(Test Bank) Auditing - A Practical Approach with Data Analytics

Wiley,Johnson,Moroney,Campbell,Hamilton, 2

Business

Test Bank

2nd Edition

• $15.00 $50.00

---

Description

Test Bank for Auditing - A Practical Approach with Data Analytics, The downloadable file consists of 1457 pages, and the total size of the file is 5.32 MB. Purchase now only for highly discounted price.

Author(s): Wiley, Johnson, Moroney, Campbell, Hamilton

---

---

Study Note Preview

Prof.Exams TEST BANK 2022 Prof.Exams COMPLETE Elaborated Test Bank for Auditing -A Practical Approach with Data Analytics 2Ed. Laura Davis Wiley , Raymond N. Johnson Robyn Moroney Fiona Campbell Jane Hamilton 2022 Prof.Exams Auditing -A Practical Approach with Data Analytics 2Ed. by Laura Davis Wiley , Raymond N. Johnson, Robyn Moroney, Fiona Campbell & Jane Hamilton . ISBN -10 1119785995 ISBN -13 978 -1119785996 Test bank for Medical Nutrition Therapy -A Case Study Approach 6Ed. by Marcia Nelms & Kristen Roberts ISBN -10 1119785995 ISBN -13 978 -1119785996 THIS IS NOT THE ACTUAL BOOK. YOU ARE BUYING it is the Official Test Bank in e-version INSTANT DOWNLOAD >The test bank is what most professors use as a template when making exams for their students, which means there’s a very high chance that you will see the exact questions in the tests! >The file is either in.pdf, excel, or zipped in the package and can easily be read on PCs and Macs. >Delivery is INSTANT. You can download the files IMMEDIATELY once payment is done. If you have any questions, please feel free to contact us. Our response is the fastest. All questions will always be answered in 6 hours, most of the time within 30mins. We also faced similar difficulties when we were students, and we understand how you feel. But now, with the Official Test Bank, you will be able to * Anticipate the type of the questions that will appear in your exam. * Know the correct answers to those questions. * Reduce the hassle and stress of your student life. * Improve your studying and get a better grade! * Get prepared for examination questions. * Save you time and help you understand the material. Prof.Exams TABLE OF CONTENTS 1. Introduction and Overview of Audit and Assurance 2. Professionalism and Professional Responsibilities 3. Risk Assessment Part 1: Audit Risk and Audit Strategy 4. Risk Assessment Part 2: Understanding the Client 5. Audit Evidence 6. Gaining an Understanding of the Client’s System of Internal Control 7. Risk Response: Performing Tests of Controls 8. Audit Data Analytics 9. Risk Response: Performing Substantive Procedures 10. Risk Response: Audit Sampling for Substantive Procedures 11. Auditing the Revenue Process 12. Auditing the Purchasing and Payr oll Processes 13. Auditing Cash, Inventory, and Related Income Statement Accounts 14. Auditing Investing and Financing Activities 15. Completing the Audit 16. Reporting on the Audit 2 4) Private companies, or non-issuers, are not required by the U.S. government to have an annual financial statement audit. Answer: TRUE Explanation: Private companies, or non -issuers, are not required by the U.S. government to have an annual financial statement audit, but often other interested users, such as a bank or lender, may request that a private company provide audited financial statements. Diff: 1 LO: 2 Bloom: Knowledge Min: 1 AACSB: Analytic AICPA: AC: Reporting 5) One of the reasons there is a demand for financia l statement audits is that users of financial statements often lack accounting and legal knowledge to fully understand complex accounting and disclosure choices. Answer: TRUE Explanation: Financial statements are complex, the amounts are often affected by significant estimates, and the disclosures often require significant knowledge and experience to evaluate. Most financial statement users do not have the accounting and legal knowledge to assess the reasonableness of complex accounting and disclosure ch oices being made by the company. Diff: 1 LO: 3 Bloom: Comprehension Min: 1 AACSB: Analytic AICPA: PC: Communication 6) In financial accounting, the balance sheet is a statement of financial position. Answer: TRUE Explanation: In financial accounting, the financial statements include the balance sheet (statement of financial position), income statement (statement of comprehensive income), statement of cash flows, statement of changes in equity and accompanying notes. Diff: 1 LO: 3 Bloom: K nowledge Min: 1 AACSB: Analytic AICPA: PC: Communication 3 7) Business valuation falls within the purview of non -assurance services. Answer: TRUE Explanation: Many of these accounting firms provide non -assurance (or non -audit) services as well as ass urance services. These non -assurance services include management consulting, business valuation, mergers and acquisitions, insolvency, tax and accounting services. Diff: 1 LO: 4 Bloom: Knowledge Min: 1 AACSB: Analytic AICPA: AC: Measurement Analysis a nd Interpretation 8) Securities Exchange Act of 1934 regulates the ongoing trading of securities after the initial public offering and requires the annual audit of a public company's financial statements. Answer: TRUE Explanation: The Securities Exchang e Act of 1934 regulates the ongoing trading of securities after the initial public offering and requires the annual audit of a public company's financial statements. Diff: 1 LO: 5 Bloom: Knowledge Min: 1 AACSB: Ethics AICPA: BC: Governance Perspective 9) The Securities Act of 1933 enhances annual financial disclosures for public companies and placed more emphasis on corporate responsibility. Answer: FALSE Explanation: The Securities Act of 1933 regulates the disclosure of financial information in a company's initial public offering of stock and requires that the financial information be audited. Diff: 1 LO: 5 Bloom: Knowledge Min: 1 AACSB: Ethics AICPA: BC: Governance Perspective 10) Neither client characteristics nor actions of the auditor affect the audit risk. Answer: FALSE Explanation: Audit risk is affected by client characteristics as well as actions of the auditor. Diff: 1 LO: 6 Bloom: Knowledge Min: 1 AACSB: Ethics AICPA: AC: Reporting 4 11) Materiality i s a relative concept, and it differs from company to company and from year to year for a given company. Answer: TRUE Explanation: Materiality is a relative concept, and it differs from company to company and from year to year for a given company. Auditor s design an audit to provide reasonable assurance that the financial statements are free of material misstatement. However, auditors do not design an audit to look for immaterial misstatements because they would not influence a financial statement user. Diff: 1 LO: 6 Bloom: Knowledge Min: 1 AACSB: Ethics AICPA: AC: Reporting 12) When auditors determine that the financial statements of a public company are presented fairly in accordance with the applicable financial reporting framework, they issue a type of report that PCAOB standards call "the standard clean report." Answer: FALSE Explanation: If auditors have determined the financial statements are presented fairly in accordance with the applicable financial reporting framework, they issue the sta ndard unqualified report. The PCAOB standards use the term "unqualified" report. Diff: 1 LO: 6 Bloom: Knowledge Min: 1 AACSB: Ethics AICPA: AC: Reporting 13) In an unqualified audit report on the financial statements of a public company, the concludi ng statement of the Basis for Opinion paragraph mentions reasonable basis for the audit firm's opinion. Answer: TRUE Explanation: The basis for opinion paragraph explains, in brief terms, the process of conducting an audit. It mentions the concept of re asonable assurance about whether the financial statements are free of material misstatement. It includes an explicit statement that PCAOB audit standards were followed because the audit pertains to a public company. The scope paragraph also includes a brie f discussion of the professional judgments made during the audit. Finally, it concludes with a statement that the audit firm believes that its audit provides a reasonable basis for its opinion. Diff: 1 LO: 6 Bloom: Knowledge Min: 1 AACSB: Ethics AICPA: AC: Reporting 5 14) In an audit report on the effectiveness of ICFR for a public company, the basis for opinion paragraph states the different responsibilities of management and auditors. Answer: FALSE Explanation: In an audit report on the effect iveness of ICFR for a public company, the basis for opinion paragraph states the different responsibilities of management and auditors. Like the audit report on the financial statements, this paragraph references registration with the PCAOB and independenc e requirements of the SEC and other federal securities laws. Diff: 1 LO: 7 Bloom: Knowledge Min: 1 AACSB: Communication AICPA: BC: Governance Perspective 15) In an audit report on the effectiveness of ICFR for a public company, the Opinion on Internal Control over Financial Reporting paragraph mentions that auditors are only required to obtain reasonable assurance about whether the company maintained, in all material respects, effective ICFR. Answer: TRUE Explanation: In an audit report on th e effectiveness of ICFR for a public company, the Opinion on Internal Control over Financial Reporting paragraph explains that auditors conducted their audit in accordance with the standards of the PCAOB. In brief terms, it explains the process of conducti ng an audit of the effectiveness of ICFR. It mentions that auditors are only required to obtain reasonable assurance about whether the company maintained, in all material respects, effective ICFR. It concludes with a statement that the audit firm believes its audit provides a reasonable basis for its opinion. Diff: 1 LO: 7 Bloom: Knowledge Min: 1 AACSB: Communication AICPA: BC: Governance Perspective 16) A financial statement user's expectations are only impacted by legislation. Answer: FALSE Explana tion: A financial statement user's expectations are often impacted by audit standards, ethical standards, regulations, legislation, and firm policy and procedures. Diff: 1 LO: 8 Bloom: Knowledge Min: 1 AACSB: Communication AICPA: AC: Measurement Anal ysis and Interpretation 6 17) The audit expectation gap is caused by user expectations such as: The auditor will catch all instances of fraud. Answer: TRUE Explanation: The audit expectation gap is caused by unrealistic user expectations such as: the auditor is providing complete assurance; the auditor is guaranteeing the future viability of the entity; an unmodified audit opinion is an indicator of complete accuracy of the financial statements; the auditor will definitely find any and all fraud; and tha t the auditor has checked all transactions. Diff: 1 LO: 8 Bloom: Knowledge Min: 1 AACSB: Communication AICPA: AC: Reporting 18) Identify a service that falls under audit services. A) examination of historical financial statements B) compilation of historical financial statements C) inspection of website security D) review of financial forecast Answer: A Explanation: Examination of historical financial statements comes under audit services. Diff: 1 LO: 1 Bloom: Knowledge Min: 1 AACSB: Ethics AICPA: AC: Measurement Analysis and Interpretation 19) Examination of internal controls is a service that comes under ________ services, which fall under ________ services. A) audit; assurance B) assurance; attestation C) acceptable; assur ance D) attestation; audit Answer: A Explanation: Attestation services (under the umbrella of assurance services) include review of historical financial statements, review of financial forecast, and examination of internal control. Diff: 1 LO: 1 Bloom: Knowledge Min: 1 AACSB: Ethics AICPA: AC: Measurement Analysis and Interpretation 7 20) Compared to an audit of historical financial statements, a review engagement is ________. A) less extensive and also less expensive B) more extensive and also more expensive C) less extensive but more expensive D) more extensive but less expensive Answer: A Explanation: In a review engagement, the practitioner expresses limited assurance that no material modifications need to be made to the financial statement s. So, a review of historical financial statements is a less extensive, and therefore, less expensive service that can be very useful for smaller private companies. Diff: 1 LO: 1 Bloom: Comprehension Min: 1 AACSB: Ethics AICPA: AC: Measurement Analysi s and Interpretation 21) Who are the only licensed accounting professionals in the United States? A) Certified Public Accountants (CPA) B) Chartered Accounts (CA) C) Financial Accountants (FA) D) Chief financial and operating officer (CFOO) Answer: A Explanation: Certified Public Accountants (CPA) are the only licensed accounting professionals in the United States. Diff: 1 LO: 1 Bloom: Knowledge Min: 1 AACSB: Ethics AICPA: AC: Measurement Analysis and Interpretation 22) As attestation services encompass more than just the inspection of historical financial statements, the term ________ is used rather than ________. A) practitioner; auditor B) auditor; practitioner C) intended user; auditor D) intended user; practitioner Answer: A Expla nation: In attestation services, the term practitioner is used rather than auditor because attestation services encompass more than just the audit of historical financial statements. Diff: 1 LO: 1 Bloom: Knowledge Min: 1 AACSB: Communication AICPA: A C: Reporting 8 23) What services are defined as independent professional services that improve the quality of information, or its context, for decision makers? A) assurance services B) attestation services C) absolute assurance D) audit services Answer: A Explanation: Assurance services are defined as independent professional services that improve the quality of information, or its context, for decision makers. Diff: 1 LO: 1 Bloom: Knowledge Min: 1 AACSB: Communication AICPA: AC: Reporting 24) The most common assurance service is the ________. A) audit of a company's historical financial statements B) compilation of financial statements C) review of a company's financial controls D) review of a company's historical financial statements Answer: A Explanation: The audit of a company's historical financial statements is the most common assurance service. Diff: 1 LO: 1 Bloom: Knowledge Min: 1 AACSB: Communication AICPA: AC: Reporting 25) A review of historical financial statements is an example of ________. A) attestation service B) absolute assurance C) financial forecast D) applicable financial reporting framework Answer: A Explanation: An example of an attestation service is a review of historical financial statements. Diff: 1 LO: 1 Bloom: Comprehension Min: 1 AACSB: Communication AICPA: AC: Reporting 9 26) Assurance, attestation, and auditing are similar because all three represent a common process of ________. A) taking information prepared by someone else and comparing that information to an established set of criteria. B) compiling and reviewing historical financial statements and providing non -financial information. C) compiling historical financial statements and providing non -financial information and web security. D) rev iewing financial forecast, examining internal controls, and providing website security. Answer: A Explanation: The terms assurance, attestation, and auditing are sometimes used interchangeably, but they actually represent different types of services. The y are similar because they all represent a common process of an independent accounting firm taking information prepared by someone else and comparing that information to an established set of criteria. Diff: 1 LO: 1 Bloom: Comprehension Min: 1 AACSB: C ommunication AICPA: AC: Reporting 27) Which of the following is true of assurance services? A) Both attestation and auditing services fall under the term of assurance services. B) The term information refers to subject matter that is an entire system, no t standalone data. C) The services are performed by someone who was involved with the creation of the information. D) The intended user is an independent Certified Public Accountant qualified to perform the auditing service. Answer: A Explanation: Both a ttestation and auditing services fall under the term of assurance services. The term independent implies that the service is performed by someone who was not involved with the creation of the information and who is objective in the evaluation of the inform ation. The term information refers to subject matter that can be standalone data or entire systems. The auditor refers to an independent Certified Public Accountant, or CPA, who is qualified to perform the auditing service. Diff: 1 LO: 1 Bloom: Comprehen sion Min: 1 AACSB: Communication AICPA: AC: Reporting 10 28) When CPAs are hired to report on the integrity of financial forecasts and reports on financial reporting processes, it is called an ________. A) attestation service B) absolute assurance C) applicable financial reporting framework D) audit service Answer: A Explanation: Companies produce financial information that goes beyond historical financial statements. Examples include financial forecasts and reports on financial reportin g processes. When CPAs are hired to report on the integrity of this type of financial information, it is called an attestation service. Diff: 1 LO: 1 Bloom: Comprehension Min: 1 AACSB: Communication AICPA: AC: Reporting 29) In assurance services, the term " information" refers to subject matter that is ________. A) historical or prospective B) created by independent or in -house services C) financial and outside the purview of the non -financial D) internal to a company only Answer: A Explanation: In t he assurance services, the term information refers to subject matter that can be financial or non -financial, historical or prospective, or standalone data or entire systems, internal or external to a company. Diff: 1 LO: 1 Bloom: Knowledge Min: 1 AACSB: Communication AICPA: AC: Reporting