International Accounting
5th Edition
ISBN: 9781259747984
Author: Doupnik, Timothy S., Finn, Mark T., Gotti, Giorgio
Publisher: Mcgraw-hill Education,
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Chapter 11, Problem 12EP
To determine
Explain the approach used in Country I relating to auditors liability.
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In both Japan and the United States, external auditors have frequently been accused of failing to maintain a proper degree of independence from their clients. What measures have and should be taken to promote the independence of auditors from their clients?
Explain how the purposes and principles of internal controls are different between accounting systems reporting under IFRS versus U.S. GAAP.
Which statement about the International Code of Ethics for Professional Accountants, including International Independence Standards, (international code) is not accurate?
a) State accountancy boards of accountancy are required to adopt the rules in the international code.
b)When the international code and the AICPA Code of Professional Conduct differ, a CPA should apply the most restrictive rule(s).
c)The international code is based primarily on a conceptual framework approach.
d)CPAs should apply the international code when performing services under international auditing standards.
Chapter 11 Solutions
International Accounting
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- Explain what is meant by this statement "Ordinarily, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognize the non-compliance." What is the relevance of Philippine Standard on Auditing 250 (Redrafted) in the conduct of audit?arrow_forwardWhich statement is FALSE? 1)Under SEC rules, we cannot have a subcontracting relationship with an audit client and/or affiliate. 2)Under the SEC rules, a third-party resource relationship with an audit client is usually prohibited because it creates a mutuality of interest between KPMG and the audit client. 3)Under the SEC rules, an alliance relationship may be possible, subject to materiality and significance considerations. 4)Under the IESBA rules, a subcontracting relationship might be possible, subject to materiality and significance considerations.arrow_forwardWhat should you tell your friend about the presence of accounting standards in theUnited States? Who has the authority for standard setting? Who has the responsibility?arrow_forward
- How does auditing differ in the global environment? If the US publicly traded companies are required to have their financial statements audited by firms registered and inspected by the PCAOB, what are the implications if the foreign governments will not allow PCAOB inspectors into these audit firms?arrow_forwardWhat is the auditors responsibility regarding the noncompliance with laws by a client?arrow_forwardDo you think the new revenue recognition standard introduced by the FASB-IASB can reduce the likelihood of similar fraud cases caused by improper revenue recognition?arrow_forward
- Which of the following statements is correct with respect to the IFRS accounting policy hierarchy in situations where a specifically relevant IASB standard dealing with an accounting issue does not exist?a. The IASB Conceptual Framework takes precedence over other IASB standards that deal with related issues.b. The IASB Conceptual Framework takes precedence over standards developed by standard-setting bodies in other countries that deal with the specific accounting issue.c. The most recent specifically relevant pronouncement of any other standard-setting body may be used when neither IASB standards nor the IASB Conceptual Framework provide helpful guidance.d. IFRSs take precedence over IASs and Interpretations in identifying appropriate guidance.arrow_forwardThe auditor’s report in the U.S. does not provide the user with details on the level of materiality that the auditor used during the audit. Do you think that the audit report should disclose materiality levels? Why might the user find such information useful? Why might auditors hesitate to publicly reveal the level of misstatement that they will accept as “immaterial”? Would management have a preference regarding the public disclosure of materiality?arrow_forwardWhich of the following does not constitute fair presentation and compliance with IFRS? A) an entity apply IFRS, with additional disclosure when necessary. B) an entity rectify inappropriate accounting policies by additional disclosures. C) an entity did not selectively apply standards it likes. D) an entity follows the recognition criteria for assets, liabilities and expenses set out in the conceptual framework.arrow_forward
- In your words, what is the legal responsibility of the auditor?arrow_forwardWhich of the following statements is most likely to be included in an attorney letter?a. “Certain representations in this letter are described as being limited to matters that arematerial.”b. “If any unasserted claims or assessments are omitted from this disclosure, please provide this information directly to our auditors.”c. “Our work enabled us to notice some actions that could enhance the profitability of theCompany.”d. “Please furnish to our auditors such explanation, if any, that you consider necessary tosupplement the foregoing information.”arrow_forwardChoose the correct. Which of the following statements is correct with respect to the IFRS accounting policy hierarchy in situations where a specifically relevant IASB standard dealing with an accounting issue does not exist?a. The IASB Conceptual Framework takes precedence over other IASB standards that deal with related issues.b. The IASB Conceptual Framework takes precedence over standards developed by standard-setting bodies in other countries that deal with the specific accounting issue.c. The most recent specifically relevant pronouncement of any other standard-setting body may be used when neither IASB standards nor the IASB Conceptual Framework provide helpful guidance.d. IFRSs take precedence over IASs and Interpretations in identifying appropriate guidance.arrow_forward
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