EBK AUDITING & ASSURANCE SERVICES: A SY
11th Edition
ISBN: 9781260687668
Author: Jr
Publisher: MCGRAW-HILL LEARNING SOLN.(CC)
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Question
Chapter 2, Problem 2.21MCQ
To determine
Concept Introduction:
In order to protect the investor’s interest, government has established several bodies and boards which have their separate responsibilities. These boards are PCAOB, SEC, etc. Public Company Accounting Oversight Board (PCAOB) is a nonprofit organization. It was created in the provision of Sarbanes and Oxley Act, 2002. PCAOB was formed to monitor the public company’s activities in order to protect the interest of shareholders. PCAOB regulates the financial reporting of the public companies and it is responsible for issuing the auditing standards and guidelines for audit of public companies.
To choose: The statement that best describes the unqualified audit opinion.
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Students have asked these similar questions
Which of the following is not true about the major differences in the scope of audit
responsibilities for CPAS, GAO auditors, IRS agents, and internal auditors?
CPAS perform audits of financial statements of private and public companies
(A)
prepared in accordance with U.S. or international auditing standards.
GAO auditors perform compliance or operational audits in order to assure the
B government of the expenditure of public funds in accordance with its directives and
the law.
IRS agents perform compliance audits to enforce the federal tax laws as defined by
the government, interpreted by the courts, and regulated by the IRS.
Internal auditors perform compliance or operational audits in order to assure
management or the board of directors that controls and policies are properly and
consistently developed, applied, and evaluated.
Can you think of any reasons why the SEC relies on private sector bodies to set accounting standards, ratherthan undertaking the task itself?
If a nonissuer wants an accountant to perform an examination of its internal controls, the accountant should follow:a. PCAOB AS 2201, “An Audit of Internal Control over Financial Reporting That Is Integrated with an Audit of Financial Statements.”b. AICPA AT 501, “An Examination of an Entity’s Internal Control over Financial Reporting That Is Integrated with an Audit of Its Financial Statements.”c. AICPA AU-C 315, “Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement.”d. FASB Concepts Statement No. 1, “Objectives of Financial Reporting by Business Enterprises.”
Chapter 2 Solutions
EBK AUDITING & ASSURANCE SERVICES: A SY
Ch. 2 - Prob. 2.1RQCh. 2 - Prob. 2.2RQCh. 2 - Prob. 2.3RQCh. 2 - Prob. 2.4RQCh. 2 - Prob. 2.5RQCh. 2 - Prob. 2.6RQCh. 2 - Prob. 2.7RQCh. 2 - Prob. 2.8RQCh. 2 - Prob. 2.9RQCh. 2 - Prob. 2.10RQ
Ch. 2 - Prob. 2.11RQCh. 2 - Prob. 2.12RQCh. 2 - Prob. 2.13RQCh. 2 - Prob. 2.14RQCh. 2 - Prob. 2.15MCQCh. 2 - Prob. 2.16MCQCh. 2 - Prob. 2.17MCQCh. 2 - Prob. 2.18MCQCh. 2 - Prob. 2.19MCQCh. 2 - Prob. 2.20MCQCh. 2 - Prob. 2.21MCQCh. 2 - Prob. 2.22MCQCh. 2 - Prob. 2.23MCQCh. 2 - Prob. 2.24PCh. 2 - Prob. 2.25PCh. 2 - Prob. 2.26P
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Similar questions
- Which of the following is the federal, independent agency that provides oversight of public companies to maintain fair representation of company financial activities for investors to make informed decisions? A. IRS (Internal Revenue Service) B. SEC (Securities and Exchange Commission) C. FASB (Financial Accounting Standards Board) D. FDIC (Federal Deposit Insurance Corporation)arrow_forwardWhich persons may be subject to the GAO's independence rules? a) Auditors and tax services providers in public accounting. b) Auditors in public accounting and employed by the government. c) Government officials and politicians. d) Government employees and contractors only.arrow_forwardWhich of the following statements about the auditor's responsibilities in public company audits is true as covered by the PCAOB? A. The auditor issues an opinion on the financial statements and management issues the opinion on internal control over financial reporting. B. The auditor issues an opinion on the financial statements only if internal control over financial reporting is found to be effective. C. The auditor issues an opinion on the financial statements; if those are found to be fairly stated, the auditor proceeds to issue an opinion on internal control over financial reporting. D. The auditor issues opinions on the financial statements and internal control over financial reporting.arrow_forward
- KPMG is the auditor for an IESBA public interest entity audit client. Which non-audit service is permitted for this type of audit client? Designing a technology system for financial reporting that generates information significant to the accounting records. Preparing annual tax returns subject to review by the client and appropriate assessment of threats and safeguards. Valuations that might create a self-review threat. Tax calculations for the purpose of preparing the accounting entries included in the financial statements on which the firm will express an opinion.arrow_forwardHow does the audit opinion given to this nonprofit entity by its independent auditors differ from the audit opinion rendered on the financial statements for a for-profit business? What are some significant differences you see between the report you just reviewed and a for-profit statement?arrow_forwardExplain how governmental financial auditing is similar to anddifferent from audits of commercial companies. Who does governmental auditing?arrow_forward
- Which regulatory body sets auditing standards for private companies, and also established the Principles Underlying an Audit Conducted in Accordance with Generally Accepted Auditing Standards? FASB O PCAOB AICPA SEC ASBarrow_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_forwardWhich of the following is true if an auditor performs nonaudit services for a governmententity?a. The scope of the audit must be reduced so that the auditor does not audit the area forwhich the nonaudit work was performed.b. The auditor is prohibited from providing nonaudit work in areas directly related to theproduction of accounting information.c. The senior members of the government entity must document their review of the nonaudit service and indicate why it is appropriate for the auditors to perform this service.d. The scope of the audit cannot be reduced because the nonaudit work was performed bythe public accounting firm.arrow_forward
- True or False Independent Auditor is responsible for preparing the financial statements, establishing and maintaining adequate internal control over financial reporting (ICFR), and evaluating the effectiveness of ICFR. * Under Sarbanes–Oxley Section 301 public company audit committees are directly responsible for the appointment, compensation, and oversight of the work of any registered public accounting firm employed by their company. * Auditors are required by the Security and Exchange Commission to report to the audit committee of the publicly-traded company all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management officials. * CFO and the audit committee depend heavily on one another * Included in the Environment disclosures are the risks and opportunities due to climate change, procurement practices with respect to local suppliers, and anti-corruption *arrow_forwardWhich of the following combinations of standards and types of audits are most closelyrelated to the activities of the Public Company Accounting Oversight Board?a. Develop Auditing Standards for the audits of nonpublic entities.b. Develop Auditing Standards for the audits of public entities.c. Develop Statements on Auditing Standards for the audits of nonpublic entities.d. Develop Statements on Auditing Standards for the audits of public entities.arrow_forwardSection 301 of the Sarbanes-Oaxley requires that public companies have an audit committee. Independent auditors are increasingly involved with audit committees. Required: a. Describe what an audit committee is. b. Identify the reasons why audit committees have been formed and are currently in operation. c. Describe the functions of an audit committee.arrow_forward
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