S U M M AR Y O F LE C T U R E S

AUDITING I
Group Task
Major: Bachelor of Accountancy

Arranged By:
Atri Dyah Utami

F0314017

Diana Wulan Sari

F0314028

Paulina Kartika Negara

F0314076

Potina Histika P.M.

F0314079

Rizka Ardiptya

F0314086

FACULTY OF ECONOMICS AND BUSINESS

SEBELAS MARET UNIVERSITY
SURAKARTA
2016

Certified Public Accounting Firms

Four size categories are used to describe CPA firms.
1. Big Four international firms
Usually called the Big Four, are the largest CPA firms that have offices throughout
in the United States and worlwide and audit nearly all of the largest companies
throughout the world.
2. National firms
These firms are called national firms because they have offices in most major cities.
These firms are large but smaller than the Big Four.
3. Regional and large local firms
There are less than 200 CPA firms with professional staffs of more than 100 people.
4. Small local firms
More than 95% of all CPA firms have fewer than 25 professionals in a single-office
firm
Activities of CPA Firms
CPA firms provide audit services.
Additional services include accounting and bookkeeping services, tax services, and
management consulting services.
CPA firms continue to develop new products and services. Such as financial planning,
business valuation, forensic accounting, and information technology advisory service.
CPA Firms Structure
CPA firms has many types in the nature and range of services. 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.
Six organizational structure are available to CPA firms. Each structure, except for the
proprietorship, results in an entity separate from the CPA personally, which helps promote
auditor independence.
a. Proprietorship: operate by a firms with one owner only.
b. General Partnership: same as a proprietorship, but can can be applied to multiple
owners

c. General Corporation: the advantage of a corporation is that shareholders are liable

only to the extent of their investement in the corporation.
d. Professional Corporation: provies professional services and is owned by one or
more shareholders.
e. Limited Liability Company: combines the most favorable atributes of a general
corporation and a general partnership.
f. Limited Liability Partnership: is owned by one or more partners.
Sarbanes-Oxley Act & Public Company Accounting Oversight Board
The Sarbanes-Oxley Act established the Public Company Accounting Oversight Board
(PCAOB), appointed and overseen by the SEC. The PCAOB provides oversight for auditors
of public companies, establishes auditing and quality control standards for public company
audits, and perform inspections of the quality controls at audit firms performing those audit.
Securities and Exchange Commission
The Securities and Exchanges Commission (SEC), an agency of the federal government,
assits in providing investors with reliable information upon which to make investment
decision.
AICPA
American institute of certified public accountants (AICPA) is the largest professional
association for CPAs in united states. Membership in AICPA is restricted to CPAs, but not all
members are practicing as independent auditors.
The AICPA has four major to sets standards and make rules that all members and other CPAs
must follow :
1. Auditing standards
The auditing standards boards (ASB) is accountable for releasing pronouncements on
auditing matters for all entities besides publicly traded companies.

2. Compilation and review standards

The accounting and review services committee is accountable for releasing
pronouncements of the CPAs responsibilities when a CPA is associated with financial
statement of privately owned companies that are not audited.
3. Other attestation standards

Statements on standards for attestation engagements provide a framework for the

development standards for specific types of attestation engagement.
4. Code of professional conduct
The AICPA professional ethics executive committee sets rules and ethical when CPAs
meet each other.
The AICPA performs many educational such as supports research that publishes some
journals and provide a considerable seminars for maintaining their licenses to practice and
stay current with knowledge in accounting ,auditing, attestation and aasurance service , etc.
The three main sets of auditing standards :
1) International standards of auditing (ISAs)
ISAs do not override a countrys regulations governing the audit of financial or other
information, as each countrys own regulations generally govern audit practices.
2) U.S. Generally Accepted Auditing Standards (GAAS)
GAAS are similar with ISAs but there are some differences. If an auditor in US is
auditing historical financial statements in accordance with ISAs, the auditor must
meet any ISA requirements that extend beyond GAAS.
3) PCAOB Auditing Standards
The PCAOB initially adopted existing auditing standards established by the ASB and
consider with international auditing standards when developing new standards.
Generally Accepted Auditing Standards
Generally accepted auditing standards fall into three categories :

General Standards.
Standards of Field Work.
Reporting Standards.

Generally standards.
1. The auditor must have adequate technical training and proficiency to perform the
audit.
2. The auditor must maintain independence in all matters relating to the audit.
3. The auditor must exercise due professional care in the performance of the audit
and the preparation of the report.
Standards of filed work.

1. The auditor must adequately plan the work.

2. The auditor must have understanding about process and procedures of audit.
Standards of reporting.
1. The auditor must state in the auditors report whether the financial statement are
presented in accordance with generally accepted accounting principles (GAAP).
2. The auditor must so state in the auditors report.
3. The auditor should clearly indicate the character of the auditors work, if any, and
the degree of responsibility the auditor is taking, in the auditors report.

Quality Control
Quality control for CPA firm comprises the methods (include organizational structures and
procedures of firm) used to ensure that the firm meets its professional responsibilities to
clients and others. Quality control is closely related to but distinc from GAAS. CPA firm
follows specific quality control procedures that to ensure that generally accepted auditing
standards are followed on every audit. Quality control are therefore established for the entire
CPA firm, whereas GAAS are applicable to individual engagements.
Quality control has some elements :
1.
2.
3.
4.
5.
6.

Leadership responsibilities fro quality within the firm

Relevant ethical requirements
Acceptance and continuation of clients and engagements
Human resources
Engagement performance
Monitoring

Public accounting firms must be enrolled in a AICPA approved practice-monitoring program

for members in tthe firm to be eligible for membership in the AICPA, that known as peer
review.
Audit practice and quality centers is an autonomous public policy organization affiliated with
the AICPA serving investors, public company auditors and the capital markets.