ACC M115 Lecture Notes - Lecture 2: Financial Accounting Standards Board, Governmental Accounting Standards Board, Tax Avoidance
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Document Summary
Certified public accountants (cpa) offer expert service to the general public through the services they perform. Auditing-auditors examine the financial statements of companies and express an opinion as to the compliance with generally accepted accounting. Taxation-tax specialists give tax advice, do tax planning, prepare tax returns, and represent clients before governmental agencies such as the irs. Certified management accountants (cma) work for a single company and focus on internal managerial issues. Private accountants are employees of individual companies, including controllers, accounting managers and members of top management. Not-for-profit accounting includes reporting and control for government units, foundations, hospitals, unions, educational organizations, and charities: generally accepted accounting principles (gaap) - u. s. accounting rule book. Two organizations are primarily responsible for establishing generally accepted accounting principles. The financial accounting standards board (fasb) is a private organization that establishes broad reporting guidelines of general applicability as well as specific accounting rules and principles.
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Related Questions
2-30 | 2–30. Multiple Choice Questions | |||||||
Select the best answer for each of the following items and give reasons for your choice. | ||||||||
A | a. Which of the following organizations can revoke the right of an individual to practice as a | |||||||
CPA? | ||||||||
(1) The Public Company Accounting Oversight Board. | ||||||||
(2) The American Institute of Certifi ed Public Accountants. | ||||||||
(3) The Securities and Exchange Commission. | ||||||||
(4) The applicable state board of accountancy. | ||||||||
B | b. The AICPA over time has played an important role in standards setting. Which of the following | |||||||
standards are currently established by the AICPA? | ||||||||
(1) Accounting standards applicable to nonpublic companies. | ||||||||
(2) Auditing standards applicable to audits of nonpublic companies. | ||||||||
(3) Quality control standards applicable to audits of public companies. | ||||||||
(4) Standards for reviews of the interim fi nancial information issued by public companies. | ||||||||
C | c. Which of the following does the FASB consider a source of nonauthoritative guidance for | |||||||
use when there is no authoritative guidance available? | ||||||||
(1) The FASB Codifi cation. | ||||||||
(2) FASB Concepts Statements. | ||||||||
(3) SEC Rules. | ||||||||
(4) SEC Interpretive Releases | ||||||||
D | d. Financial statement audits performed under PCAOB requirements are designed to provide | |||||||
which type(s) of assurance with respect to the detection of material misstatements due to | ||||||||
errors or fraud? | ||||||||
Reasonable | Absolute | |||||||
1 | Yes | Yes | ||||||
2 | Yes | No | ||||||
3 | No | Yes | ||||||
4 | No | No | ||||||
E | e. A basic objective of a CPA fi rm is to provide professional services that conform with professional | |||||||
standards. Reasonable assurance of achieving this basic objective is provided through: | ||||||||
(1) Compliance with generally accepted reporting standards. | ||||||||
(2) A system of quality control. | ||||||||
(3) A system of peer review. | ||||||||
(4) Continuing professional education. | ||||||||
F | f. Which of the following is not explicitly included in a standard report for a nonpublic | |||||||
company? | ||||||||
(1) The CPA’s opinion that the fi nancial statements comply with generally accepted | ||||||||
accounting principles. | ||||||||
(2) That generally accepted auditing standards were followed during the audit. | ||||||||
(3) That internal control of the client was satisfactory. | ||||||||
(4) An identifi cation of the fi nancial statements audited. | ||||||||
G | g. The general group of the 10 PCAOB Auditing Standards requires that: | |||||||
(1) The auditors maintain an independent mental attitude. | ||||||||
(2) The audit be conducted in conformity with generally accepted accounting | ||||||||
principles. | ||||||||
(3) Assistants, if any, be properly supervised. | ||||||||
(4) The auditors obtain an understanding of internal control. | ||||||||
H | h. Which AICPA quality control standard would most likely be satisfi ed when a CPA fi rm | |||||||
maintains records indicating which partners or employees of the fi rm were previously | ||||||||
employed by the CPA fi rm’s clients? | ||||||||
(1) Professional relationship. | ||||||||
(2) Engagement performance. | ||||||||
(3) Relevant ethical requirements. | ||||||||
(4) Monitoring. | ||||||||
I | i. An audit provides reasonable assurance of detecting material: | |||||||
Fraudulent Financial | Misappropriation | |||||||
Reporting | of Assets | |||||||
1 | Yes | Yes | ||||||
2 | Yes | No | ||||||
3 | No | Yes | ||||||
4 | No | No | ||||||
J | j. Which of the following is not included in an integrated audit report on the fi nancial statements | |||||||
of a public company? | ||||||||
(1) The report states that the audit was performed in accordance with AICPA standards. | ||||||||
(2) The report indicates that the fi nancial statements are the responsibility of management. | ||||||||
(3) The report indicates that the auditors have also audited the effectiveness of the company’s | ||||||||
internal control. | ||||||||
(4) The report is signed in the name of the CPA fi rm. | ||||||||
K | k. Audit fi rms that are subject to inspections by the PCAOB staff include: | |||||||
(1) All audit fi rms. | ||||||||
(2) Audit fi rms that are registered with the SEC. | ||||||||
(3) Audit fi rms that are registered with the PCAOB. | ||||||||
(4) Audit fi rms that are registered with a state board of accountancy. | ||||||||
L | l. Which of the following is not a difference noted when comparing the AICPA audit report | |||||||
to the international audit report? | ||||||||
(1) The international audit report may use the phrase “true and fair view.” | ||||||||
(2) The international audit report may be signed using the personal name of the audit | ||||||||
partner, the audit fi rm, or both. | ||||||||
(3) The international audit report requires inclusion of the city of the CPA fi rm offi ce that | ||||||||
performed the audit. | ||||||||
(4) The international audit report includes an opinion on internal control. |