Presentation on theme: "2 - 1 The CPA Profession Chapter 2 Highlights 2 - 2 Certified Public Accounting Firms The legal right to perform audits is granted to CPA firms by regulation."— Presentation transcript:
2 - 2 Certified Public Accounting Firms The legal right to perform audits is granted to CPA firms by regulation of each state. CPA firms also provide many other services to their clients, such as tax and consulting services.
2 - 3 Certified Public Accounting Firms Big Four international firms National firms Regional and large local firms Small local firms
2 - 4 Certified Public Accounting Firms The four largest CPA firms in the United States are called the “Big Four” international CPA firms. These four firms have offices in most major cities in the United States and in many cities throughout the world.
2 - 5 Management consulting services Tax services Accounting and bookkeeping services Activities of CPA Firms
2 - 6 Hierarchy of a Typical CPA Firm Staff Level Experience Typical Responsibilities Staffassistant 0-2 years Performs most of the detailed audit work Senior or in-chargeauditor 2-5 years Responsible for the audit field work, including supervising staff work
2 - 7 Hierarchy of a Typical CPA Firm Staff Level Experience Typical Responsibilities Manager 5-10 years Helps the plan, manages the audit, reviews work, and works with the client Partner 10+ years Reviews audit work and makes significant audit decisions
2 - 8 The AICPA sets professional requirements for CPAs, conducts research, and publishes materials on many different subjects related to accounting, auditing, attestation and Assurance services, management Consulting services, and taxes. AICPA
2 - 9 Establishing Standards and Rules 1.Auditing standards (Historically) 2.Compilation and review standards 3.Other attestation standards 4.Consulting standards 5.Code of Professional Conduct
2 - 10 Other AICPA Functions Supports research by its own staff and provides grants to others Writes and grades the CPA examination Provides seminars and education in a variety of subject matters Publishes a variety of materials.
2 - 11 1.The audit is to be performed by a person or persons having adequate technical training and proficiency having adequate technical training and proficiency as an auditor. 2. In all matters relating to the assignment, an independence in mental attitude is to bemaintained by the auditor or auditors. General Standards 3. Due professional care is to be exercised in the planning and performance ofthe audit and the preparation of the report.
2 - 12 1.The work is to be adequately planned and assistants, if any, are to be properly supervised. 2. A sufficient understanding of internal control is to be obtained to plan the audit and to determine the nature, obtained to plan the audit and to determine the nature, timing, and extent of tests to be performed. timing, and extent of tests to be performed. Standards of Field Work 3. Sufficient competent evidential matter is to be obtained through inspection, observation, inquiries and confirmations to afford a reasonable basis for an opinion regarding the financial statements under audit.
2 - 13 1. The report shall state whether the financial statements are presented in accordance with generally accepted accounting principles. 2. The report shall identify those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period. Standards of Reporting
2 - 14 3. Informative disclosures in the financial statements are to be regarded as reasonably adequate unless otherwise stated in the report. 4. The report shall contain an expression of opinion regarding the financial statements, taken as a whole. Standards of Reporting
2 - 15 The term generally accepted auditing standards is no longer used for public company audits. The term GAAS continues to be used for audits of private companies. Relationship Between GAAS and PCAOB Auditing Standards Public company audits refer to PCAOB auditing standards.
2 - 16 The 10 generally accepted auditing standards are too general to provide meaningful guidance. SASs interpret the 10 generally accepted auditing standards and are the most Authoritative references available to auditors. Statements on Auditing Standards
2 - 17 Elements of Quality Control Standards Independence, integrity, and objectivity Personnel management Acceptance and continuation of clients and engagements Engagement performance Monitoring
2 - 18 CPAs Encouraged to Conduct Themselves at a High Level Legalliability Division of CPA firms Continuingeducationrequirements GAAS and interpretations Code of ProfessionalConduct CPAexamination Qualitycontrol Peerreview PCAOB and SEC Conduct of CPA firm personnel
2 - 19 Next Class: Background and nature of the Sarbanes-Oxley Act. Background and nature of the Sarbanes-Oxley Act. It’s effect on the CPA profession Role of the Public Company Accounting Oversight Board (PCAOB)
Your consent to our cookies if you continue to use this website.