Question 1

International Standards on Auditing are issued by

Accepted Answer

International Standards on Auditing (ISAs) are issued by the International Auditing and Assurance Standards Board (IAASB), which is an independent standard-setting body of the International Federation of Accountants (IFAC). The IAASB develops and issues ISAs to promote international consistency and enhance the quality of audit and assurance engagements globally.

Question 2

Formed to improve standards of financial accounting for state and local government entities.

Accepted Answer

The answer of Formed to improve standards of financial accounting...

Question 3

An integrated audit performed under the Sarbanes-Oxley Act requires that auditors report on:  
$$\begin{array}{l}

\begin{array} { l cc} 
&\text { Finaricial Staternents}&\text { Internal Contro }\
\text { A } & \text { Yes } & \text { Yes } \
\text { B. } & \text { Yes } & \text { No } \
\text { C. } & \text { No } & \text { Yes } \
\text { D } & \text { No } & \text { No }
\end{array}
\end{array}$$

Accepted Answer

An integrated audit, as required by the Sarbanes-Oxley Act, requires auditors to report on both financial statements and internal controls. Therefore, the correct option is A, which indicates that auditors must report on both financial statements and internal controls. Option B indicates that auditors must report on financial statements but not internal controls, which is incorrect. Option C indicates that auditors must report on internal controls but not financial statements, which is also incorrect. Option D is incorrect as it suggests that auditors aren't required to report on either financial statements or internal controls.

Question 4

An investor is considering investing in one of two companies.The companies have very similar reported financial position and results of operations.However,only one of the companies has its financial statements audited.
a.Describe what creates the demand for an audit in this situation.Include a discussion of how audited financial statements facilitate this investment transaction,and the effect of the audit on business risk and information risk.
b.Identify the potential consequences to the company of not having its financial statements audited.

Accepted Answer

The answer of An investor is considering investing in one...

Question 5

Issue auditing standards for public companies.

Accepted Answer

The answer of Issue auditing standards for public companies....

Question 6

In United States v.Arthur Young,the Supreme Court of the United States described the auditor's role as requiring independence,complete fidelity to the public trust and to serve as a(n):

Accepted Answer

The Supreme Court of the United States described the auditor's role as that of a "public watchdog," which emphasizes the importance of an independent, impartial, and objective approach to auditing. This role requires auditors to act in the public interest and to provide reliable and unbiased information to users of financial statements. While the other options (A, C, and D) may also be relevant to the audit function, they do not capture the overarching role of the auditor as a public watchdog.

Question 7

The financial statements of a United States public company are most likely to follow:

Accepted Answer

Generally accepted accounting principles (GAAP) are the set of accounting rules and standards for financial reporting issued by the Financial Accounting Standards Board (FASB) that are commonly followed in the United States. Public companies are required by law to follow GAAP when preparing their financial statements.

Question 8

Develop accounting standards for public and nonpublic companies.

Accepted Answer

The answer of Develop accounting standards for public and nonpublic...

Question 9

Issue CPA certificates.

Accepted Answer

The answer of Issue CPA certificates....

Question 10

The Sarbanes-Oxley Act of 2002 made significant reforms for public companies and their auditors.
a.Describe the events that led up to the passage of the Act.
b.Describe the major changes made by the Act.

Accepted Answer

The answer of The Sarbanes-Oxley Act of 2002 made significant...

Question 11

An audit of the financial statements of a company is referred to as a(n)

Accepted Answer

A financial audit specifically focuses on the examination of a company's financial statements to ensure they are accurate and in accordance with generally accepted accounting principles. Compliance audits and operational audits may also be conducted, but they have different focuses than a financial audit. Integrated financial audits are simply financial audits that are done in conjunction with other types of audits.

Question 12

Many people confuse the responsibilities of the independent auditors and the client's management with respect to audited financial statements.
a.Describe management's responsibility regarding audited financial statements.
b.Describe the independent auditors' responsibility regarding audited financial statements.
c.Evaluate the following statement: "If the auditors disagree with management regarding an accounting principle used in the financial statements,the auditors should express their views in the notes to the financial statements."

Accepted Answer

The answer of Many people confuse the responsibilities of the...

Question 13

An act passed by Congress aimed at promoting financial stability improving accountability and transparency in the financial system:

Accepted Answer

The Dodd-Frank Act, also known as the Wall Street Reform and Consumer Protection Act, was passed by Congress in 2010 with the aim of promoting financial stability, improving accountability, and increasing transparency in the financial system. It created various regulatory agencies, established new regulations and scrutiny for banks and financial institutions, and made changes to corporate governance and executive compensation practices. The other options listed (A, C, and D) are also related to financial governance and oversight, but do not specifically address the issues targeted by the Dodd-Frank Act.

Question 14

Prepares the CPA exam.

Accepted Answer

The answer of Prepares the CPA exam....

Question 15

Develop accounting standards for the U.S.Government.

Accepted Answer

The answer of Develop accounting standards for the U.S.Government....

Question 16

In cases of a publicly traded company audit in the United States,when International Standards on Auditing (ISAs)conflict with the PCAOB,standards,which of the following is correct?

Accepted Answer

In the United States, when auditing publicly traded companies, the Public Company Accounting Oversight Board (PCAOB) standards take precedence over International Standards on Auditing (ISAs) in cases of conflict. The PCAOB is a regulatory body established by Congress to oversee the audits of public companies, ensuring that they are conducted with the highest standards of independence, integrity, and professionalism.

Quiz 1: The Role of the Public Accountant in the American Economy