(Test Bank) Auditing + Assurance A Business Risk Approach

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Chapter 1: Assurance and auditing: Integral to the economy TRUE/FALSE 1.The need for assurance services arises because the interests of the users of information may be different from that of the interests of those responsible for providing information. ANS:TPTS:1DIF: Easy TOP:Need for assurance 2.An audit of financial statements is a form of attestation service. ANS:TPTS:1DIF: Easy TOP:Auditing defined 3.Independence is an attribute necessary to perform assurance services. ANS:TPTS:1DIF: Easy TOP:What is assurance? 4.A bank using Milton Company’s financial statements to determine the credit worthiness of a potential loan to Milton is a good example of the need for unbiased reporting. ANS:TPTS:1DIF: Moderate TOP:The need for unbiased reporting 5.Independence is only required for assurance service providers. ANS:TPTS:1DIF: Easy TOP:What is assurance? 6.A member of one of the professional accounting bodies automatically qualifies as an assurance provider in all areas of business. ANS:FPTS:1DIF: Easy TOP:What is assurance? 7.Attestation services are a subset of assurance services and always involve a report that goes to a third party. ANS:TPTS:1DIF: Moderate TOP:What is assurance? 8.The Australian Financial Reporting Council (FRC) is responsible for providing broad oversight of the process for setting accounting and auditing standards. ANS:TPTS:1DIF: Moderate TOP:Financial Reporting Council (FRC) 9.The audit function is unique because it exists to perform services on a ‘client’ on behalf of shareholders, directors and other parties. ANS:TPTS:1DIF: Easy TOP:Auditing defined 10.Auditing is the process of attesting to assertions about economic actions and events. ANS:TPTS:1DIF:EasyTOP:Auditing defined 11.Auditing is the process of verifying the accuracy of the financial statements. ANS:FPTS:1DIF: Moderate TOP:Auditing defined 1-11-2 Chapter 1: Auditing: Integral to the Economy 12.Internal auditing only provides assurance services to clients. ANS:FPTS:1DIF: Moderate TOP:The internal audit profession 13.Auditing primarily exists because users need unbiased information on which to assess management performance and make economic decisions. ANS:TPTS:1DIF: Moderate TOP:Auditing defined 14.The degree of confidence that users place on management’s financial statements is higher than that placed on audited financial statements because few users have direct knowledge of the company’s operations and management is the most knowledgeable about operations. ANS:FPTS:1DIF: Moderate TOP:Auditing defined 15. Corporate governance is an oversight structure that ensures that management operates in the best interests of management. ANS:FPTS:1DIF: Easy TOP:Demand for improved corporate governance 16.An assertion is a statement about an action, event, condition or performance over a specified time period. ANS:TPTS:1DIF: Easy TOP:Auditing defined 17.Management is required to comment on the fairness of the company’s financial presentation. This reduces the auditor’s legal responsibility for the opinion rendered on the financial statements. ANS:FPTS:1DIF: Difficult TOP:Auditing defined 18.Audited financial statements should be free from all errors and fraud. ANS:FPTS:1DIF: Moderate TOP:Auditing defined 19.Audited financial statements should be presented fairly according to the substance of generally accepted accounting principles (GAAP). ANS:TPTS:1DIF: Moderate TOP:Need for assurance 20.The Australian Auditing Standards Board (AUASB) is made up of members appointed by the Financial Reporting Council (FRC) and a Treasury appointed Chairman. ANS:TPTS:1DIF: Moderate TOP:Auditing and Assurance Standards Board (AUASB) 21.The International Auditing and Assurance Standards Board (IAASB) is interested in harmonising auditing standards around the world and is working closely with US standard setters on selected standards. ANS:TPTS:1DIF: Moderate TOP:International Auditing and Assurance Standards Board 22.Attestation is confined to an audit of client financial statements. © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.Auditing: A Business Risk Approach 1-3 ANS:FPTS:1DIF: Easy TOP:What is assurance? 23.An auditor must have a good understanding of the risks associated with a client’s industry in order to ensure that the financial statements reflect the underlying substance of accounting transactions and the economic effects of such transactions. ANS:TPTS:1DIF: Easy TOP:Requirements to enter the public accounting profession 24.The Australian Auditing Standards Board provides the criteria against which the auditor measures the fairness of financial statement presentation for both public and private companies. ANS:FPTS:1DIF: Moderate TOP:Financial Reporting Council (FRC) 25.Generally accepted accounting principles provide the criteria against which the auditor measures the fairness of financial statement presentation. ANS:TPTS:1DIF: Moderate TOP:Auditing defined 26.Businesses that use independent auditors do not need the use of internal auditors. ANS:FPTS:1DIF: Moderate TOP:The providers of assurance services 27.Registration for company auditors is the responsibility of the Australian Securities and Investments Commission (ASIC). ANS:TPTS:1DIF: Easy TOP:The Australian Securities and Investments Commission (ASIC) 28.Internal auditing is an independent, objective evaluation function established within an organisation. ANS:TPTS:1DIF: Moderate TOP:The internal audit profession 29.Operational audits are designed to determine if the company’s financial statements are prepared in compliance with generally accepted accounting principles (GAAP). ANS:FPTS:1DIF: Moderate TOP:The internal audit profession 30.Governmental auditors perform operational and financial statement audits. ANS:TPTS:1DIF: Easy TOP:The public sector auditing profession 31.The internal audit profession adheres exclusively to standards set by the Auditing and Assurance Standards Board (AUASB). ANS:FPTS:1DIF: Moderate TOP:The Institute of Internal Auditors 32.The execution of solutions to issues brought to light by internal auditors is the responsibility of management of the organisation. © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.1-4 Chapter 1: Auditing: Integral to the Economy ANS:TPTS:1DIF: Moderate TOP:The internal audit profession 33.Governmental audit standards are developed by the Auditing and Assurance Standards Board (AUASB). ANS:FPTS:1DIF: Moderate TOP:Auditing and Assurance Standards Board (AUASB) 34.The Auditing and Assurance Standards Board (AUASB) sets auditing standards for non-publicly traded companies. ANS:TPTS:1DIF: Moderate TOP:Auditing and Assurance Standards Board (AUASB) 35.The Australian Accounting Standards Board (AASB) has the authority to establish generally accepted accounting principles for reporting entities. ANS:FPTS:1DIF: Easy TOP:Auditing and Assurance Standards Board (AUASB) 36.The Auditing and Assurance Standards Board (AUASB) has authority to establish generally accepted accounting principles (GAAP) for all business enterprises. ANS:FPTS:1DIF: Easy TOP:Auditing and Assurance Standards Board (AUASB) 37.The Auditing and Assurance Standards Board (AUASB) was established by the professional bodies in response to the Corporations Act 2001. ANS:FPTS:1DIF: Moderate TOP:Auditing and Assurance Standards Board (AUASB) 38.Auditors of public companies need not adhere to the requirements of statutory or regulatory organisations. ANS:FPTS:1DIF: Easy TOP:The Australian Securities and Investments Commission (ASIC) 39.When the auditor has no reservations about management’s financial statements, then the report issued is called a qualified report. ANS:FPTS:1DIF: Easy TOP:Auditing defined 40.Auditors need only understand the rules of accounting as the principles are outdated. ANS:FPTS:1DIF: Easy TOP:Auditing defined 41.An audit is a form of an attestation service. ANS:TPTS:1DIF: Easy TOP:Auditing defined 42.An audit and an assurance service both require a report to a third party. ANS:FPTS:1DIF: EasyTOP:What is assurance? © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.Auditing: A Business Risk Approach 1-5 43.The purpose of assurance services is to improve the quality of the information provided. ANS:TPTS:1DIF: Easy TOP:What is assurance? 44.The internal auditor is a primary provider of assurance services. ANS:TPTS:1DIF: Moderate TOP:The internal audit profession 45.The internal auditor is a primary provider of operational audits. ANS:TPTS:1DIF: Moderate TOP:The internal audit profession MULTIPLE CHOICE 1.The need for assurance services arises for all of the following reasons except: a.potential bias in providing information b.closeness between a user and the organisation c.complexity of the processing systems d.remoteness between a user and the organisation ANS:BPTS:1DIF: Easy TOP:Need for assurance 2.Independent professional services that are provided on financial or other information that improve the quality of decision making are known as: a.internal auditing b.financial auditing c.assurance services d.attestation services ANS:CPTS:1DIF: Moderate TOP:What is assurance? 3.Which one of the following is not a critical component of assurance services? a.a process on which service is provided b.an assurance service provider c.a user who derives value d.a registered company auditor ANS:DPTS:1DIF: Moderate TOP:What is assurance? 4.Which one of the following is not a key attribute needed to perform assurance? a.subject matter knowledge b.independence c.established criteria or standards d.accounting skills ANS:DPTS:1DIF: Moderate TOP:What is assurance? 5.A service that does not always require that a report is provided to a third party is: a.assurance © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.1-6 Chapter 1: Auditing: Integral to the Economy b.attestation c.audit d.all of these choices ANS:APTS:1DIF: Easy TOP:What is assurance? 6.Which one of the following is not part of the attest process? a.gathering evidence about assertions b.proving the accuracy of the books and records c.evaluating evidence against objective criteria d.communicating the conclusions reached ANS:BPTS:1DIF: Moderate TOP:Auditing defined 7.Which of the following is/are not part of the attest process? a.communicating the conclusions reached to a third party b.guaranteeing the accuracy of the books and records c.evaluating evidence against objective criteria d.all of these choices ANS:BPTS:1DIF: Moderate TOP:Auditing defined 8.Which one of the following is a potential problem with management’s communication of financial information that causes third parties to desire the independent auditor’s assessment of the financial statement presentation? a.complexity of transactions affecting the financial statements b.lack of criteria on which to base information c.remoteness of the trading partner from the organisation d.none of these choices ANS:APTS:1DIF: Easy TOP:Need for assurance 9.Users of the audit report can reasonably expect the audited financial statements to be: a.complete, contain all necessary information and contain all financial disclosures b.a true and fair view of the organisation’s financial results c.free from all errors d.all of these choices ANS:BPTS:1DIF: Easy TOP:Auditing: a special function 10.Which one of the following is not a management expectation for independent auditors? a.an outside source of expertise on accounting matters b.individuals who perform tests and draw conclusions on assertions c.a participant in management decision making d.a provider of a written communication © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.Auditing: A Business Risk Approach 1-7 ANS:CPTS:1DIF: Easy TOP:Auditing Defined 11.Users can reasonably expect audited financial statements to be: a.complete and contain all important financial disclosures, be free from material misstatements and be presented fairly b.complete and contain all important financial disclosures, be free from material misstatements and be presented fairly according to accounting standards c.complete, be accurate and be presented fairly according to generally accepted accounting principles (GAAP) d.complete and contain all important financial disclosures, be free from all misstatements and be presented fairly according to the substance of generally accepted accounting principles ANS:BPTS:1DIF: Moderate TOP:Auditing defined 12.Internal auditors may perform all of the following types of audits except: a.operational audits b.compliance audits c.computer system audits d.all of these choices ANS:DPTS:1DIF: Moderate TOP:The internal audit profession 13.An ‘integrated audit’ includes an audit of: a.the company’s external controls b.the company’s financial statements c.the company’s compliance with its rules and policies d.none of these choices ANS:BPTS:1DIF: Moderate TOP:Auditing defined 14.Which of the following services is the broadest and most inclusive? a.audit b.attestation c.assurance d.compliance ANS:CPTS:1DIF: Moderate TOP:What is assurance? 15.An expectation of the public is that the auditor will recognise that the primary users of audit assurance are: a.the clients b.the Public Company Accounting Oversight Board (PCAOB) c.members of management d.third-party users ANS:DPTS:1 DIF: Difficult TOP: What is assurance? © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.1-8 Chapter 1: Auditing: Integral to the Economy 16.Auditing is important in a free market society because: a.the public requires auditors to function as divisions of regulatory bodies b.auditors detect all errors and fraud made by company employees c.it provides reliable information based upon which to judge economic performance d.the auditor is an amiable insurance policy for investors e.all of these choices ANS:CPTS:1DIF: Moderate TOP:Auditing defined 17.Third-party users of the audit report expect the auditor to do all of the following except: a.to evaluate measurements and disclosures made by management b.to provide a biased evaluation of the financial statements c.to determine whether financial statements are presented in accordance with accounting standards d.to gather sufficient evidence to support their opinion ANS:BPTS:1DIF: Moderate TOP:Auditing defined 18.Public accounting firms performing financial report audits for companies must: a.register with the Auditing and Assurance Standards Board (AUASB) b.register with the Institute of Internal Auditors c.register with the Australian Securities Exchange (ASX) d.have a registered company auditor sign the audit report ANS:DPTS:1 DIF: Moderate TOP:Professional and regulatory organisations 19.The auditor of financial statements must make very difficult interpretations regarding authoritative literature. Additionally, the auditor must: a.consider whether the application of a generally accepted accounting principle best portrays the economic activity of the company b.force management to make certain decisions regarding their financial statements c.disregard independence in order to find the underlying truth of the evidence d.establish new criteria by which financial statements may be compared ANS:APTS:1DIF: Moderate TOP:Auditing defined 20.Results of the financial statement audit are communicated to users through a(n): a.financial statement b.written management assertion c.audit report d.none of these choices ANS:CPTS:1 DIF: Moderate TOP:Auditing defined 21.Assurance services do not include which of the following? a.attesting to financial statements b.examination of the economy and efficiency of governmental operations © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.Auditing: A Business Risk Approach 1-9 c.evaluation of a division’s performance for management d.tax preparation services ANS:DPTS:1DIF: Easy TOP:What is assurance? 22.The criteria against which the auditor measures the truth and fairness of financial report presentation in Australia are known as: a.generally accepted auditing standards b.generally accepted accounting principles c.generally accepted accounting standards d.generally accepted public sector accounting principles ANS:BPTS:1DIF: Moderate TOP:Auditing defined 23.Management of a company is responsible for: a.hiring the auditor b.preparing the financial statements c.the audit work papers d.independence and obtaining evidence ANS:BPTS:1DIF: Easy TOP:Auditing defined 24.Which one of the following is an example of management expectations for independent auditors? a.an expert providing a written communication as the product of the engagement b.individuals who perform day-to-day accounting functions on behalf of the company c.an active participant in management decision making d.an internal source of expertise on financial and other matters ANS:APTS:1DIF: Easy TOP:Auditing defined 25.Which one of the following is not a provider of assurance services? a.operational auditors b.internal auditors c.governmental auditors d.management accountants ANS:DPTS:1DIF: Easy TOP:The providers of assurance services 26.The internal audit profession has emerged and has become active for all of the following reasons except: a.management’s need for an objective appraisal of organisational or departmental performance b.increased internal and external emphasis on effective procedures to detect or prevent fraud c.companies’ compliance with the Australian Securities Exchange Corporate Governance Guidelines © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.1-10 Chapter 1: Auditing: Integral to the Economy d.management’s need to delegate the responsibility of the financial statements ANS:DPTS:1DIF: Moderate TOP:The internal audit profession 27.Which one of the following statements is not true about internal auditing? a.It is an objective evaluation function. b.It is established within an organisation. c.Its purpose is to provide assurance regarding the company’s compliance with stated policies and procedures. d.It is established as an independent service to regulatory bodies and creditors. ANS:DPTS:1DIF: Moderate TOP:The internal audit profession 28.An audit which has as its purpose the evaluation of the economy and efficiency with which resources are employed is known as a(n): a.financial audit b.compliance audit c.operational audit d.governmental audit ANS:CPTS:1DIF: Moderate TOP:The internal audit profession 29.The audit committee of the board of directors of a company is responsible for: a.hiring the auditor b.preparing the financial statements c.the audit work papers d.independence and obtaining evidence ANS:APTS:1DIF: Easy TOP:Demand for improved corporate governance 30.The Australian Auditing and Assurance Standards Board (AUASB) remains a valuable organisation because of its continuing involvement in: a.the audit standard setting process b.regulation and enforcement of the audit profession c.education and administration of the professional accounting body exam d.promulgation of accounting standards ANS:CPTS:1DIF: Easy TOP:Auditing and Assurance Standards Board (AUASB) 31.The objective of an operational audit is to: a.evaluate whether laws have been broken by management b.evaluate fairness of presentation of financial statements c.evaluate compliances with company rules and regulations d.evaluate the effectiveness and efficiency with which resources are employed © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.Auditing: A Business Risk Approach 1-11 ANS:DPTS:1DIF: Easy TOP:The internal audit profession 32.The primary governing board that performs quality reviews on registered auditors is the: a.The Australian Securities and Investments Commission (ASIC) on behalf of the Financial Reporting Council (FRC) b.Public Sector Services Board c.Auditing and Assurance Standards Board (AUASB) d.Australian Securities Exchange (ASX) ANS:APTS:1 DIF: Moderate TOP:The Australian Securities and Investments Commission (ASIC) 33.Which of the following organisations is authorised to establish generally accepted auditing standards? a.Auditing and Assurance Standards Board (AUASB) b.Financial Reporting Council (FRC) c.Australian Securities and Investments Commission (ASIC) d.Accounting Professional and Ethical Standards Board (APESB) ANS:APTS:1DIF: Easy TOP:Auditing and Assurance Standards Board (AUASB) 34.The public expects auditors to: a.understand and enforce principles that best portray the spirit of accounting concepts b.be neutral to preparers and users of financial information c.recognise that the public are the primary users of audit services d.take more responsibility for the discovery of fraud e.all of these choices ANS:EPTS:1DIF: Easy TOP:Auditing defined 35.Auditors of companies are licensed by the: a.Financial Reporting Council (FRC) b.Accounting Professional and Ethical Standards Board (APESB) c.Australian Securities and Investments Commission (ASIC) d.Auditing and Assurance Standards Board (AUASB) ANS:CPTS:1DIF: Easy TOP:The Australian Securities and Investments Commission (ASIC) 36.The Certified Internal Auditor program is administered by the: a.Australian Securities and Investments Commission (ASIC) b.Institute of Internal Auditors (IIA) c.Australian Securities Exchange (ASX) d.Accounting Professional and Ethical Standards Board (APESB) ANS:BPTS:1DIF: Moderate TOP:Professional and regulatory © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.1-12 Chapter 1: Auditing: Integral to the Economy organisations 37.The body that sets the strategic direction for the Auditing and Assurance Standards Board is: a.Australian Prudential Regulation Authority (APRA) b.Financial Reporting Council (FRC) c.Accounting Professional and Ethical Standards Board (APESB) d.Australian Securities Exchange (ASX) ANS:BPTS:1DIF: Easy TOP:Financial Reporting Council 38.The organisation that issued the Internal Control, Integrated Framework which serves as the primary criterion for evaluating the quality of a company’s internal control system is: a.Accounting Professional and Ethical Standards Board (APESB) b.Committee of Sponsoring Organizations (COSO) c.Financial Reporting Council (FRC) d.Australian Securities Exchange (ASX) ANS:BPTS:1DIF: Moderate TOP:Committee of Sponsoring Organizations 39.Auditing is a systematic process that includes all of the following except: a.communicating results to users b.procuring and evaluating evidence c.providing important managerial decisions for a client d.comparing evidence regarding assertions to certain established criteria ANS:CPTS:1DIF: Moderate TOP:Auditing defined 40.Which of the following is not a component of assurance services? a.information or a process on which the assurance services is provided b.report to a third party c.a user or a group of users who derive value from the service provided d.a service provider ANS:BPTS:1DIF: Moderate TOP:What is assurance? 41.Which type of auditor may not perform a financial statement audit? a.external auditor b.internal auditor c.governmental auditor d.none of these choices e.all of these choices ANS:BPTS:1DIF: Moderate TOP:The internal audit profession 42.Which type of auditor would typically perform an operational audit? a.external auditor b.internal auditor © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.Auditing: A Business Risk Approach 1-13 c.none of these choices d.all of these choices ANS:BPTS:1DIF: Moderate TOP:The internal audit profession 43.What is the criteria used in an operational audit? a.generally accepted accounting principles (GAAP) b.effectiveness and efficiency c.rules and regulations d.company policies ANS:BPTS:1DIF: Moderate TOP:The internal audit profession 44.Which of the following assurance services would be provided by the internal auditor? a.the quality of an organisation’s governance processes b.effectiveness and efficiency c.company rules and regulations d.all of these choices ANS:DPTS:1DIF: Moderate TOP:What is assurance? ESSAY 1.Attributes of assurance providers Discuss the three or more attributes that an assurance professional must possess in order to maintain credibility. Explain the importance of these attributes to the assurance process. ANS: 1)Subject matter knowledge – the assurance provider must be an expert in the area of service provided. Expertise in a complex body of knowledge sets the assurance professional apart from others. 2)Independence – the assurance provider must be unbiased, free from conflict of interest, objective and independent of the company receiving assurance services. This allows the professional to remain neutral and free from influence by parties with a vested interest in the outcome of assurance services. 3)Agreed upon criteria – clear criteria must be available for the assurance provider to measure objectives and results against. In a financial statement assurance engagement, the criteria are represented by generally accepted accounting principles (GAAP). 4)Process expertise – evidence is obtained and evaluated during the course of an assurance engagement. Professionals providing these services must be able to draw accurate conclusions based upon the results of testing competent, sufficient evidence obtained. PTS:1DIF: Easy TOP:What is assurance? © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.1-14 Chapter 1: Auditing: Integral to the Economy 2.Users of financial statements Identify at least three types of users of financial statements. Describe their primary use of the financial statements and how the misstatement of those statements might injure the user. ANS: Users of audited financial statements may include: Management may utilise the audit report to determine whether the financial statements are presented in accordance with generally accepted accounting principles (GAAP), whether the firm is availing itself of appropriate internal controls, and as a means of evaluating employee performance. Misstatement of the financial statements would cause the client to make erroneous decisions about financial position, internal controls and employee rewards and punishments. A financial institution that is asked to make a loan uses the financial statement to judge the credit worthiness of the borrower. Misstatements in the financial statements lead to errors in lending that jeopardise the assets of the bank and depositors. A vendor who is asked to grant credit uses the statements and faces injury in a manner similar to the financial institution. A third-party stockholder uses the financial statements to determine if the investment will provide the returns consistent with the needs of the investor. Misstatements of the financial statements will lead to different results or possible loss of the investment. Others: potential stockholders, taxing authorities, regulatory agencies, labour and unions, employees, bondholders, legal system, retirement plans or retired employees PTS:1DIF: Moderate TOP:The need for unbiased reporting 3.Overview of financial report audit Define auditing and discuss how its components fit into an overview of a financial report audit. ANS: Financial report auditing has been defined as a ‘systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users’. PTS:1DIF: Easy TOP:Auditing defined 4.Professional and regulatory organisations Identify at least four professional or regulatory organisations. Explain how and why they assist and/or monitor the audit and assurance profession. ANS: © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.Auditing: A Business Risk Approach 1-15 Financial Reporting Council (FRC) is responsible for providing broad oversight of the process for setting accounting and auditing standards as well as monitoring the effectiveness of auditor independence requirements in Australia and giving the relevant government minister reports and advice on these matters. Auditing and Assurance Standards Board (AUASB) : consistent with the FRC’s strategic direction to it, standards issued by the AUASB are based on those of the International Auditing and Assurance Standards Board (IAASB). The Australian Securities and Investments Commission (ASIC) is responsible for the administration of the Corporations Act and the registration of all company auditors, among other things. Australian Securities Exchange (ASX) operates as a listed company in its own right, yet is part of the regulatory regime within which listed companies disclose their financial information. The ASX prescribes the form and nature of corporate disclosures through its listing rules and continuous disclosure regime, backed through the Corporations Act. The Public Company Accounting Oversight Board (PCAOB) was established by the US Congress as part of the Sarbanes-Oxley Act of 2002. The PCAOB has full authority to: • set auditing standards for audits of listed companies • require all firms that audit listed companies to register with it • perform quality reviews of all firms that are registered with it. The Securities and Exchange Commission (SEC) was established by the US Congress in 1934 to regulate the capital market system. The SEC has oversight responsibilities for the PCAOB and for all listed companies that are required to register with it to gain access to the US capital markets. International Auditing and Assurance Standards Board (IAASB) defines its objective as ‘to serve the public interest by setting high-quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession’. Committee of Sponsoring Organizations (COSO) : in 1992, COSO issued the Internal Control, Integrated Framework , which serves as a framework for evaluating the quality of a company’s internal control system. What about the accounting standard setters? Professional accounting bodies : CPA Australia (CPAA), the Institute of Chartered Accountants in Australia (ICAA) and the Institute of Public Accountants (IPA) are the private professional accounting bodies active in Australia . Membership of these bodies is voluntary; their status is derived from regulatory and public acceptance that self-regulation by highly trained © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.