Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Question
Chapter 2, Problem 14CYBK
To determine
Introduction: Securities and Exchange Commission (SEC) was established in 1934 with the aim to regulate the capital market and its system. The SEC is authorized to establish GAAP standards for publicly traded companies.
To examine: Whether the given statement is true or false.
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Students have asked these similar questions
Outline the reasons why auditor independence is considered of fundamental importance for confidence in financial statement auditing and evaluate the case for and against recent regulatory changes that affect the relationship between the auditor and the reporting company.
Any help?
Where do I get help for these?
А.
The fundamental purpose of financial statements audit is to provide independent
assurance that management has presented a "true and fair" view of a company's
financial performmance and position. It underpins the trust and obligation of stewardship
between those who manage a company and those who own it. To a publicly traded
company, financial statements audit offers credibility; to its shareholders, it offers
comfort; and to all stakeholders - including the market at large - financial statements
audit offers confidence.
(PricewaterhouseCoopers, 2019)
Required:
i.
Explain the following terms in respect of financial statements audit:
Independent assurance.
True and fair view.
a.
b.
ii.
State your agreement or disagreement with the following statements. Justify
your answer.
The auditor is responsible to ensure that the client's financial
statements are free from any misstatements.
a.
b.
The auditor shall bear the liability should any of its clients being sued
by a third party due to…
Chapter 2 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 2 - The Great Salad Oil Swindle of 1963 is an asset...Ch. 2 - Prob. 2CYBKCh. 2 - Prob. 3CYBKCh. 2 - Prob. 4CYBKCh. 2 - The three elements of the fraud triangle include...Ch. 2 - Prob. 6CYBKCh. 2 - Prob. 7CYBKCh. 2 - Prob. 8CYBKCh. 2 - Prob. 9CYBKCh. 2 - Prob. 10CYBK
Ch. 2 - Prob. 11CYBKCh. 2 - Prob. 12CYBKCh. 2 - Prob. 13CYBKCh. 2 - Prob. 14CYBKCh. 2 - Prob. 15CYBKCh. 2 - Prob. 16CYBKCh. 2 - Prob. 17CYBKCh. 2 - Prob. 18CYBKCh. 2 - Prob. 19CYBKCh. 2 - Prob. 20CYBKCh. 2 - Prob. 21CYBKCh. 2 - Prob. 22CYBKCh. 2 - Prob. 23CYBKCh. 2 - Prob. 24CYBKCh. 2 - Prob. 1RQSCCh. 2 - Prob. 2RQSCCh. 2 - Prob. 3RQSCCh. 2 - Refer to Exhibit 2.1 a. What is a Ponzi scheme? b....Ch. 2 - Prob. 5RQSCCh. 2 - Prob. 6RQSCCh. 2 - Prob. 7RQSCCh. 2 - Prob. 8RQSCCh. 2 - Prob. 9RQSCCh. 2 - Prob. 10RQSCCh. 2 - Prob. 11RQSCCh. 2 - Prob. 12RQSCCh. 2 - Prob. 13RQSCCh. 2 - Prob. 14RQSCCh. 2 - Many consider the Enron fraud to be one of the...Ch. 2 - Prob. 16RQSCCh. 2 - Prob. 17RQSCCh. 2 - Prob. 18RQSCCh. 2 - Prob. 19RQSCCh. 2 - Prob. 20RQSCCh. 2 - Prob. 21RQSCCh. 2 - Prob. 22RQSCCh. 2 - Prob. 23RQSCCh. 2 - Prob. 24RQSCCh. 2 - Prob. 25RQSCCh. 2 - Prob. 26FFCh. 2 - Prob. 27FFCh. 2 - Prob. 28FF
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Similar questions
- External auditing gives confidence in the integrity of corporate reporting for the benefit of: a. Society b. Shareholders c. Management d. All options are correctarrow_forwardThe primary responsibility of the board is to ensure that it develops a clear understanding of the bank’s business strategy and fundamental risks. The board also needs to ensure that: Group of answer choices C. Risks are verified through review of accounting and not economic practices. A. Risks are made transparent to stakeholders and managers. D. Both A & B B. Risks are made transparent legally through non-disclosure agreements.arrow_forwardThe CPA's role in performing audits is important to our society because: O an audit of financial statements helps investors and others know that they can rely on the information presented in the financial statements. O auditors have the primary responsibility for the information contained in the financial statements. auditors issue reports on the accuracy of each financial transaction. auditors provide direct financial advice to potential investors.arrow_forward
- Which of the following is not a purpose of the Center for Audit Quality which is affiliated with the AICPA? a. to serve investors b. to serve the International Accounting Standards Board (IASB) c. to serve the capital markets d. to serve public company auditorsarrow_forwardTRUE OR FALSE? WHY? For purposes of examining the client's financial statements, the auditor is concerned with those objectives or features of internal control that primarily relate to the entity's ability to record, process, summarize, and report financial data.arrow_forward“Audits servea fundamental purpose in promoting confidence and reinforcing trust infinancialinformation.The principal-agent relationship, as depicted in agency theory, isimportantinunderstanding how the audit has developed.”-ICAEW, December 2005a)Explainagencytheoryand discuss TWO (2) agency problems in the context of corporategovernance. Present your answers in the following structure. Agency Theory Problem1 Problem2b)BrieflyexplainFOUR (4) ways that the agency problem might be reduced.(number youranswers in (i)(ii)(iii)(iv)) Present your answers in the following structure:(1)(ii)(iii)(iv)arrow_forward
- Which of the following is a reason that an entity may receive an audit? Select the best response and then click "Submit". O The entity has publicly traded stock. O The entity is required by regulators. O The entity is required by its lenders. Management wants assurance around accounting procedures and to reduce the risk of fraud. O All of the abovearrow_forward1arrow_forwardThe auditor is answerable to Bankers All Stakeholders Shareholders Managementarrow_forward
- SOX 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 NOT a major component of the Sarbanes-Oxley Act? Executive responsibility for accurate financial reporting. Accounting regulation. Mandating external financial audits for all companies. Formation of an audit committee.arrow_forward“The maintenance of auditor independence is vital to the credibility of the audit in the minds of the users of financial statements.” 1. State the provisions of the companies Act, 2019 (Act 992) which strengthen the independence of the auditor. 2. Suggest how the independence of the auditor might be further strengthened and improved.arrow_forward
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