Recognizing the Role of the American

Institute of Certified Public

Accountants (AICPA)
The American Institute of Certified Public Accountants (AICPA) is the national
professional organization for all certified public accountants (CPAs). Through its
senior technical committee, called the Auditing Standards Board (ASB), the AICPA
is responsible for establishing auditing and attestation standards for companies in
the United States. To understand what that entails, you need to know the meaning
of three key terms:
»»Auditing: The purpose of auditing is to gather evidence about a company’s
financial statements and to use that evidence to determine whether the
statements are free of material (significant) misstatements. The company
creates the financial statements — the auditor is an independent entity who
issues an opinion on the company’s financials.
»»Attestation: Accountants create other reports on financial statements that
don’t provide an opinion. Those reports are considered attestation services.
For example, a company may hire you to calculate the rate of return on the
company’s investments (see Book 8, Chapter 3), making sure your figures
match the company’s report on the same topic.
»»Nonpublic: Nonpublic companies are privately owned. Their stock isn’t traded
on any open-to-the-public stock exchange. For example, if you start a corporation,
you aren’t required to sell any of your shares of stock unless you want to.

Tying together regulators for audits

of publicly traded companies
Shares of publicly traded companies are available for purchase on stock exchanges,
such as the New York Stock Exchange, or over-the-counter markets, such as the
NASDAQ. To issue securities to the public, companies must register their securities
with the Securities and Exchange Commission (SEC).
The Public Company Accounting Oversight Board (PCAOB) oversees audits of publicly
traded companies. The SEC has oversight over the PCAOB. The SEC approves
.the PCAOB’s rules and standards and its budget