Arens14e_ch02_ppt_update

2-1©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/BeasleyTheCPAProfessionChapter2©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-2LearningObjective1DescribethenatureofCPAfirms,whattheydo,andtheirstructure.©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-3CertifiedPublicAccountingFirmsThelegalrighttoperformauditsisgrantedtoCPAfirmsbyregulationineachstate.CPAfirmsalsoprovidemanyotherservicestotheirclients,suchastaxandadvisoryservices.CPAfirmscontinuetodevelopnewproductsandservices—suchasfinancialplanning,businessvaluation,forensicaccounting,andinformationtechnologyadvisoryservices.©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-4CertifiedPublicAccountingFirmsBigFourinternationalfirmsNationalfirmsRegionalandlargelocalfirmsSmalllocalfirms©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-5CertifiedPublicAccountingFirmsThefourlargestCPAfirmsintheUnitedStatesarecalledthe“BigFour”internationalCPAfirms.ThesefourfirmshaveofficesthroughouttheUnitedStatesandinmanycitiesthroughouttheworld.©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-6CertifiedPublicAccountingFirmsTABLE2-1onpage26shouldbeinsertedintothisslide.©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-7ManagementconsultingservicesTaxservicesAccountingandbookkeepingservicesActivitiesofCPAFirms©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-8StructureofCPAFirmsThreemainfactorsinfluencetheorganizationalstructureofallfirms:1.Theneedforindependencefromclients.2.Theimportanceofastructuretoencouragecompetence.3.Theincreasedlitigationriskfacedbyauditors.©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-9OrganizationalStructureProprietorshipGeneralPartnershipGeneralCorporationProfessionalCorporationLimitedLiabilityCompanyLimitedLiabilityPartnership©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-10StaffAssistantsHierarchyofaTypicalCPAFirmSeniorsandIn-chargeAuditorsManagersPartnersAverageExperience10+years5-102-50-2©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-11LearningObjective2UnderstandtheroleofthePublicCompanyAccountingOversightBoardandtheeffectsoftheSarbanes-OxleyActontheCPAprofession.©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-12ThisActisconsideredbymanyobserverstobethemostimportantlegislationaffectingtheauditingprofessionsincethe1930s.Sarbanes-OxleyActTheprovisionsoftheActapplytopubliclyheldcompaniesandtheirauditfirms.©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-13Sarbanes-OxleyActSECPCAOB(PublicCompanyAccountingOversightBoard)©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-14LearningObjective3SummarizetheroleoftheSecuritiesandExchangeCommissioninaccountingandauditing.©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-15ThepurposeistoassistinprovidinginvestorswithreliableinformationuponwhichtomakeinvestmentdecisionsTheSecuritiesActof1933TheSecuritiesExchangeActof1934SecuritiesandExchangeCommission©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-16SecuritiesandExchangeCommissionFormS-1Form8-KForm10-KForm10-Q©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-17LearningObjective4DescribethekeyfunctionsperformedbytheAICPA.©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-18PerformsthefollowingservicesforCPAs:SetsprofessionalrequirementsConductsresearchPublishesmaterialsrelatedtoservicesperformedAICPAEmpoweredtosetstandards(guidelines)andrules©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-19EstablishingStandardsandRules1.Auditingstandards2.Compilationandreviewstandards3.Otherattestationstandards4.CodeofProfessionalConduct©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-20OtherAICPAFunctionsResearchandGrantsTheCPAexaminationProvidesseminarsandcontinuingeducationPublishesavarietyofmaterials©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-21LearningObjective5UnderstandtheroleofinternationalauditingstandardsandtheirrelationtoU.S.auditingstandards©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-22GAASandStandardsofPerformanceStatementsonAuditingStandardsClassificationofStatementsonAuditingStandards©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-23InternationalStandardsonAuditingIFACistheworldwideorganizationfortheaccountancyprofession.TheIAASBworkstoimprovetheuniformityofauditingpracticesandrelatedservicesthroughouttheworld.©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-24InternationalStandardsonAuditing©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-25LearningObjective6UseU.S.auditingstandardsasabasisforfurtherstudy©2013PrenticeHallBusinessPublishing,Auditing15/e,Arens/Elder/Beasley2-26GAASThisframeneedstocontainTABLE2-3onp