Anda di halaman 1dari 36

The CPA Profession

Chapter 2
http://downloadslide.blogspot.com

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2-1


Learning Objective 1

Describe the nature of CPA firms,


what they do, and their structure.

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2-2


Certified Public Accounting
Firms
The legal right to perform audits is granted
to CPA firms by each state.

CPA firms also provide many other services to


their clients, such as tax and consulting services.

CPAs continue to develop new products and


services—such as financial planning, business
valuation and information technology.
©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2-3
Certified Public Accounting
Firms
 Big Four international firms

 National firms

 Regional and large local firms

 Small local firms

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 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.

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2-5


Certified Public Accounting
Firms

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2-6


Activities of CPA Firms

 Accounting and bookkeeping services

 Tax services

 Management consulting services

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2-7


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.

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2-8


Organizational Structure

 Proprietorship
 Professional corporation
 General partnership
 Limited liability company
 General corporation
 Limited liability partnership

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2-9


Hierarchy of a Typical
CPA Firm
Breadth of Experience

Partners 10+ years

Managers 5-10

Seniors and
In-charge Auditors 2-5

Staff Assistants 0-2

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 10


Learning Objective 2

Understand the impact of the PCAOB and


Sarbanes-Oxley on the CPA profession.

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 11


Sarbanes-Oxley Act

This Act is considered by many observers to


be the most important legislation affecting
the auditing profession since the 1930s.

The provisions of the Act apply to publicly


held companies and their audit firms.

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 12


Sarbanes-Oxley Act

SEC

PCAOB
(Public Company
Accounting
Oversight Board)

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 13


Learning Objective 3

Summarize the role of the Securities and


Exchange Commission in accounting and
auditing.

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 14


Securities and Exchange
Commission
The purpose is to assist in providing investors
with reliable information upon which to make
investment decisions
The Securities Act of 1933
The Securities Exchange Act of 1934

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 15


Securities and Exchange
Commission
 Form S-1
 Form 8-K
 Form 10-K
 Form 10-Q

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 16


Learning Objective 4

Describe the key functions performed by the


AICPA.

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 17


AICPA

Performs the following services for CPAs:


 Sets professional requirements
 Conducts research
 Publishes materials related to services
performed

Empowered to set standards (guidelines)


and rules

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 18


Establishing Standards
and Rules
1. Auditing standards

2. Compilation and review standards

3. Other attestation standards

4. Code of Professional Conduct

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 19


Other AICPA Functions

The CPA examination

Research and Grants

Publishes a variety of materials

Provides seminars and


continuing education
©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 20
Learning Objective 5

Understand the role of international auditing


standards and their relation to U.S. auditing
standards

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 21


Statements on Auditing
Standards
 Classification of Statements on Auditing Standards

 GAAS and Standards of Performance

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 22


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.

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 23


International Standards
on Auditing

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 24


Learning Objective 6

Use U.S. auditing standards as a basis for


further study

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 25


GAAS

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 26


Generally Accepted Auditing
Standards – United States
General Standards

1. Adequate training and proficiency

2. Independence in mental attitude

3. Due professional care

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 27


Generally Accepted Auditing
Standards – United States

Standards of Field Work

1. Proper planning and supervision

2. Understanding of the entity

3. Sufficient appropriate evidence

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 28


Generally Accepted Auditing
Standards – United States
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

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 29


Relationship Between GAAS and
PCAOB Auditing Standards

PCAOB GAAS

Public Private
company company
audits audits

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 30


Statements on Auditing
Standards
The 10 generally accepted auditing standards
are too general to provide meaningful guidance.

SAS interpret the 10 generally accepted


auditing standards and are the most
authoritative references available to auditors.

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 31


Learning Objective 7

Identify quality control standards and


practices within the accounting profession.

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 32


Elements of Quality Control

 Independence, integrity, and objectivity

 Personnel management

 Acceptance and continuation of clients


and engagements

 Engagement performance

 Monitoring

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 33


Relationships

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 34


CPAs Encouraged to Conduct
Themselves at a High Level
GAAS and
interpretations Continuing
CPA
education
examination
requirements

Quality Conduct of Legal


control liability
CPA firm
personnel
Peer AICPA practice
review sections

PCAOB Code of
and SEC Professional
Conduct
©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 35
End of Chapter 2

©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 2 - 36