All Matches
Solution Library
Expert Answer
Textbooks
Search Textbook questions, tutors and Books
Oops, something went wrong!
Change your search query and then try again
Toggle navigation
FREE Trial
S
Books
FREE
Tutors
Study Help
Expert Questions
Accounting
General Management
Mathematics
Finance
Organizational Behaviour
Law
Physics
Operating System
Management Leadership
Sociology
Programming
Marketing
Database
Computer Network
Economics
Textbooks Solutions
Accounting
Managerial Accounting
Management Leadership
Cost Accounting
Statistics
Business Law
Corporate Finance
Finance
Economics
Auditing
Ask a Question
AI Study Help
New
Search
Search
Sign In
Register
study help
business
principles of auditing
Questions and Answers of
Principles of Auditing
What independence problems are created when an audit manager is approached by a private company audit client, which he or she audits, to become the company’s CFO? Are there appropriate safeguards
Astor Inc. purchased the assets of Bell Corp. A condition of the purchase agreement required Bell to retain a CPA to audit Bell’s financial statements. The purpose of the audit was to determine
The essence of the due care standard is that the auditor should not be guilty of:a. Bias.b. Errors in judgment.c. Fraud.d. Negligence.
List three situations in which the SEC and PCAOB independence rules are stricter than the AICPA rules. Give an example of each.
Without the consent of the client, a CPA should not disclose confidential client information contained in working papers to a:a. Voluntary quality control review board.b. CPA firm that is a likely
The AICPA rule on general standards identifies four aspects of professional behavior. Identify each of the four aspects and develop an example illustrating the violation of each aspect.
Henry Owens, CPA works in a local accounting firm. He is the tax manager on a major client in the office. The firm prepares compiled financial statements for the client on a quarterly basis. The
Starr Corp. approved a plan of merger with Silo Corp. One of the determining factors in approving the merger was the strong financial statements of Silo, which were audited by Cox & Co., CPAs.
What does a third-party user of financial statements have to prove under common law in a suit against an auditor for the auditor’s negligence? Illustrate each item with an example.
Johnson and Wiley, CPAs acquires Fritz and Rufner, CPAs as of January 1, 2022. Johnson and Wiley have audited the financial statements of Matthews Grocery for the last 5 years. Fritz and Rufner
When a plaintiff is suing the auditor for damages under Rule 10(b)-5 of the 1934 Securities Act, which of the following is not part of the plaintiff’s burden of proof?a. The financial statements
John Rodrigeuz purchased newly issued bonds of Fly By Night Airlines in the primary market. Subsequently Fly By Night went bankrupt. What statutory law applies to this transaction? What does John
One of the elements necessary to recover damages if there has been a material misstatement in a registration statement filed pursuant to the Securities Act of 1933 is that:a. There was a material
Mary Chen purchased shares of Fly By Night Airlines in the secondary market. Subsequently Fly By Night went bankrupt. What statutory law applies to this transaction? What does Mary have to prove in a
Star Software is a client of Jones & Parker, LLP. Star has experienced increased competition in its industry that has resulted in decreased profits over the last three years. In an effort to stay
The audit committee of the board of directors of WaterFun Corporation asked DDD LLP to audit WaterFun’s financial statements for the 2022 fiscal year. DDD requested permission to communicate with
a. Gather information: Identify and explain any significant fraud risk factors for KCI.b. Analysis: For each fraud risk factor you identify, analyze how the risk will affect your approach to the
Gather information: Considering both industry and entity factors, what are the major inherent risks in the MSI audit? Mobile Security, Inc. (MSI) has been an audit client of Leo & Lee LLP for
An attitude of professional skepticism means:a. The auditor can rely on past experience to determine current risk of fraud.b. Any indicator of fraud is properly investigated.c. The auditor can rely
The quantitative materiality of an item is assessed relative to a particular benchmark. What are some of the choices for this benchmark, and what factors guide the auditor in this choice?
Explain the relationship between planning materiality and performance materiality.
Consider this statement, “Auditors should only use professional skepticism when considering fraud risk.” Do you agree or disagree with this statement? Support your position.
Avery Island Dairy is a boutique cheese maker based on Avery Island, Louisiana. Over the years, the business has grown by supplying local retailers and through exports. In addition, there is a
Consider the following statement: “When inherent and control risk are assessed as high, the risk of material misstatement is assessed as high, and an auditor will set detection risk as low to
If auditors adopt a reliance on controls approach, do they have to perform any substantive procedures? Explain.
Analysis and evaluation: What qualitative factors in the background information would you consider when determining planning materiality for the 2022 audit of KCI? Evaluate how each factor affects
W&S Partners has just won the January 31, 2023, audit for Cloud 9. The audit team assigned to this client is:• Partner, Jo Wadley• Audit manager, Sharon Gallagher• Audit senior, Josh
The risk assessment phase of an audit does not include:a. Gaining an understanding of the client.b. Audit execution and reporting.c. Identification of factors that may affect the risk of a material
Which of the following is an example of a qualitative materiality factor?a. The client is experiencing a slowdown in sales and is struggling to pay vendors on time.b. Inventory represents 40% of
Are all audits the same? Why might an audit change from year to year?
Mark Jackson is the manager on the audit team for a new client, Central Companies (CC). CC is a home appliance and lighting retailer specializing in high-end kitchen equipment and specialty light
Analysis and evaluation: Discuss the factors to consider when determining planning materiality for MSI. Calculate an amount for planning materiality for the audit of fiscal year-end June 30,
Goodfellow & Perkins gained a new client, Brookwood Pines Hospital (BPH), a private, not-for-profit hospital. The fiscal year-end for Brookwood Pines is June 30. You are performing the audit for
Which component of audit risk can the auditor control?a. Inherent risk.b. Control risk.c. Financial risk.d. Detection risk.
All Tunes Satellite Radio (ATS) provides a subscription service to satellite radio channels. Customers can pay for a subscription on monthly basis, or pay for a year in advance and receive a 15%
Explain how setting a lower materiality level affects the number of items that are material and affects the decisions about the nature, extent, and timing of the audit procedures.
All Tunes Satellite Radio (ATS) provides a subscription service to satellite radio channels. Customers can pay for a subscription on a monthly basis, or pay for a year in advance and receive a 15%
Pelican Oil is a publicly traded oil and gas company specializing in global exploration and offshore drilling. Even though Pelican has been operating for almost 30 years, it is still considered a
If auditors adopt a predominantly substantive approach to the audit, do they have to consider and test the client’s internal controls? Explain.
In the context of fraud risk assessment, what is the purpose of the brainstorming session?
Explain the rule on integrity and objectivity. Give examples of conflicts of interest, knowingly misrepresenting facts, or subordinating judgment.
A CPA who is a “covered person” purchased stock in a client corporation and placed it in a trust as an educational fund for the CPA’s minor child. The trust securities were not material to the
Gilbert and Bradley formed a corporation called Financial Services, Inc., each taking 50% of the authorized common stock. Gilbert is a CPA and a member of the American Institute of CPAs. Bradley is a
Assume that a CPA has just received a new audit client. The client will be the firm’s largest audit client, and the firm will have to hire one new staff member to staff the engagement. The fees
In the practice of public accounting, an auditor who is a member of the AICPA is expected to comply with the rules of the AICPA Code of Professional Conduct. Listed below are circumstances that raise
Assume that a CPA has an opportunity to bid on a new audit client. The accounting firm is being considered because the CPA’s best friend from college is the CFO of the potential client. Apply the
A CPA would violate the AICPA rule on integrity and objectivity if:a. A CPA in industry knowingly misrepresented the earnings of the company he worked for.b. A CPA in public practice represented both
Jones and Jones, CPA, has a manufacturing client, Widgit Technologies, Inc. (WTI), that is a small, owner-managed business with annual revenues of approximately $8 million. WTI employs a bookkeeper
Explain the differences between Parts 1, 2, and 3 of the AICPA Code of Professional Conduct.
In the conceptual framework to the AICPA Code of Professional Conduct, a self-interest threat is:a. The threat that a CPA could benefit, financially or otherwise, from an interest in, or a
The attribute of independence has been traditionally associated with the CPA’s function of auditing and expressing opinions on financial statements.Requireda. What is meant by “independence” as
There are a series of characteristics associated with CPI professionals. Explain how they apply to architecture and to public accounting.
Which of the following statements is true about interpretations of the AICPA Code of Professional Conduct?a. Interpretations are not enforceable by the AICPA in a disciplinary matter.b.
Assume that you are the audit partner on an engagement for a client that has had a string of operating losses. You know the CFO, who is a former audit manager of your firm. The company still has a
Explain the “public interest” in the work performed by auditors.
A key aspect of the “concern for the public interest” definition of a professional is:a. The level of professional expertise of the professional.b. The fact that there are situations where
Sharon Gallagher, Josh Thomas, and Jo Wadley work for the audit firm W&S Partners. Sharon is an audit manager, Josh is an audit senior, and Jo is an audit partner. They meet to discuss the
Thornson & Danforth plans to continue to prepare tax returns for KCI and the King family. The firm also plans to perform the audit for the year ended December 31, 2022.a. Identify any ethics
Debate the audit expectation gap. Why do you think professional auditing standard do not give users what they want? Why do you think auditors sometimes do not meet professional standards?
List and briefly describe the components of the auditor’s report on internal controls over financial reporting for a public company.
Auditors of publicly traded companies are required to perform a(an) ________ for their clients.a. Compliance auditb. Integrated auditc. Internal auditd. Operational audit
On an international level, other countries have also discussed and implemented expanding the audit report to include more detail from auditors about critical audit matters (CAM). The United Kingdom
Discuss the similarities and differences in the auditor’s reports for a public company client and a private company client.
What is the appropriate date for an audit report?a. The date the auditors were hired.b. The date of the balance sheet.c. The conclusion of the gathering of evidence for the audit.d. The date required
You are an intern at a Big 4 accounting firm and have just finished your internship training. You feel a little overwhelmed with all of the information from the training session, and you are
Briefly describe the principles underlying an audit conducted in accordance with GAAS that are issued by the ASB.
Auditors can only provide reasonable assurance that the financial statements are presented fairly because:a. Sampling techniques are used to gather evidence.b. Some items in the financial statements
Compare and contrast the functions of a state board of accountancy and of NASBA.
The role of COSO is to:a. Establish financial accounting and reporting standards.b. Establish auditing standards for private companies.c. Prepare and grade the CPA exam.d. Provide guidance in the
Auditor’s reports for The Boeing Company are provided in Illustrations 1.7 and 1.9 in this chapter. Both reports are signed by Deloitte & Touche LLP. Deloitte & Touche also audits Starbucks
Describe the relationship between the SEC and the PCAOB.
Which of the following organizations issues auditing standards for the audits of public companies?a. PCAOB.b. SEC.c. ASB.d. COSO.
Since the creation of the PCAOB in 2003, accounting firms that wish to audit public companies must be registered with the PCAOB. Visit the PCAOB’s website (www.pcaobus.org) and browse the
Compare and contrast the responsibilities of preparers and auditors regarding a financial statement audit.
Management is responsible for which of the following?a. Preparing financial statements in accordance with the appropriate auditing standards.b. Designing, implementing, and maintaining internal
Each state has the power to determine the education and experience requirements to be a licensed CPA in that state. The power is delegated to the state board of accountancy in each
Why would investors in a company demand an audit of financial statements?
All of the following are reasons why users would demand an audit of financial statements except:a. Complexity.b. Remoteness.c. Cost.d. Reliability.
Economic changes can affect how clients select their assurance providers.Requireda. In times of economic recession, would you expect the demand for audits to increase or decrease?b. Would you expect
Discuss some limitations of a financial statement audit.
Operational (performance) audits are useful because they:a. Include a comprehensive audit.b. Are concerned with the economy, efficiency, and effectiveness of an organization’s activities.c. Involve
An assurance service that determines whether the entity has conformed with regulations, rules or processes is a (an):a. Compliance audit.b. Financial statement audit.c. Internal audit.d. Operational
Ron McLellan established his business, McLellan’s Shoes, in 1985. Since then, he has run his business as a sole proprietor. Ron keeps records and his wife helps him prepare basic accounting
A friend knows that you are studying auditing and asks you what the difference is between internal and external auditing.RequiredUsing what you learned in this chapter and from information from the
What does assurance mean in the financial reporting context? Who are the three parties relevant to an assurance engagement?
Which of the following is not a characteristic of an assurance service?a. The engagement is conducted by an independent professional.b. The service lends credibility to information.c. The subject
According to Sarbanes Oxley, at least one audit committee member should be ‘financial expert’. Discuss some criteria that should be met.
Should the audit committee review design and operating effectiveness of internal controls? Do you think the audit committee is part of ‘internal control?’
Describe the steps of the audit of internal controls over financial reporting.
Transparency is an important element of good corporate governance. Visit www.iirc.org and study the guidance and content of the Integrated Reporting Framework. What conditions should be met for an
Describe the concept of Integrated Thinking.
Explain the concept of Corporate Governance?
List major differences between the internal and external audit.
What is meant with the statement Corporate governance is not an end in itself?
Describe the role of the external auditor in corporate governance.
Describe advantages and disadvantages of mandatory firm rotation.
Select a transparency report of one of the (EU) big four firms. Summarise the measures the firm implemented to guarantee good (audit firm) governance.
Using the example of basketball, explain the nature of governance in terms of a basketball team.
Bakka Bee, a Canadian construction firm, of which 30% of the shares are listed at the Toronto Stock Exchange and 70%, is held by the board of management. They are a firm with 200 employees in five
Pick one listed US-based company and one listed continental European company and compare and contrast their board of directors and other supervisory boards.
Showing 2900 - 3000
of 3387
First
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34