Auditing and Assurance Services (16th Edition)
16th Edition
ISBN: 9780134065823
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
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Question
Chapter 2, Problem 15.2MCQ
To determine
Indicate the option that provides the authoritative guidance for the auditor of a non-public company.
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Auditing standards are:a. Ways to obtain / collect proof of transactionb. A collection of rules that must be obeyed by public accountants in carrying out auditsc. Measures regarding the quality of work (audits) of auditors recognized by the International Federation of Accountantsd. The requirements governing the types of audit evidence that the auditor must collect in performing the audit
“The maintenance of auditor independence is vital to the credibility of the audit in the minds of the users of financial statements.”
1. State the provisions of the companies Act, 2019 (Act 992) which strengthen the independence of the auditor.
2. Suggest how the independence of the auditor might be further strengthened and improved.
Select the necessary words from the list of possibilities to complete the following statements: assertion, codification, financial reporting framework, generally accepted accounting principles, International auditing and assurance standards board, interpretations, professional skepticism, quality control, shareholders, and statements on auditing standards
Statements
Answer
1.
The purpose of an audit conducted in accordance with generally accepted auditing standards is to provide financial statement users with an opinion by the auditor on whether the financial statements are presented fairly, in all material respects, in accordance with the applicable __________.
2.
The serially numbered pronouncements issued by the Auditing Standards Board of the AICPA as generally accepted auditing standards are known as __________.
3.
Investors need to compare financial statements of different companies. The standards most frequently followed to prepare…
Chapter 2 Solutions
Auditing and Assurance Services (16th Edition)
Ch. 2 - Prob. 1RQCh. 2 - Prob. 2RQCh. 2 - Prob. 3RQCh. 2 - Prob. 4RQCh. 2 - Prob. 5RQCh. 2 - Prob. 6RQCh. 2 - Prob. 7RQCh. 2 - Prob. 8RQCh. 2 - Prob. 9RQCh. 2 - Prob. 10RQ
Ch. 2 - Prob. 11RQCh. 2 - State what is meant by the term peer review. What...Ch. 2 - Prob. 13.1MCQCh. 2 - Prob. 13.2MCQCh. 2 - Prob. 13.3MCQCh. 2 - Prob. 14.1MCQCh. 2 - Prob. 14.2MCQCh. 2 - Prob. 14.3MCQCh. 2 - Prob. 15.1MCQCh. 2 - Prob. 15.2MCQCh. 2 - Prob. 15.3MCQCh. 2 - Prob. 16DQPCh. 2 - Prob. 17DQPCh. 2 - Prob. 18DQPCh. 2 - Prob. 19DQPCh. 2 - Prob. 21DQP
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- Professional guidance indicates that the auditor should consider revenue recognition to be high risk in planning an audit of a company’s financial statements. a. Identify the activities that affect the revenue cycle. b. Identify the financial statement accounts typically associated with the revenue cycle.arrow_forward1. Johnson & Johnson CPAs, is considering accepting an engagement to perform an audit for a new client, whose prior period financial statements had been audited by another CPA. Johnson & Johnson would like to make certain that they understand the auditor's objective in conducting an initial audit engagement. Which title of Professional Standards addresses this issue , and, will be helpful in understanding the auditor's objectives in conducting an initial audit engagement? Enter the exact section and paragraph with helpful information.arrow_forwardCommunicating Key Audit Matters in the audit report is : A. Additional communication to provide transparency in the auditor’s professional judgment, B. An assistance for financial statement users to better understand the entity and areas of significant management juudgments C. A substitute for disclosures in the financial statements that the applicable financial reporting framework requires management to make D. A separate additional opinion on individual matters Seçimimi temizlearrow_forward
- The standard unqualified opinion based on the audit of a public company's financial statements includes a. A discussion of Key Audit Matters if KAMs are discovered. b. A reference to Key Audit Matters if no KAMs are discovered. c. A statement that the CPA firm is registered with the AICPA. d. An indication of how long the firm has served as the company's auditors. e. A Basis for Opinion section preceding the Opinion of Financial Statements section.arrow_forwardPrior to accepting a new audit engagement, a public accounting firm shoulda. Attempt to contact the predecessor auditors.b. Evaluate the integrity of management.c. Assess the firm’s resources to ensure that they are sufficient to permit the firm to accept the engagement.d. All of the above.arrow_forwardWhich of the following best describes the general contents of the introductory paragraph of the auditors’ report?a. A description of an audit examination, including the fact that the audit was conducted under standards established by the PCAOB.b. The auditors’ conclusion with respect to the fairness of the entity’s financial statements.c. Statements identifying the responsibility of auditors and management in the financial reporting process.d. The auditors’ conclusion with respect to the effectiveness of the entity’s internal control over financial reporting.arrow_forward
- Distinguish between auditing standards and generally accepted accounting principles, and give two examples of each. Auditing standards: A. represent pronouncements by any of the organizations responsible for setting auditing standards. In the U.S. these standards are set by the PCAOB for public companies and broker dealers, and by the Auditing Standards Board of the AICPA for other entities. B. are ten general guidelines to aid auditors in fulfilling their professional responsibilities and maintain professional skepticism and exercise professional judgment. C. represent the combination of the six principles and four of the Statements on Auditing Standards (SASS) that are codified in the AU-C sections. D. outline specific rules for accounting for transactions occurring in a business enterprise for all private companies in the United States.arrow_forwardHe Select the necessary words from the list of possibilities to complete the following statements. Statements Answer The purpose of an audit conducted in accordance with generally accepted auditing standards is to provide financial statement users with an opinion by the auditor on 1. whether the financial statements are presented fairly, in all material respects, in accordance with the applicable The FASB 2. is the source of authoritative GAAP to be applied by nongovernmental entities. 3. International auditing standards are issued by the An attestation engagement includes a report on subject matter, or on an 4. about subject matter. CPA firms should establish assurance that their services adhere to firm and professional standards. policies and procedures to providearrow_forwardWhich of the following engagements is most likely to be considered an operational audit? The auditor determines whether the organization is following provisions of laws and regulations. The auditor examines information presented in an entity’s financial statements to determine whether the financial statements are presented fairly in accordance with the applicable financial reporting framework. The auditor evaluates the organization’s efficiency in processing payments. The auditor assists the client in preparation of financial statements.arrow_forward
- Fundamental Principles (Comprehensive). In each of the following, identify which ofthe elements of the fundamental principles is most applicable. In addition, discuss whataction(s) (if any) you believe auditors should take with respect to these issues.a. An entity has contacted you about performing its audit engagement. You have not previously served a client in the entity’s industry, which has many industry-specific accounting issues that are both technical and complex.b. An entity has entered into a number of lease agreements. Based on the requirements ofGAAP, you believe that these obligations meet the criteria for being classified as capitalleases; however, the entity has elected to treat these leases as operating leases, providingfull and complete disclosure of this treatment in the footnotes to the financial statements.c. Because of a disagreement with its current auditors, an entity has contacted you aboutconducting its current-year audit. However, because the previous auditors…arrow_forwardWhich of the following is not a part of opinion section of the auditor's report? O a. Identify the title of each statement comprising the financial statements O b. State that the financial statements have been audited as per set standards O C. Auditors signature and address O d. Identify the entity whose financial statements have been audited Coa ENCarrow_forward
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