Professional Documents
Culture Documents
The Role of The Public Accountant in The American Economy: Mcgraw-Hill/Irwin
The Role of The Public Accountant in The American Economy: Mcgraw-Hill/Irwin
McGraw-Hill/Irwin
Assurance services
The
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Types of Services
Assurance
Services
Attestation Services
Example: Audits of Financial Statements,
Examinations of Internal Control
NonAssurance
Services
Tax Services
Management Consulting Services
Other
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Attestation Services
To attest
The CPA
Suitable
Criteria
Subject
Matter
Gathers
Evidence
Issues
Report
Subject
Matter*
The Attest
Report
Suitable criteria
Standards established or developed by
groups of experts.
Example: Internal control audit standards
established by a committee of experts on
internal control
Example: Financial statement audit
standards are GAAP. For a financial
statement audit suitable criteria are referred
to as the applicable financial reporting
framework.
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Forms of Attestation
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Management
Prepares
Financial
Statements
Criteria
(e.g., GAAP)
Gathers
Evidence
Issues
Report
Financial
Statements
The Auditors
Report
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Audit Evidence
Evidence focuses on whether financial statements are
presented in accordance with GAAP; examples:
Balance sheet contains all liabilities
Income statement
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Accidental errors
Lack of knowledge of accounting principles
Unintentional bias
Deliberate falsification
Developments
Audit Objective
Nature of Audit
Ancient - 1850
Detection of fraud
Detailed; No reliance on
controls
1850-1905
Industrial revolution
resulted in the need for
corporate audits
Some testing; No
reliance
on controls
1905-1940
Development of stock
markets - increased
emphasis on earnings
Determination of
fairness; detection of
fraud & errors
Increased emphasis on
testing; Slight reliance on
controls
1940-1975
Development of auditing
standards
Determination of
fairness
Substantial reliance on
controls
1975-1985
Criticism by Congress;
Increased self-regulation
Determination of
fairness
Internal control
determines scope of
audit
1985-1995
Determination of
fairness
Risk assessment
determines audit scope;
must assess risk of fraud
1995-Present
Panel on Audit
Effectiveness; SarbanesOxley Act of 2002
Determination of
fairness
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Panel on Audit
Effectiveness made a variety of
suggestions to improve audits.
2001Enron Bankruptcy
2002WorldCom Fraud
2002Sarbanes-Oxley Act
2003Public Company Accounting
Oversight Board began operations
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Financial Audits
Audit
entity
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Operational
Audits
Integrated
Audits
Audits
Auditors
Government Accountability Office Auditors
Tax Auditors
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Internal Auditors
Employed
They
by a company as an employee
often
The
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Tax Auditors
Responsible
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Establish Standards
Research and Publication
Continuing Professional Education
Self-Regulation
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Establishes Standards--Examples
AICPA Auditing
Standards Board
Publications
Statements of Position
of continuing professional
education programs
Necessary for continuing education
requirement for CPA certificate
Offered by
AICPA
State societies
Other professional organizations
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Professional Regulation
Regulations
Regulation
of Individual CPAs
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CPA certificates
All boards require successful completion
of CPA examination
Education and experience requirements
vary
National Association of State Boards of
Accounting (NASBA)
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Other Parties
FASB
GASB
FASAB
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PCAOB Role
Register firms
Perform inspections of firms
Conduct investigations and disciplinary proceedings of firms
Sanction registered firms
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of the US government
Oversight responsibility for the PCAOB
Objectives
statements
Protects
investors
Regulation S-X
and Assurance
Tax
Consulting
Accounting
Personal
Financial Planning
Litigation support
Fraud Investigation
Personal Financial Planning
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proprietorship
Partnerships
Professional Corporation
Limited Liability Partnership (LLP)
Limited Liability Company (LLC)
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4
Alternative Practice Structures
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Industry Specialization
Firms
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Partners
Managers
Seniors
Staff Assistant
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Responsibilities on an Engagement
PartnerOverall
responsibility is to
assure that that audit is performed in
accordance with professional standards.
ManagerSupervise overall engagement.
SeniorsIn charge auditor on a daily
basis.
Staff assistantsWork under the
immediate supervision of the senior.
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Seasonal
Developments
fluctuations
Relationships
with clients
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