Chapter 2: The CPA Profession (PowerPoint). Exam Questions & Answers. Rated A+
Activities of CPA Firms - --CPA firms provide audit services as well as other attestation and assurance services.
-CPA firms also provide accounting and bookkeeping services, tax services, and management consulti...
Activities of CPA Firms - ✔✔--CPA firms provide audit services as well as other attestation and assurance
services.
-CPA firms also provide accounting and bookkeeping services, tax services, and management consulting
and risk advisory services.
-Although the Sarbanes-Oxley Act and the SEC restrict auditors from providing many consulting services
to public company audit clients, audit firms are not restricted from providing consulting to private
companies and public companies that are not audit clients.
Sarbanes-Oxley Act - ✔✔-Act—Established the Public Company Accounting Oversight Board (PCAOB)
PCAOB - ✔✔-Provides oversight for auditors of public companies including:
-Establishing auditing, attestation, and quality control standards for public company audits.
-Performing inspections of audit engagements and quality controls.
The Securities Exchange Commission (SEC) - ✔✔-A federal government agency that assists in providing
investors with reliable information upon which to make investing decisions.
The Securities Act of 1933 - ✔✔-Requires most companies planning to issue *new securities* to the
public to submit a registration statement to the SEC for approval.
, The Securities Exchange Act of 1934 - ✔✔-Provides additional protection for investors by requiring
public companies to file detailed annual reports with the commission.
The Securities Acts of 1933 and 1934 - ✔✔-Require financial statements and the opinion of an
independent public accountant as part of the registration statement and subsequent reports.
Several reports required by the SEC are of interest to auditors: - ✔✔--Form S-1
-Form 8-K
-Form 10-K
-Form 10-Q
Form S-1 - ✔✔-"S" forms must be completed prior to issuing new securities to the public
Form 8-K - ✔✔-annual report with detailed financial information, including audited financial statements
Form 10-K - ✔✔-annual report with detailed financial information, including audited financial
statements
Form 10-Q - ✔✔-quarterly report containing certain financial information and auditor reviews of
financial statements
American Institute of Certified Public Accountants (AICPA). - ✔✔-CPAs are licensed by the state in which
they practice, but significant influence is exerted by their professional organization
Membership is restricted to CPAs. Membership is voluntary, so not all CPAs are members, but it is the
*largest professional association* for CPAs in the United States.
The *AICPA* sets standards and rules that all members and other practicing CPAs must follow in four
major areas - ✔✔--Auditing standards
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