Full Test Bank for Principles of Auditing and Other Assurance Services 22nd E
m m m m m m m m m m m m
dition by Ray Whittington, Kurt Pany
m m m m m
Answers are at the end of each chapter Chapt
m m m m m m m m
er 1
m
Student name: m
1) Accountantsmaremregulated mbymamvarietymof morganizations.mMatchmthemstatementsmwithmt
hemmost mdirectlymrelated morganization:
● Accountingmand mReview mServicesmCommittee.
● AmericanmInstitutemof mCertified mPublicmAccountants.
● AuditingmStandardsmBoard.
● FederalmAccountingmStandardsmAdvisorymBoard.
● FinancialmAccountingmStandardsmBoard.
● GeneralmAccountingmOffice.
● Government mAccountingmStandardsmBoard.
● PublicmCompanymAccountingmOversight mBoard.
● Securitiesmand mExchangemCommission.
● StatemBoardsmof mAccountancy.
Organizationsmmaymbemused monce,mmoremthanmonce,mormnot mat mall.
Statements Organizations
A.mDevelopsmaccountingmstandards
formpublicmandmnonpublicmcompanies.
B.mDevelopsmaccountingmstandardsmfor
mthemU.S.mGovernment.
C.mImprovesmstandardsmofmfinancialmac
countingmformstatemandmlocal
governmentmentities.
D.mIssuesmauditingmstandardsmformpub
licmcompanies.
E.mIssuesmCPAmcertificates.
F.mPreparesmthemCPAmexam.
Organizations:mAmericanmInstitutemof mCertified mPublicmAccountants,mFederalmAccountingmStand
ardsmAdvisorymBoard,mFinancialmAccountingmStandardsmBoard,mGovernment mAccountingmStandar
dsmBoard,mPublicmCompanymAccountingmOversight mBoard,mStatemBoardsmof mAccountancy.
Versionm1 1
,2) ThemSarbanes-
OxleymAct mof m2002mmademsignificant mreformsmformpublicmcompaniesmand mtheirmauditors.
a. Describemthemeventsmthat mled mupmtomthempassagemof mthemAct.
b. DescribemthemmajormchangesmmadembymthemAct.
3) Manympeoplemconfusemthemresponsibilitiesmof mthemindependent mauditorsmand mthemclien
t'smmanagement mwithmrespect mtomaudited mfinancialmstatements.
a. Describemmanagement'smresponsibilitymregardingmaudited mfinancialmstatements.
b. Describemthemindependent mauditors'mresponsibilitymregardingmaudited mfinancialmstatements.
c. Evaluatemthemfollowingmstatement:m"If mthemauditorsmdisagreemwithmmanagement mregardingma
nmaccountingmprinciplemused minmthemfinancialmstatements,mthemauditorsmshould mexpressmtheirmvie
wsminmthemnotesmtomthemfinancialmstatements."
4) Anminvestormismconsideringminvestingminmonemof mtwomcompanies.mThem companiesmhavem ver
ymsimilarmreported mfinancialmpositionmand mresultsmof moperations.mHowever,monlymonemof mthemcompa
niesmhasmitsmfinancialmstatementsmaudited.
a. Describemwhat mcreatesmthemdemand mformanmaudit minmthismsituation.mIncludemamdiscussionmof mh
owmaudited mfinancialmstatementsmfacilitatemthisminvestment mtransaction,mand mthemeffect mof mthemau
dit monmbusinessmriskmand minformationmrisk.
b. Identifymthempotentialmconsequencesmtomthemcompanymof mnot mhavingmitsmfinancialmstateme
ntsmaudited.
5) A msummarymof mfindingsmrathermthanmassurancemismmost mlikely mtombemincluded minma(n):
A) Agreed-uponmproceduresmreport.
B) Compilationmreport.
C) Audit mreport.
D) Review mreport.
Versionm1 2
,6) ThemStatementsmonmAuditingmStandardsmhavembeenmissued mbymthe:
A) AuditingmStandardsmBoard.
B) FinancialmAccountingmStandardsmBoard.
C) Securitiesmand mExchangemCommission.
D) FederalmBureaumof mInvestigation.
7) Themriskmthat mamcompany’smfinancialmstatementsmwillmmateriallymdepart mfrommgeneral
lymaccepted maccountingmprinciplesmismreferred mtomas:
A) BusinessmRisk.
B) InformationmRisk.
C) DetectionmRisk.
D) Document mRisk.
8) Historically,mwhichmof mthemfollowingmhasmthemAICPA mbeenmmostmconcerned mwi
thmproviding?
A) Auditingmstandards.
B) Professionalmguidancemformregulatingmfinancialmmarkets.
C) Internalmauditingmstandards.
D) Staff msupport mtomCongress.
9) Themorganizationmcharged mwithmprotectingminvestorsmand mthempublicmbymrequiring mf
ullmdisclosuremof mfinancialminformationmbymcompaniesmofferingmsecuritiesmtomthempublicm ismt
he:
A) AuditingmStandardsmBoard.
B) FinancialmAccountingmStandardsmBoard.
C) Government mAccountingmStandardsmBoards.
D) Securitiesmand mExchangemCommission.
Versionm1 3
, 10) Anmengagement minmwhichmamCPA mfirmmarrangesmformamcriticalmreview mof mitsmpracticesm
bymanothermCPA mfirmmismreferred mtomasma(n):
A) PeermReview mEngagement.
B) QualitymControlmEngagement.
C) QualitymAssurancemEngagement.
D) AttestationmEngagement.
11) Themsequentially-
numbered mpronouncementsmissued mbymthemAuditingmStandardsmBoard movermamperiod mof myears
maremknownmas:
A) AuditingmStatementsmof mPositionm(ASPs).
B) AccountingmSeriesmReleasesm(ASRs).
C) StatementsmonmAuditingmStandardsm(SASs).
D) StatementsmonmAuditingmPrinciplesm(SAPs).
12) Government mAccountabilitymOfficem(GAO):
A) ismprimarilymconcerned mwithmrapid mprocessingmof mallmaccountsmpayablemincurred mbymt
hemfederalmgovernment.
B) responsibilitiesmincludemauditsmof mgovernment magencies.
C) ismanmorganizationmof mprofessionalmaccountantsmwhosemprimaryminterest mism inmt
hemeffectivenessmof mpresidentialmexpenditures.
D) ismprimarilymconcerned mwithmbudgetsmand mforecastsmapproved mbymthemPCAOB.
13) Themriskmassociated mwithmsurvivabilitymand mprofitabilitymismreferred mtomas:
Versionm1 4
m m m m m m m m m m m m
dition by Ray Whittington, Kurt Pany
m m m m m
Answers are at the end of each chapter Chapt
m m m m m m m m
er 1
m
Student name: m
1) Accountantsmaremregulated mbymamvarietymof morganizations.mMatchmthemstatementsmwithmt
hemmost mdirectlymrelated morganization:
● Accountingmand mReview mServicesmCommittee.
● AmericanmInstitutemof mCertified mPublicmAccountants.
● AuditingmStandardsmBoard.
● FederalmAccountingmStandardsmAdvisorymBoard.
● FinancialmAccountingmStandardsmBoard.
● GeneralmAccountingmOffice.
● Government mAccountingmStandardsmBoard.
● PublicmCompanymAccountingmOversight mBoard.
● Securitiesmand mExchangemCommission.
● StatemBoardsmof mAccountancy.
Organizationsmmaymbemused monce,mmoremthanmonce,mormnot mat mall.
Statements Organizations
A.mDevelopsmaccountingmstandards
formpublicmandmnonpublicmcompanies.
B.mDevelopsmaccountingmstandardsmfor
mthemU.S.mGovernment.
C.mImprovesmstandardsmofmfinancialmac
countingmformstatemandmlocal
governmentmentities.
D.mIssuesmauditingmstandardsmformpub
licmcompanies.
E.mIssuesmCPAmcertificates.
F.mPreparesmthemCPAmexam.
Organizations:mAmericanmInstitutemof mCertified mPublicmAccountants,mFederalmAccountingmStand
ardsmAdvisorymBoard,mFinancialmAccountingmStandardsmBoard,mGovernment mAccountingmStandar
dsmBoard,mPublicmCompanymAccountingmOversight mBoard,mStatemBoardsmof mAccountancy.
Versionm1 1
,2) ThemSarbanes-
OxleymAct mof m2002mmademsignificant mreformsmformpublicmcompaniesmand mtheirmauditors.
a. Describemthemeventsmthat mled mupmtomthempassagemof mthemAct.
b. DescribemthemmajormchangesmmadembymthemAct.
3) Manympeoplemconfusemthemresponsibilitiesmof mthemindependent mauditorsmand mthemclien
t'smmanagement mwithmrespect mtomaudited mfinancialmstatements.
a. Describemmanagement'smresponsibilitymregardingmaudited mfinancialmstatements.
b. Describemthemindependent mauditors'mresponsibilitymregardingmaudited mfinancialmstatements.
c. Evaluatemthemfollowingmstatement:m"If mthemauditorsmdisagreemwithmmanagement mregardingma
nmaccountingmprinciplemused minmthemfinancialmstatements,mthemauditorsmshould mexpressmtheirmvie
wsminmthemnotesmtomthemfinancialmstatements."
4) Anminvestormismconsideringminvestingminmonemof mtwomcompanies.mThem companiesmhavem ver
ymsimilarmreported mfinancialmpositionmand mresultsmof moperations.mHowever,monlymonemof mthemcompa
niesmhasmitsmfinancialmstatementsmaudited.
a. Describemwhat mcreatesmthemdemand mformanmaudit minmthismsituation.mIncludemamdiscussionmof mh
owmaudited mfinancialmstatementsmfacilitatemthisminvestment mtransaction,mand mthemeffect mof mthemau
dit monmbusinessmriskmand minformationmrisk.
b. Identifymthempotentialmconsequencesmtomthemcompanymof mnot mhavingmitsmfinancialmstateme
ntsmaudited.
5) A msummarymof mfindingsmrathermthanmassurancemismmost mlikely mtombemincluded minma(n):
A) Agreed-uponmproceduresmreport.
B) Compilationmreport.
C) Audit mreport.
D) Review mreport.
Versionm1 2
,6) ThemStatementsmonmAuditingmStandardsmhavembeenmissued mbymthe:
A) AuditingmStandardsmBoard.
B) FinancialmAccountingmStandardsmBoard.
C) Securitiesmand mExchangemCommission.
D) FederalmBureaumof mInvestigation.
7) Themriskmthat mamcompany’smfinancialmstatementsmwillmmateriallymdepart mfrommgeneral
lymaccepted maccountingmprinciplesmismreferred mtomas:
A) BusinessmRisk.
B) InformationmRisk.
C) DetectionmRisk.
D) Document mRisk.
8) Historically,mwhichmof mthemfollowingmhasmthemAICPA mbeenmmostmconcerned mwi
thmproviding?
A) Auditingmstandards.
B) Professionalmguidancemformregulatingmfinancialmmarkets.
C) Internalmauditingmstandards.
D) Staff msupport mtomCongress.
9) Themorganizationmcharged mwithmprotectingminvestorsmand mthempublicmbymrequiring mf
ullmdisclosuremof mfinancialminformationmbymcompaniesmofferingmsecuritiesmtomthempublicm ismt
he:
A) AuditingmStandardsmBoard.
B) FinancialmAccountingmStandardsmBoard.
C) Government mAccountingmStandardsmBoards.
D) Securitiesmand mExchangemCommission.
Versionm1 3
, 10) Anmengagement minmwhichmamCPA mfirmmarrangesmformamcriticalmreview mof mitsmpracticesm
bymanothermCPA mfirmmismreferred mtomasma(n):
A) PeermReview mEngagement.
B) QualitymControlmEngagement.
C) QualitymAssurancemEngagement.
D) AttestationmEngagement.
11) Themsequentially-
numbered mpronouncementsmissued mbymthemAuditingmStandardsmBoard movermamperiod mof myears
maremknownmas:
A) AuditingmStatementsmof mPositionm(ASPs).
B) AccountingmSeriesmReleasesm(ASRs).
C) StatementsmonmAuditingmStandardsm(SASs).
D) StatementsmonmAuditingmPrinciplesm(SAPs).
12) Government mAccountabilitymOfficem(GAO):
A) ismprimarilymconcerned mwithmrapid mprocessingmof mallmaccountsmpayablemincurred mbymt
hemfederalmgovernment.
B) responsibilitiesmincludemauditsmof mgovernment magencies.
C) ismanmorganizationmof mprofessionalmaccountantsmwhosemprimaryminterest mism inmt
hemeffectivenessmof mpresidentialmexpenditures.
D) ismprimarilymconcerned mwithmbudgetsmand mforecastsmapproved mbymthemPCAOB.
13) Themriskmassociated mwithmsurvivabilitymand mprofitabilitymismreferred mtomas:
Versionm1 4
