Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN: 9781305080577
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: South-Western College Pub
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 10TFQ
To determine
Introduction: Sarbanes-Oxley Act 2002 was formulated by the Country U congress with the main objective to safeguard the interests of the investors from the falsified and fraudulent activities that takes place within a corporation.
To examine: Whether the given statement is true or false.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Sarbanes-Oxley [SOX] legislation, greatly restricts the types of nonaudit services that auditors may provide to audit clients. It is unlawful for a registered public accounting firm that is currently providing attest services for a client to provide the following services, except:
a. Appraisal or valuation services, fairness opinions, or contribution-in-kind reportsb. Internal audit outsourcing servicesc. Developing overall audit strategyd. Bookkeeping or other services related to the accounting records or financial statements of the audit client.
Explain the answer in 100-150 words
Explain one way the external auditor's responsibilities regarding a public company's system of internal controls have changed since SAS 78 became effective in the late 1990s. Were these changes necessary? Do you believe the changes have been effective at reducing risk for the company and the users of the financial statements? Explain your rationale.
What change at a non-audit client DOES NOT require an independence evaluation?
The client wants to acquire a KPMG audit client.
The CEO of the client changes.
The client is acquired by an existing KPMG audit client.
KPMG is appointed the auditor of the client's parent company.
Chapter 2 Solutions
Auditing: A Risk Based-Approach to Conducting a Quality Audit
Ch. 2 - The Great Salad Oil Swindle of 1963 is an asset...Ch. 2 - Prob. 2TFQCh. 2 - The three elements of the fraud triangle include...Ch. 2 - Prob. 4TFQCh. 2 - Prob. 5TFQCh. 2 - Prob. 6TFQCh. 2 - Prob. 7TFQCh. 2 - Prob. 8TFQCh. 2 - Prob. 9TFQCh. 2 - Prob. 10TFQ
Ch. 2 - Prob. 11TFQCh. 2 - Prob. 12TFQCh. 2 - Prob. 13MCQCh. 2 - Prob. 14MCQCh. 2 - Prob. 15MCQCh. 2 - Prob. 16MCQCh. 2 - Prob. 17MCQCh. 2 - Prob. 18MCQCh. 2 - Prob. 19MCQCh. 2 - Prob. 20MCQCh. 2 - Prob. 21MCQCh. 2 - Prob. 22MCQCh. 2 - Prob. 23MCQCh. 2 - Prob. 24MCQCh. 2 - Prob. 25RSCQCh. 2 - Prob. 26RSCQCh. 2 - Prob. 27RSCQCh. 2 - Refer to Exhibit 2.1 a. What is a Ponzi scheme? b....Ch. 2 - Prob. 29RSCQCh. 2 - Prob. 30RSCQCh. 2 - Prob. 31RSCQCh. 2 - Prob. 32RSCQCh. 2 - Prob. 33RSCQCh. 2 - Prob. 34RSCQCh. 2 - Prob. 35RSCQCh. 2 - Prob. 36RSCQCh. 2 - Prob. 37RSCQCh. 2 - Prob. 38RSCQCh. 2 - Many consider the Enron fraud to be one of the...Ch. 2 - Prob. 40RSCQCh. 2 - Prob. 41RSCQCh. 2 - Refer to Exhibit 2.5 and answer the following...Ch. 2 - Prob. 43RSCQCh. 2 - Prob. 44RSCQCh. 2 - Prob. 45RSCQCh. 2 - Prob. 46RSCQCh. 2 - Prob. 47RSCQCh. 2 - Prob. 48RSCQCh. 2 - Prob. 49RSCQCh. 2 - Prob. 50FFCh. 2 - Prob. 51FFCh. 2 - Prob. 52FF
Knowledge Booster
Similar questions
- KPMG is the auditor of an SEC registrant and cannot perform a management function. Which of the following is NOT likely to be considered as a management function? 1.Creating a strategic plan to overhaul their supply chain. 2.Providing a detailed implementation plan for deploying technology resources in a new way. 3.Designing internal controls for financial systems. 4.Providing generic training to staff on a new accounting standard.arrow_forwardFrom the article below, 1) What caused the SEC to question EY's independence? 2). Explain the findings in the history for EY's other instances where its independence was called into question. Accounting reform occurred after significant corporate misconduct was discovered in the early 1980s. Some of the reform sought to require public companies to put the hiring and pay of their auditors in the hands of an independent audit board committee. There has been concern that management still has significant influence on the evaluation and final decisions. Phillip Lamoreaux, an accounting professor at Arizona State University, conducted a study of more than 2,000 auditor changes in publicly traded companies. He found that companies whose top executives had worked with a Big Four accounting firm were twice as likely to select that firm. Many executives make their way into corporate America through the largest accounting firms in the world. A chief accountant in the Securities and Exchange…arrow_forwardWhich of the following is not a way by which the Sarbanes-Oxley Act attempts to ensure auditor independence from an audit client? Multiple Choice The auditing firm must be appointed by the client's audít committee. The audit committee must be composed of members of the client's board of directors who are independent of the management. Audit fees must be approved by the Public Company Accounting Oversight Board. The external auditor cannot also perform financial information system design and implementation work.arrow_forward
- Which of the following statements is false when a company’s internal audit department is asked to complete consulting work? In some instances, management or the audit committee may be somewhat averse to the concept that internal auditors should provide consulting services, primarily because they fear it would impair the internal auditors’ objectivity. the internal audit charter should include provisions for consulting engagements as the internal audit function would then have access to all areas of the organization when performing consulting engagements as it does when performing assurance engagements. Not including consulting services in the charter will never create confusion should the internal audit function decide to provide any form of advice, and will never increase the likelihood for disagreement regarding the internal audit function’s position on consulting services.arrow_forwardWhich of the following factors most likely would cause a CPA not to accept a new audit engagement? Management's reluctance in making all financial records available to the CPA. The CPA's inability to review the predecessor auditor's working papers. The CPA's lack of understanding of the entity's operations and industry O Management's reputation for failing to provide schedules to prior auditors on a timely basis.arrow_forwardWhich of the provisions of Sarbanes Oxley Act of 2002 (SOX) increased the chances that the financial statement auditor would push back against management's aggression in financial reporting? Require audit committees to hire, supervise and terminate auditors. Severe criminal penalties for perpetrators of fraudulent reporting. Requirement that c-level management certify the financial statements. O Require auditors to audit internal controls over financial reporting.arrow_forward
- CredPoint SAOG Company is unhappy with the audit report and threatens to change auditors next year. CredPoint SAOG is the biggest client of the auditor. The auditor’s independence may be compromised, as CredPoint SAOG is their biggest client and they do not want to lose such a client. Therefore, the auditor may issue a audit report that is favourable to CredPoint SAOG. Which threat may occur when a professional accountant may be deterred from acting objectively by threats, actual or perceived? a-Intimidation threats b-Self-interest threats c-Self-review threats d-Advocacy threatsarrow_forwardWhen an auditor-client conflict arises during an audit engagement, the client and/or the current auditor may sometimes employ another accounting firm to offer an impartial report on the problem at the core of the conflict - as occurred during Deloitte's 1997 audit of Livent. Discuss the responsibility of accounting firms when they are contracted to provide such a report.arrow_forwardWhich of the following statements is/are correct? O a. The ban on simultaneously offering consulting and auditing services to economically relevant companies within the framework of the FISG results from the bad experiences that BaFin had with corresponding offers in the context of the Wirecard scandal. O b. Violations of the so-called "blacklist" lead to significant fines being paid by the auditing company. Oc. According to the Financial Market Integrity Strengthening Act, companies are obliged to set up an audit committee to monitor the quality of the audit. O d. The external rotation of auditing firms requires more frequent tendering processes for auditing services.arrow_forward
- KPMG is the auditor for a company under IESBA rules and cannot assume a management responsibility for the company. Which option below is NOT a management responsibility? 1)Presenting a report to a client’s board on behalf of management. 2)Benchmarking employee salaries against industry and market averages. 3)Monitoring internal controls for the company’s financial reporting. 4)Deciding which recommendations from another 3rd party to implement.arrow_forwardWhich of the following is an example of a self-interest threat to the fundamental principles? The fee quoted is so low that it may be difficult to perform the audit The auditor provides legal consultancy services to the company None of these Auditor prepared the accounts for the companyarrow_forwardWhich of the following is one of the changes in the Revised ISA 700 on audit reporting? a. the audit opinion will now become more like a guarantee on the fairness of the financial statements b. all of the above c. the opinion is required to be presented first, unless law or regulation may prescribe alternate presentation d. the auditor’s responsibility paragraph include a statement that the auditor will now proactively search for fraudarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Business/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Business/Professional Ethics Directors/Executives...
Accounting
ISBN:9781337485913
Author:BROOKS
Publisher:Cengage
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub