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
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Question
Chapter 2, Problem 24MCQ
To determine
Introduction:Audit committee is a sub-committee of the board of directors which is responsible for providing an oversight to the financial reporting process. Audit committee acts as an intermediary between external auditors of the company and the management to resolve areas of conflict amongst them.
To identify:The correct option relating to responsibilities of audit committee that NYSE has mandated.
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Students have asked these similar questions
Which of the following statement is not related to role of audit committee?
Approve remuneration and terms of engagement of the external auditor
Monitor and review the effectiveness of the company’s internal control
Monitor the integrity of the company’s financial statements
To prepare the financial statement of the company in time
Which of the following parties are responsible for the detection of errors and accounting irregularities in a company's financial statements?
Multiple Choice
O
internal audit staff and audit committee of the board of directors.
all of these answer choices are correct.
the SEC staff during their review process
external auditors
Audit committees have an essential role to play in ensuring the integrity and transparency of corporate reporting. The external auditor will normally report to the audit committee on all the following matters except:
Select one:
a.Detected frauds.
b.Future staff requirements of the audit firm.
c.Potential breach of Corporation Act 2001.
d.The management responsibility in presenting annual financial reports.
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
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Similar questions
- The external auditor of a company has certain requirements due to Sarbanes-Oxley. Which of the following best describes these requirements? A. The auditor is required to only report weaknesses in the internal control design of the company he or she is auditing. B. The auditor must issue an internal control report on the evaluation of internal controls overseen by the Public Company Accounting Oversight Board C. The auditor in charge can serve for a period of only two years. D. The Public Company Accounting Oversight Board reviews reports submitted by the auditors when no evaluations have been performed.arrow_forwardProfessional guidance indicates that the auditor should consider revenue recognition to be high risk in planning an audit of a company’s financial statements. a. Identify the activities that affect the revenue cycle. b. Identify the financial statement accounts typically associated with the revenue cycle.arrow_forwardWhich of the following is NOT an implication of Section 302 of SOX?a. Auditors must determine whether changes in internal control have materially affected, or are likely to materially affect, internal control over financial reporting.b. Auditors must interview management regarding significant changes in the design or operation of internal control that occurred since the last audit.c. Corporate management (including the CEO) must certify monthly and annually their organization’s internal controls over financial reporting.d. Management must disclose any material changes in the company’s internal controls that have occurred during the most recent fiscal quarter.arrow_forward
- Select the appropriate provisions of the Sarbanes-Oxley Act (SOX) for each of the following descriptions. Descriptions Major Provisions of the Sarbanes-Oxley Act a. Executives must personally certify the company's financial statements. b. Audit firm cannot provide a variety of other services to its client, such as investment advising. c. PCAOB establishes standards related to the preparation of audited financial reports. d. Lead audit partners are required to change every five years. e. Management must document the effectiveness of procedures that could affect financial reporting.arrow_forwardWhich of the following statements about the auditor's responsibilities in public company audits is true as covered by the PCAOB? A. The auditor issues an opinion on the financial statements and management issues the opinion on internal control over financial reporting. B. The auditor issues an opinion on the financial statements only if internal control over financial reporting is found to be effective. C. The auditor issues an opinion on the financial statements; if those are found to be fairly stated, the auditor proceeds to issue an opinion on internal control over financial reporting. D. The auditor issues opinions on the financial statements and internal control over financial reporting.arrow_forwardThe purpose of an audit is to A. provide financial statement users with an opinion by an independent auditor on whether the financial statements are presented fairly in accordance with an applicable financial reporting framework B. provide internal auditors with an opinion by the external auditor on whether the financial statements are presented fairly in accordance with an applicable financial reporting framework C. provide absolute assurance that the financial statements conform to Generally Accepted Accounting Principles (GAAP) D. help management ensure yearly bonuses will be receivedarrow_forward
- The following are selected portions of the report ofmanagement from a published annual report.REPORT OF MANAGEMENTManagement’s Report on Internal Control over Financial ReportingThe Company’s management is responsible for establishing and maintaining adequateinternal control over financial reporting. The Company’s internal control over financialreporting is a process designed under the supervision of its President and ChiefExecutive Officer and Chief Financial Officer to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of the Company’s financialstatements for external reporting in accordance with accounting principles generallyaccepted in the United States of America. Management evaluates the effectiveness ofthe Company’s internal control over financial reporting using the criteria set forth bythe Committee of Sponsoring Organizations of the Treadway Commission (COSO)in Internal Control–Integrated Framework. Management, under the…arrow_forwardWhich of the following is NOT one of the roles of an audit committee? Which of the following is NOT one of the roles of an audit committee? reviewing the work of the internal audit ensuring that appropriate resources are used in company operations reviewing systems of internal control. launching special investigations of employees, company practices, or proceduresarrow_forwardWhich non-audit service is permitted for an SEC audit client? Preparing a point-in-time gap analysis on its technology controls compared to industry standards. Providing a technology service that records accounting entries for the client. Loaning staff to prepare the client’s tax return. Loaning staff to assist with the client’s internal audit function.arrow_forward
- Auditors have a responsibility related to management’s disclosure of new informationrelated to subsequent events untila. The date of the financial statements.b. The date of the auditor’s report.c. The audit report release date.d. The following year’s date of the financial statementsarrow_forwardAn auditor issues an audit report that expresses three opinions. Which of the following is not one of those opinions? Question 23 options: a) whether management’s assessment of the company’s internal control over its financial reporting is appropriate b) whether management’s assessment that the financial statements are based upon the proper use of GAAP c) whether the company maintained effective internal control over its financial reporting d) whether the company’s financial statements present fairly the results of operations and cash flows in conformity with GAAParrow_forwardAs an audit manager at Gung & Ho, CPAs, you have been scheduled to serve as the discussion leader for an in-office training session on consideration of the internal control structure in a financial statement audit. Gung & Ho’s audit practice consists of audits of privately-owned companies and not-for-profit organizations. RequiredPrepare an outline of comments you plan to make to indicate similarities and differences in how each of the following items is handled under a primarily substantive approach versus reliance on controlsapproach.a. Understand entity-level controls.b. Understand the flow of transactions.c. Identify what can go wrong (WCGW) for financial statement assertions.d. Identify relevant controls to test.e. Determine preliminary audit strategy.f. Perform tests of controls.g. Evaluate audit evidence, assess control risk, and re-evaluate audit strategy (if necessary).h. Report internal control weaknesses to those charged with governance.arrow_forward
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