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How does the role of the SEC differ from that of the AICPA
SEC – establishes standards and regulations related to public companies. Oversight of PCAOB, protects investors
AICPA – research and publication standards and publications for non-public companies
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List three of the more important responsibilities of a partner in a public accounting firm
1 – Planning, supervision and execution of the audit
2 – Maintaining primary contacts with clients
3 – Recruiting new staff members
and last stop for quality of work
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The Sarbanes-Oxley Act of 2002 created the Public Company Accounting Oversight Board. Explain the major responsibilities of this board
Establish independence standards for auditors of public companies
Establish auditing standards for audits of public companies
Sanction registered audit firms
Protect investors
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Which of the following best describes the relationship between assurance services and
attest services
Both attest and assurance services require independence
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Which of the following has primary responsibility for the fairness of
the representations made in financial statements.
Client’s management
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The most important benefit of having an annual audit by a public accounting firm is to
Provide assurance to investors and other outsiders that the financial statements are reliable
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The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board. Which of the following is not one of the responsibilities of that board.
Review financial reports filed with the SEC
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Which of these organizations has the responsibility to perform inspections of auditors of public companies?
PCAOB (public company accounting oversightboard)
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Governmental auditing, in addition to including audits of financial statements,
often includes audits of efficiency, effectiveness and:
Compliance
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In general, internal auditors’’ independence will be greatest when they report directly to the:
Audit committee of the board of directors
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Which of the following did not precipitate the passage of the Sarbanes-Oxley Act of 2002 to regulate public accounting firms
Ethic scandals at the AICPA
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What caused the passage of Sarbanes-Oxley
- Disclosure related to accounting irregularities at Enron and WorldCom
- Restatements of financial statements by a number of public companies
- Conviction of the accounting firm of Arthur Anderson LLP
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Which of the following organizations establishes accounting standards for the U.S. government agencies?
The Federal Accounting Standards Advisory Board
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Which of the following is correct about forensic audits?
Forensic audits are usually performed in situations in which fraud has been found or is suspected
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What best describes the purpose of the auditors’ consideration of internal control in a financial statement audit for a nonpublic company.
To determine the nature, timing and extent of audit testing
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Which of the following is an example of a compliance audit?
An Audit of a company’s policies and procedures for adhering to environmental laws and regulations.
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2 types of assurance services
Increase reliability of info
Put info into context that helps decision making
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Forms of Attestation
Examination - High - Low - In our opinion
Review - Moderate - Moderate - We are not aware
Agreed Upon Services - Summary - Varies - Includes a summary
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Types of Risk
Business - Survival and Profitability
Information - Info used to asses business risk
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Types of Audits
Financial - only by CPA - bal sheet etc.
Compliance - rules - irs income tax
Operational - not CPA - effect of operations
Integrated - combination of both
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Types of Auditors
External
Internal
TaxGovernment
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IIA
Institute of Internal Auditors
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GAO
Government Accounting Office
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AICPA
American Institute of CPA
Standards
Publications
Continuing Education
CPA Test
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FASB
Sets GAAP for all except federal and state
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PCAOB
Public Accounting Oversight Board
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SEC
Security Exchange Commission
Protect Investors
Registration Statements
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Structure of CPA firm
Partners - overall responsibility
Managers - supervise overall engagement
Seniors - in charge of auditor on daily
Staff - work under immediate supervision of senior
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