ACC550 Exam 1 Questions with Correct Answers Graded A+ (Latest Update 2024)
Widely Held Perception of Accounting - Answers "Bean counting." Public perception is narrow. They perceive accting as a mechanical, black-or-white, right-or-wrong process.
In reality, accting plays a critical role is su...
Widely Held Perception of Accounting - Answers "Bean counting." Public perception is narrow. They
perceive accting as a mechanical, black-or-white, right-or-wrong process.
In reality, accting plays a critical role is supporting a prosperous society. This is represented by the
pathways vision model. Says that economic activity goes into gray areas that lead to accting judgments
(critical thinking) to provide useful info that leads to good decisions and a prosperous society. Good
decisions have consequences for accting judgments and economic activity. Arrows can be reversed to
show that preparers provide info to users.
Often it is said that accting is the language of business. The public's view of accting following black and
white rules is essential but really only the grammar! Accting both affects and is affected by the bus
reality and culture.
A Career in Auditing - Answers Auditing allows you to work in many fields. Auditor characteristics:
1. Enterprising: career in auditing means always learning, adapting, and evolving.
2. Inquisitive: auditors don't accept things at face value. Probe and verify.
3. Dedicated: auditors play a critical role in fin mkts, economy, and communities. Provide investors, cos,
and others w/ assessmt abt financial health of businesses/orgs.
4. Confident
5 Key Players Involved in Protecting the Interests of Investors (CAQ Video) - Answers For system of
investor protection.
1. CFO
-responsible for fin activities/controls, preps F/S. Needs CEO/BOD approval.
,2. Audit committee chair
-oversees co's fin reporting. Hires and supervises external auditor.
3. Internal auditor
-identifies risk, tests for error/fraud, recommends improvemts.
-SEC protects investors and regulates public cos and mkts
-PCAOB regulates public co auditors and sets audit stds
Central Theme of Chairman Doty Speech "PCAOB's Role in Enhancing Public Trust and Integrity in
Audits" - Answers The PCAOB recogs the importance of the public perception of the audit profession to
create trust in the fin mkts. They believe it's important for the PCAOB to interact w/ public cos and their
auditors to facilitate the audit process and ensure stds are adhered to.
Considers how the PCAOB helps provide the profession the solid footing needed to maintain/grow
public trust.
-investor protection enhanced by indep process promoting audit integrity.
-PCAOB is mechanism for managing process and making a diff.
-constructive relationship w/ first helps economy/investors, provides clarity on essential stds, helps cos
stay on track, and contrs to capital formation.
-PCAOB can help profession achieve full potential in cap mkts, must keep innovating.
Main Findings from Forbes Insights "A Focus on Change" - Answers It is vital for the profession to keep
up to date w/ changing tech and regs. Many young people believe auditors S/B doing more to provide
assurance in a broader variety of areas. Profession is constantly changing, it's important to keep up.
,Auditors need to keep up w/ new tech and leverage it so they can deliver deeper insights based on new
capabilities and the increased level of data available.
Biggest challenges to enhancing the role of audit/auditor:
-reg environment
-culture of audit profession
-career tracks in audit
-budgets
-data security
-auditor independence
The audit profession should evolve by:
-being viewed as equally attractive in status/pay as private equity/investmt banking
-perceived as profession not job
-career tracks more rewarding
-more proactive abt providing more insights/value/quality in audits
Future audit skill sets:
-understanding data analytics
-investigative financial skills
-experience in client industry
-critical thinking/judgment
-comm skills
How is Information Relevant to Auditing? - Answers The financial statements that are audited are
comprised of information. The audit report is also info itself. Reduces info asymmetries and info risk.
What does it mean to be an audit professional? - Answers To be ethical, inquisitive, and professionally
skeptical.
, Expectations are to protect the public interest and be knowledgeable/competent.
The role has evolved over time as standards have become more stringent and the importance of the
auditor has gained greater recognition.
Audit Quality - Answers Involves consistent audits that increase the degree of confidence of F/S users by
gathering sufficient/approp evidence to render an opinion on the F/S.
Measured in terms of no/ratio of staff, overtime hours worked, no of restmts, etc.
Audit failure is when an audit doesn't find things it should (MM). Failure to plan/perform approp
procedures to provide reasonable assurance. Measured by restmts, frauds, etc.
Current Restatement Trends - Answers 4.02 restmts render a company's F/S overall unrealiable. More
serious.
4.02 restmts declining since 2005, same w/ non 4.02.
Most restmts come from expense category.
Characteristics of Companies who Restate Financial Statements - Answers Tend to be smaller and
typically unprofitable. 4.02 restmts in particular common among smaller cos.
Foreign restmt cos acct for about 15%. May be larger.
Restmt activity/severity somewhat consistent across industries.
Current Environment for Providing Assurance Services - Answers Lots of litigation!
Assurance v. Nonassurance Services - Answers Assurance= independent professional services that
improve the quality of info, or its context, for decision makers. Implicit in this is that people use these to
make decisions (assurance services improve the decision process!). Attestation provides the highest
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller TutorJosh. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.99. You're not tied to anything after your purchase.
