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 4, Problem 25DQP
a.
To determine
Explain about an audit committee.
b.
To determine
State the meaning for the audit committee members to be independent.
c.
To determine
State the typical functions performed by an audit committee.
d.
To determine
Explain the manner in which an audit committee can help an auditor to be more independent.
e.
To determine
Describe the nature of the audit firms’ communications with the audit committee with respect to independent issues.
f.
To determine
Evaluate the comments given.
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“Audit committees do not prepare financial reports, nor do they conduct audits. But they have an essential role to play in ensuring the integrity and transparency of corporate reporting”. Explain this statement? Who should be members of the Audit Committee? Is there an association between Audit committee effectiveness and audit quality after IFRS adoption?
“Audit committees do not prepare financial reports, nor do they conduct audits. But they have an essential role to play in ensuring the integrity and transparency of corporate reporting”. Explain this statement?
Which of the following is not a way by which the Sarbanes–Oxley Act attempts to ensure auditor independence from an audit client?a. The auditing firm must be appointed by the client’s audit committee.b. Audit fees must be approved by the Public Company Accounting Oversight Board.c. The audit committee must be composed of members of the client’s board of directors who are independent of the management.d. The external auditor cannot also perform financial information system design and implementation work.
Chapter 4 Solutions
Auditing and Assurance Services (16th Edition)
Ch. 4 - Prob. 1RQCh. 4 - Describe an ethical dilemma. How does a person...Ch. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQ
Ch. 4 - Assume that an auditor makes an agreement with a...Ch. 4 - Prob. 12RQCh. 4 - Prob. 13RQCh. 4 - Prob. 14RQCh. 4 - Prob. 15RQCh. 4 - Prob. 16RQCh. 4 - Prob. 17.1MCQCh. 4 - Prob. 17.2MCQCh. 4 - Prob. 17.3MCQCh. 4 - Prob. 18.1MCQCh. 4 - Prob. 18.2MCQCh. 4 - Prob. 18.3MCQCh. 4 - Prob. 19.1MCQCh. 4 - Prob. 19.2MCQCh. 4 - Prob. 19.3MCQCh. 4 - Prob. 20DQPCh. 4 - Prob. 21DQPCh. 4 - Prob. 22DQPCh. 4 - Prob. 23DQPCh. 4 - Prob. 24DQPCh. 4 - Prob. 25DQPCh. 4 - Prob. 26DQPCh. 4 - Prob. 27DQPCh. 4 - Prob. 28CCh. 4 - Prob. 29CCh. 4 - Prob. 30C
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Similar questions
- “Audit committees do not prepare financial reports, nor do they conduct audits. But they have an essential role to play in ensuring the integrity and transparency of corporate reporting” – explain what is the role of an audit committee in ensuring the integrity and transparency of corporate reporting? Is an audit committee mandatory in Australia?arrow_forwardWhich of the following is not a way by which the Sarbanes-Oxley Act attempts to ensure auditor independence from an audit client? Multiple Choice The auditing firm must be appointed by the client's audít committee. The audit committee must be composed of members of the client's board of directors who are independent of the management. Audit fees must be approved by the Public Company Accounting Oversight Board. The external auditor cannot also perform financial information system design and implementation work.arrow_forwardWhy do you think rules exist that restrict auditors from investing in companies that are audited by their firms?arrow_forward
- Which of the following is a reason that an entity may receive an audit? Select the best response and then click "Submit". O The entity has publicly traded stock. O The entity is required by regulators. O The entity is required by its lenders. Management wants assurance around accounting procedures and to reduce the risk of fraud. O All of the abovearrow_forwardAudit committees have an essential role to play in ensuring the integrity and transparency of corporate reporting. Therefore, It would not be appropriate for the auditor to initiate a discussion with the audit committee concerning: Select one:a. the extent to which change in the company's organisation will influence the scope of the audit.b. Details of potential problems that the auditor believes might cause a modified opinion. c. The extent to which the work of internal auditors will influence the scope of the audit.d. Details of the procedures that the auditor intends to apply.arrow_forwardChoose the correct.Which of the following is not a way by which the Sarbanes–Oxley Act attempts to ensure auditor independence from an audit client?a. The auditing firm must be appointed by the client’s audit committee.b. Audit fees must be approved by the Public Company Accounting Oversight Board.c. The audit committee must be composed of members of the client’s board of directors who are independent of the management.d. The external auditor cannot also perform financial information system design and implementation work.arrow_forward
- Which of the following statements is true of auditing? Group of answer choices External audits tend to be more expensive than internal audits. External audits are handled by employees of the organization. Publicly held corporations are required by law to have internal audits regularly. All organizations are required to have a permanent internal auditing staff. Organizations contract with certified public accountants for external audits.arrow_forwardIf the auditor is auditing a public company in the United States and must report on internal controls over financial reporting (ICFR), the identification of one or more material weaknesses _______. A. will result in the auditor issuing an adverse opinion on the financial statements and the CFO/CEO will probably go to jail B. will result in an adverse opinion on ICFR C. will result in an unmodified opinion on ICFR D. will result in the auditor issuing a disclaimer of opinion on the financial statements and the CFO/CEO will probably go to jailarrow_forwardMatch each of the following provisions of the Sarbanes-Oxley Act (SOX) with its description. Major Provisions of the Sarbanes-Oxley Act Descriptions 1. Oversight board 2. Corporate executive accountability 3. Auditor rotation 4. Nonaudit services 5. Internal control a. Executives must personally certify the company’s financial statements. b. Audit firm cannot provide a variety of other services to its client, such as investment advising. c. PCAOB establishes standards related to the preparation of audited financial reports. d. Lead audit partners are required to change every five years. e. Management must document the effectiveness of procedures that could affect financial reporting.arrow_forward
- The audit committee’s responsibility for auditor independence concernsa. Ensuring that partners of the public accounting firm are not stockholders in the company.b. Ensuring that nonaudit services provided by the auditor do not impair independence.c. Reporting on auditor independence to the PCAOB.d. Ensuring that all nonaudit services are provided by auditors who do not perform the financial statement auditarrow_forwardFrom the article below, 1) What caused the SEC to question EY's independence? 2). Explain the findings in the history for EY's other instances where its independence was called into question. Accounting reform occurred after significant corporate misconduct was discovered in the early 1980s. Some of the reform sought to require public companies to put the hiring and pay of their auditors in the hands of an independent audit board committee. There has been concern that management still has significant influence on the evaluation and final decisions. Phillip Lamoreaux, an accounting professor at Arizona State University, conducted a study of more than 2,000 auditor changes in publicly traded companies. He found that companies whose top executives had worked with a Big Four accounting firm were twice as likely to select that firm. Many executives make their way into corporate America through the largest accounting firms in the world. A chief accountant in the Securities and Exchange…arrow_forwardWhich of the following is true of the Audit Committee? O It is composed of a group of stockholders. O It includes both the internal auditors and the external auditors of a company. It is the group that conducts the audit of a company. Its main purpose is to report errors on the company's financial statements to the SEC. It is another term for the internal auditing department of a company.arrow_forward
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