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©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 2 - 1 The CPA Profession مهنة التدقيق Chapter 2.

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Presentation on theme: "©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 2 - 1 The CPA Profession مهنة التدقيق Chapter 2."— Presentation transcript:

1 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder The CPA Profession مهنة التدقيق Chapter 2

2 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 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 More than 45,000 CPA firms exist in the USA ranging in size 1 person to 20,000 partners and staff.

3 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Certified Public Accounting Firms  Big Four international firms. In 2005, the big four size by revenue As follow: (1) Deloitte & Touche :$7,814 millions, 2650 partner, professionals (2) Ernst & Young :$6,330 millions, 2130 partner, professionals (3) PricewaterhouseCoopers: 6,167 millions, 2019 part, professional (4) KPMG: $4,715 millions, 1607 partner, professionals  National firms  Regional and large local firms  Small local firms

4 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 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.

5 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder  Management consulting services  Tax services  Accounting and bookkeeping services Activities of CPA Firms

6 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Structure of CPA Firms Three main factors influence the organizational structure of all firms: 1.The need for independence from clients. 2.The importance of a structure to encourage competence. 3.The increased litigation risk faced by auditors.

7 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Organizational Structure الهيكل التنظيمي  Proprietorship: one owner  Professional corporation: owned by one or more shareholders  General partnership: multiple owners  Limited liability company: its owners have limited personal liability  General corporation:  Limited liability partnership: owned by one or more partners

8 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Hierarchy of a Typical CPA Firm التسلسل الهرمي لشركة التدقيق Staff levelExperienceTypical responsibilities Staff assistant0-2 years Perform most of the detailed audit work Senior or in – charge auditor 2-5 years Responsible for the audit work, supervising and reviewing audit work Manager5-10 years Helps the in-charge plan and manage the audit, review the in-charge work, and manage relations with the client. May be is responsible for more than one engagement at the same time. Partner10+ yearsReview the overall audit work and involved in the significant audit decisions.

9 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder E-Commerce and CPA Firm Operations CPA firms are using the Internet to market their services. Firm Web sites also feature online software tools and databases to subscribers. Firms take advantage of online resources and databases to help their staffs stay current on emerging business and standards-setting issues.

10 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder The overall purpose of the Securities and Exchange Commission (SEC) is to assist in providing investors with reliable information upon which to make investment decisions. Securities and Exchange Commission

11 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 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

12 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder The AICPA is empowered to set standards (guidelines) and rules that all members and other practicing CPAs must follow. Establishing Standards and Rules

13 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Establishing Standards and Rules تأسيس المعايير والقواعد The AICPA is empowered to set standards (guidelines) and rules that all members and other practicing CPAs must follow. 1.Auditing standards: the auditing standard board (ASB) معايير التدقيق is responsible for pronouncements, which are called Statement on Auditing Standards SASs 2. Compilation and review standards تجميع ومراجعة المعايير 3. Other attestation standards 4. Consulting standards 5.Code of Professional Conduct: professional ethics نظام الاجراءات المهنية

14 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 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.

15 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Generally accepted auditing standards (GAAS) معايير التدقيق المتعارف عليها 1. General standards 2. Standards of field works 3. Reporting standards

16 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder The audit is to be performed by a person or persons having adequate technical training and proficiency as an auditor. التدقيق يجب ان ينجز من قبل شخص لدية تدريب ومهارة مناسبة كمدقق 2.The auditor must maintain independence in mental attitude in all matters relating to the audit. يجب على المدقق ان يكون مستقلا ذهنيا في كل الامور المتعلقة بالتدقيق General Standards معايير عامة 3.The auditor must exercise due professional care in the performance of the audit and the preparation of the report. المدقق يجب ان يمارس الحذر المهني في اداء التدقيق واعداد تقرير التدقيق

17 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder The auditor must adequately plan the work and must properly supervise any assistants.يجب ان يخطط بشكل مناسب عملية التدقيق ويشرف بشكل مناسب على المساعدين 2. The auditor must obtain a sufficient understanding of the entity and its environment, including itsinternal control, to assess the risk of material misstatement and to design further auditprocedures. المدقق يجب ان يكون لدية فهم كافي للشركة التي يدقق عليها, وبيئتها ونظام الرقابة الداخلي, لتقدير محاطر التحريف المادي ولتصميم اجراءات التدقيق اللاحقة Standards of Field Workمعاييرمتعلقة بحقل العمل 3.The auditor must obtain sufficient appropriate audit evidence by performing audit procedures to afford a reasonable basis for an opinion regarding the financial statements under audit. يجب على المدقق ان يحصل على اثباتات تدقيق كافية اثناء القيام باجراءات التدقيق لتكون قاعدة معقولة لاعطاء رأي فيما يتعلق بالقوائم المالية للشركة الواقعة تحت التدقيق

18 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder The report shall state whether the financial statements are presented in accordance with generally accepted accounting principles. التقرير يجب ان ينص فيما اذا تم اعداد القوائم المالية حسب المعاييرالمحاسبية المتعارف عليها 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

19 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Informative disclosuresافصاح فية معلومات مفيدة 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

20 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Generally Accepted Auditing Standards General Standards 1. Adequate training and proficiency 2. Independence in mental attitude 3. Due professional care Standards of Field Work 1. Proper planning and supervision 2. Understanding of the entity 3. Sufficient appropriate evidence Standards of Reporting 1. Statements prepared in accordance with GAAP 2. Circumstances when GAAP not followed 3. Adequacy of disclosures 4. Expression of opinion on financial statements

21 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder 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

22 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder  GAAS and Standards of Performance Statements on Auditing Standards  Classification of Statements on Auditing Standards

23 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder International Standards on Auditing International Standards on Auditing (ISAs) are issued by the International Auditing Practice Committee of the International Federation of Accountants (IFAC).

24 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder International Standards on Auditing IFAC is the worldwide organization for the accountancy profession. The IFAC works to improve the uniformity of auditing practices and related services throughout the world.

25 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Elements of Quality Control  Independence, integrity, and objectivity  Personnel management  Acceptance and continuation of clients and engagements  Engagement performance  Monitoring

26 ©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder Relationships Quality control standards Generally accepted auditing standards AICPA practice sections Peer review


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