwCompanywAccountingwOversightwBoard.
● SecuritieswandwExchangewCommission.
● StatewBoardswofwAccountancy.
Organizationswmaywbewusedwonce,wmorewthanwonce,worwnotwatwall.
Statements Organizations
A. Developswaccountingwstandardsfo
rw publicwandwnonpublicwcompanies.
B. Developswaccountingwstandardsforwthe
U.S.wGovernment.
C. Improveswstandardswofwfinancialw acco
untingwforwstatewandwlocalwgovernmentw e
ntities.
D. Issueswauditingwstandardswforpubli
cw companies.
E. IssueswCPAwcertificates.
F. PrepareswthewCPAwexam.
Organizations:wAmericanwInstitutewofwCertifiedwPublicwAccountants,wFederalwAccountin
gw StandardswAdvisorywBoard,wFinancialwAccountingwStandardswBoard,wGovernmentw Acc
ountingwStandardswBoard,wPublicwCompanywAccountingwOversightwBoard,wStatewBoardsw
ofwAccountancy.
, 2) ThewSarbanes-
OxleywActwofw2002wmadewsignificantwreformswforwpublicwcompaniesw andtheirwauditor
s.
a. DescribewtheweventswthatwledwupwtowthewpassagewofwthewAct.
b. DescribewthewmajorwchangeswmadewbywthewAct.
3) Manywpeoplewconfusewthewresponsibilitieswofwthewindependentwaudit
orsw andwtheclient'swmanagementwwithwrespectwtowauditedwfinancialwstatem
ents.
a. Describewmanagement'swresponsibilitywregardingwauditedwfinancialwstatements.
b. Describewthewindependentwauditors'wresponsibilitywregardingwauditedwfinancialwstatement
s.
c. Evaluatewthewfollowingwstatement:w"Ifwthewauditorswdisagreewwithwmanagem
entw regardingwanwaccountingwprinciplewusedwinwthewfinancialwstatements,wthewauditor
swshouldw expresstheirwviewswinwthewnoteswtowthewfinancialwstatements."
4) Anwinvestorwiswconsideringwinvestingwinwonewofwtwowcompanies.wThewcompaniesw
havew verysimilarwreportedwfinancialwpositionwandwresultswofwoperations.wHowever,wonly
wonewofw thewcompanieswhaswitswfinancialwstatementswaudited.
a. Describew whatw createsw thew demandw forw anw auditw inwthisw situation.w Includ
ew aw discussionwofw howw auditedw financialw statementsw facilitatew thisw investmentw tran
saction,w andwtheweffectwofwtheauditwonwbusinesswriskwandwinformationwrisk.
b. Identifyw thew potentialw consequencesw tow thew companyw ofw notw having
w itsw financialstatementswaudited.
5) Awsummarywofwfindingswratherwthanwassurancewiswmostwlikelywtowbewincludedwinwa(n):
A) Agreed-uponwprocedureswreport.
B) Compilationwreport.
C) Auditwreport.
D) Reviewwreport.
