Bundle: Auditing: A Risk Based-Approach, Loose-leaf Version, 11th + MindTap Accounting, 1 term (6 months) Printed Access Card
11th Edition
ISBN: 9781337734493
Author: JOHNSTONE, Karla M; Gramling, Audrey A.; Rittenberg, Larry E.
Publisher: Cengage Learning
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Question
Chapter 2, Problem 14CYBK
To determine
Introduction: Securities and Exchange Commission (SEC) was established in 1934 with the aim to regulate the capital market and its system. The SEC is authorized to establish GAAP standards for publicly traded companies.
To examine: Whether the given statement is true or false.
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Outline the reasons why auditor independence is considered of fundamental importance for confidence in financial statement auditing and evaluate the case for and against recent regulatory changes that affect the relationship between the auditor and the reporting company.
Any help?
А.
The fundamental purpose of financial statements audit is to provide independent
assurance that management has presented a "true and fair" view of a company's
financial performmance and position. It underpins the trust and obligation of stewardship
between those who manage a company and those who own it. To a publicly traded
company, financial statements audit offers credibility; to its shareholders, it offers
comfort; and to all stakeholders - including the market at large - financial statements
audit offers confidence.
(PricewaterhouseCoopers, 2019)
Required:
i.
Explain the following terms in respect of financial statements audit:
Independent assurance.
True and fair view.
a.
b.
ii.
State your agreement or disagreement with the following statements. Justify
your answer.
The auditor is responsible to ensure that the client's financial
statements are free from any misstatements.
a.
b.
The auditor shall bear the liability should any of its clients being sued
by a third party due to…
37.
The following are value the auditors provide EXCEPT
Group of answer choices
Internal auditors serve the public and common interests by making sure that owners receive the return on their investments that they are entitled to, and that the means of generating those profits are within the confines of the law.
Internal auditors contribute to the principal-agent relationship by making sure that these duties are defined, that structures are set to ensure behaviors are aligned with these objectives and making recommendations to the board and senior management when there are discrepancies jeopardizing the success of these arrangements.
None of the choices
Internal Auditors can help management identify, plan for, and respond effectively to the primary and secondary stakeholders, the organization will encounter less pushback and it will likely be able to operate with fewer disruptions.
Internal Auditors are change catalyst.
Chapter 2 Solutions
Bundle: Auditing: A Risk Based-Approach, Loose-leaf Version, 11th + MindTap Accounting, 1 term (6 months) Printed Access Card
Ch. 2 - The Great Salad Oil Swindle of 1963 is an asset...Ch. 2 - Prob. 2CYBKCh. 2 - Prob. 3CYBKCh. 2 - Prob. 4CYBKCh. 2 - The three elements of the fraud triangle include...Ch. 2 - Prob. 6CYBKCh. 2 - Prob. 7CYBKCh. 2 - Prob. 8CYBKCh. 2 - Prob. 9CYBKCh. 2 - Prob. 10CYBK
Ch. 2 - Prob. 11CYBKCh. 2 - Prob. 12CYBKCh. 2 - Prob. 13CYBKCh. 2 - Prob. 14CYBKCh. 2 - Prob. 15CYBKCh. 2 - Prob. 16CYBKCh. 2 - Prob. 17CYBKCh. 2 - Prob. 18CYBKCh. 2 - Prob. 19CYBKCh. 2 - Prob. 20CYBKCh. 2 - Prob. 21CYBKCh. 2 - Prob. 22CYBKCh. 2 - Prob. 23CYBKCh. 2 - Prob. 24CYBKCh. 2 - Prob. 1RQSCCh. 2 - Prob. 2RQSCCh. 2 - Prob. 3RQSCCh. 2 - Refer to Exhibit 2.1 a. What is a Ponzi scheme? b....Ch. 2 - Prob. 5RQSCCh. 2 - Prob. 6RQSCCh. 2 - Prob. 7RQSCCh. 2 - Prob. 8RQSCCh. 2 - Prob. 9RQSCCh. 2 - Prob. 10RQSCCh. 2 - Prob. 11RQSCCh. 2 - Prob. 12RQSCCh. 2 - Prob. 13RQSCCh. 2 - Prob. 14RQSCCh. 2 - Many consider the Enron fraud to be one of the...Ch. 2 - Prob. 16RQSCCh. 2 - Prob. 17RQSCCh. 2 - Prob. 18RQSCCh. 2 - Prob. 19RQSCCh. 2 - Prob. 20RQSCCh. 2 - Prob. 21RQSCCh. 2 - Prob. 22RQSCCh. 2 - Prob. 23RQSCCh. 2 - Prob. 24RQSCCh. 2 - Prob. 25RQSCCh. 2 - Prob. 26FFCh. 2 - Prob. 27FFCh. 2 - Prob. 28FF
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- External auditing gives confidence in the integrity of corporate reporting for the benefit of: a. Society b. Shareholders c. Management d. All options are correctarrow_forwardThe primary responsibility of the board is to ensure that it develops a clear understanding of the bank’s business strategy and fundamental risks. The board also needs to ensure that: Group of answer choices C. Risks are verified through review of accounting and not economic practices. A. Risks are made transparent to stakeholders and managers. D. Both A & B B. Risks are made transparent legally through non-disclosure agreements.arrow_forwardTRUE OR FALSE? WHY? For purposes of examining the client's financial statements, the auditor is concerned with those objectives or features of internal control that primarily relate to the entity's ability to record, process, summarize, and report financial data.arrow_forward
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- 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_forward“Audits servea fundamental purpose in promoting confidence and reinforcing trust infinancialinformation.The principal-agent relationship, as depicted in agency theory, isimportantinunderstanding how the audit has developed.”-ICAEW, December 2005a)Explainagencytheoryand discuss TWO (2) agency problems in the context of corporategovernance. Present your answers in the following structure. Agency Theory Problem1 Problem2b)BrieflyexplainFOUR (4) ways that the agency problem might be reduced.(number youranswers in (i)(ii)(iii)(iv)) Present your answers in the following structure:(1)(ii)(iii)(iv)arrow_forwardWhy do we need internal, external and government auditor in a company?arrow_forward
- {Auditing} 45. The audit is subjected to the guidelines provided under the International Standards on Auditing. From the statements enunciated here under identify which one of the options does not show the objective of auditing? a. Auditing enables an auditor in determination of the true and fair view of the financial position of an enterprise b. Auditing enables the auditor to prepare the financial statements of an entity c. Auditing enables an auditor to express an opinion on financial statements d. Auditing enables an auditor in determination of the true and fair view of the operating results of an enterprise.arrow_forwardThe auditor is answerable to Bankers All Stakeholders Shareholders Managementarrow_forwardSOX legislation calls for sound internal control practices over financial reporting and requires SEC-registered corporations to maintain systems of internal control that meet SOX standards. An integral part of internal control is the appropriate use of preventive controls. Which of the following is not an essential element of preventive control?a. separation of responsibilities for the recording, custodial, and authorization functionsb. sound personnel practicesc. documentation of policies and proceduresd. implementation of state-of-the-art software and hardwaree. physical protection of assetsarrow_forward
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