1. The interests of users of financial statements coincide. Public companies sho
ID: 2330867 • Letter: 1
Question
1.
The interests of users of financial statements coincide. Public companies should use accounting principles that result in higher levels of reported income.
2.
Which of these would be not be considered a factor outside the control of the external auditor that affects audit quality?
d. The regulatory environment
3.
No more than two of the PCAOB board members may be CPAs to assure users of financial statements that this important regulator is representing the broad interests of users rather than preferences of the external audit profession.
a. True b. False2.
Which of these would be not be considered a factor outside the control of the external auditor that affects audit quality?
a. Organizational corporate governance b. Systems for making client acceptance decisions c. The legal environmentd. The regulatory environment
3.
No more than two of the PCAOB board members may be CPAs to assure users of financial statements that this important regulator is representing the broad interests of users rather than preferences of the external audit profession.
a. True b. FalseExplanation / Answer
Ans 1:B) False
Reason: The objective of financial statement is to present a true and fair view. It shouldn't window dress its income statement and increase the income as it will defeat the purpose of preparation of Financial statements.
Ans 2: Option B: Systems for making client acceptance decisions
Reason: it is a part of organisation internal control system and it could be evaluate by the auditor and can be provided suggestion for improvement and if any fault is find on it then auditor can change his judgement over it.
Ans 3: true
Reason:There would be maximum two CPA's in a PCAOB Board. However in PCOAB chairrman is a CPA then he may or mayn't be a practising CPA.
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