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Auditing- Test 2 Prep

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TEST BANK FOR AUDITING & ASSURANCE SERVICES: A SYSTEMATIC APPROACH, 11TH EDITION, WILLIAM MESSIER JR, STEVEN GLOVER, DOUGLAS PRAWITT Auditing & Assurance Services: A Systematic Approach, 11e (Messier) Chapter 2 The Finan ...

TEST BANK FOR AUDITING & ASSURANCE SERVICES: A SYSTEMATIC APPROACH, 11TH EDITION, WILLIAM MESSIER JR, STEVEN GLOVER, DOUGLAS PRAWITT Auditing & Assurance Services: A Systematic Approach, 11e (Messier) Chapter 2 The Financial Statement Auditing Environment 1) A series of business and related auditing failures led to the passage of the Sarbanes-Oxley Act (2002). Answer: TRUE Difficulty: 1 Easy Topic: A Decade of Challenge and Change for Financial Statement Auditors Learning Objective: 02-04 Understand the significant changes that have taken place in the auditing profession over the past two decades. Bloom's: Remember AACSB: Communication AICPA: BB Legal; FN Measurement 2) The primary audit context with which an auditor is concerned is the auditee's industry or business. Answer: TRUE Difficulty: 1 Easy Topic: A Model of Business Learning Objective: 02-06 Recognize that an audit is shaped by the auditee's business, industry, and economic environment and understand the essential components and processes characteristic of most business entities. Bloom's: Remember AACSB: Communication AICPA: BB Industry; FN Decision Making 3) The audit committee generally includes senior executives of the organization. Answer: FALSE Difficulty: 1 Easy Topic: A Model of Business Learning Objective: 02-06 Recognize that an audit is shaped by the auditee's business, industry, and economic environment and understand the essential components and processes characteristic of most business entities. Bloom's: Remember AACSB: Communication AICPA: BB Industry; FN Reporting 4) A financial statement audit is generally organized based on the five basic business processes or cycles. Answer: TRUE Difficulty: 1 Easy Topic: A Model of Business Learning Objective: 02-07 Be familiar with a five-component model of business processes used to organize an audit. Bloom's: Remember AACSB: Communication AICPA: BB Industry; FN Decision Making 5) One of the five basic business processes is the warehousing cycle. Answer: FALSE Difficulty: 1 Easy Topic: A Model of Business Learning Objective: 02-07 Be familiar with a five-component model of business processes used to organize an audit. Bloom's: Remember AACSB: Communication AICPA: BB Industry; FN Decision Making 6) The ASB's auditing standards contain a preface that includes Principles Underlying an Audit Conducted in Accordance with GAAS. Answer: TRUE Difficulty: 1 Easy Topic: Auditing Standards Learning Objective: 02-09 Understand that auditing standards are established by both U.S. and international standard setters.

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