...using an ethical framework, the AICPA code of rules and interpretation on independence and it’s importance and the requirements of other rules under the AICPA. We found that in some cases the rules of conduct is applied accurately and in other situations violation of code of conduct, rules of conduct is existed. Ethics in professional accountancy are of utmost importance. Now as the business and financial world is adopting international accounting and auditing standards, it is becoming all the more necessary to adhere to certain Code of Ethics prescribed by international and national accountancy bodies. Accountants practicing in all segments of accounting need to understand both the relevant ethical standards of accounting and the mechanisms for enforcing these ethical standards. Further, accountants need to have an understanding of how to apply these standards in practical situations. In 1988, the AICPA restructured the profession's Code of Conduct. The changes resulted in a code with a more positive orientation. 1.0 Introduction The most well-known attest engagement is the CPA's auditing of financial statements prepared by a company's management. In this situation the CPA adds credibility to the financial statements by issuing an independent auditor's report stating that the CPA believes the financial statements have...
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...Chapter 4 Professional Ethics ← Review Questions 4-1 The six core ethical values described by the Josephson Institute are: 1. Trustworthiness 4. Fairness 2. Respect 5. Caring 3. Responsibility 6. Citizenship There are many other potential sources of ethical values, including laws and regulations, church doctrines, codes of professional ethics, and individual organizations’ codes of conduct. 4-2 An ethical dilemma is a situation that a person faces in which a decision must be made about the appropriate behavior. There are many possible ethical dilemmas that one can face, such as finding a wallet containing money, or dealing with a supervisor who asks you to work hours without recording them. An ethical dilemma can be resolved using the six-step approach outlined on p. 78 of the text. The six steps are: 1. Obtain the relevant facts. 2. Identify the ethical issues from the facts. 3. Determine who is affected by the outcome of the dilemma and how each person or group is affected. 4. Identify the alternatives available to the person who must resolve the dilemma. 5. Identify the likely consequence of each alternative. 6. Decide the appropriate action. 4-3 There is a special need for ethical behavior by professionals to maintain public confidence in the profession, and in the services provided by members of that profession. The ethical requirements for CPAs are similar to the ethical requirements...
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...C32 & E8 C39) + OPGAVE E7 DQP 29 & 31 Case 6-32 a. A review provides limited assurance about the fair presentation of financial statements in accordance with generally accepted accounting principles but far less assurance than an audit. Presumably, the bank decided that the assurances provided by a review were needed before a loan could be approved, but an audit was not necessary. A review includes a CPA firm performing analytical procedures, making inquiries about the fair presentation of the statements, and examining the information for reasonableness. Because of a CPA firm’s expertise in accounting, the accountant from the CPA firm can often identify incorrect presentations in the financial statements that have been overlooked by the accountant of the company. Reviews are common for smaller privately-held companies with relatively small amounts of debt. The bank probably did not require an audit because the additional cost of an audit was greater than the benefit the bank perceived. In many cases, the decision as to whether to have a review or an audit is negotiated between the company seeking a loan and the bank loan officer. Both the company and the bank have options in negotiating such things as the amount of the loan, the rate of interest, and whether to require an audit or a review. The bank can reject the loan request and the company can go to other banks that want to make loans. Frequently, banks have a list of CPA firms in which they have considerable confidence...
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...C32 & E8 C39) + OPGAVE E7 DQP 29 & 31 Case 6-32 a. A review provides limited assurance about the fair presentation of financial statements in accordance with generally accepted accounting principles but far less assurance than an audit. Presumably, the bank decided that the assurances provided by a review were needed before a loan could be approved, but an audit was not necessary. A review includes a CPA firm performing analytical procedures, making inquiries about the fair presentation of the statements, and examining the information for reasonableness. Because of a CPA firm’s expertise in accounting, the accountant from the CPA firm can often identify incorrect presentations in the financial statements that have been overlooked by the accountant of the company. Reviews are common for smaller privately-held companies with relatively small amounts of debt. The bank probably did not require an audit because the additional cost of an audit was greater than the benefit the bank perceived. In many cases, the decision as to whether to have a review or an audit is negotiated between the company seeking a loan and the bank loan officer. Both the company and the bank have options in negotiating such things as the amount of the loan, the rate of interest, and whether to require an audit or a review. The bank can reject the loan request and the company can go to other banks that want to make loans. Frequently, banks have a list of CPA firms in which they have considerable confidence...
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...McCoy College of Business Administration TEXAS STATE UNIVERSITY Department of Marketing Consumer Behavior: MKT 3350 |Instructor |Kathryn Davis, Ph.D |Phone: 512-245-4378 | | |Office: McCoy 417 |Email: ksd27@txstate.edu | |Office hours |MWF: 8:00 AM – 9:00 AM and Wed: 1:00 PM – 3:00 PM and by appointment as needed | |Course Description |Students examine the psychological and sociological factors that influence consumption and decision-making. During the | | |course, students learn the practical implications of consumer attitudes and behavior for marketing activities. This | | |course is part of Texas State’s Service-Learning Initiative. | |Course Materials |Consumer Behavior: Building Marketing Strategy, 12/e (note: 11/e is also accepted) | | |Hawkins, Mothersbaugh, Best | | |ISBN 13: 978-0-07-353004-8 ...
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...financial statements and any major changes proposed by the Financial Accounting Standards Board (“FASB”). Nonetheless, during the audit of Smackey, Keller CPA is subject the six generally accepted auditing standards established by the Auditing Standards Board (“ASB”) under the Accounting Institute of Certified Public Accountants (“AICPA”) which includes the ten standards of auditing. Q2: Discuss the essential activities involved in the initial planning of an audit. How do these all specifically to the Smackey Dog Food client? Solution: Audit planning includes eight major parts, of which the first seven are intended to help Keller CPA to establish the eighth, which is to develop an overall audit plan and audit program. They are as follows; Acceptance of the client and perform initial audit planning – Keller has already agreed to accept this client, although they should still try to assess Smackey with regards to other audit client of theirs. They should go through the usual client acceptance procedure which Keller CPA has in place and the decision to take on the audit should have been made before any substantial costs have been incurred. This decision should not be taken lightly and Keller CPA should ensure that they feel the client is appropriate to take on. The initial planning procedures that Keller CPA will go through included...
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...CHAPTER 1 The Role of the Public Accountant in the American Economy Review Questions 1–1 The “crisis of credibility” largely arose from the number of companies that restated their previously issued financial statements as a result of accounting irregularities and fraud. Especially responsible were the very visible Enron and WorldCom fraud cases. Both companies filed for bankruptcy and constituted the largest companies in American history to do so. The extent of the accounting irregularities and fraud being investigated and disclosed brought into question the effectiveness of financial statement audits. In addition, the criminal conviction of Arthur Andersen, LLP, one of the then Big 5 accounting firms, on charges of destroying documents related to the Enron case brought into question the ethical standards of the profession. 1–2 Assurance services are professional services that enhance the quality of information, or its context, for decision making. The two types are: (a) those that increase the reliability of information and (b) those that involve putting information in a form or context that facilitates decision making. 1–3 A financial statement audit is, by far, the most common type of attest engagement. The overall assertion, made by management, most frequently is that the financial statements follow generally accepted accounting principles. 1–4 A large corporation with securities listed on a stock exchange is required by the rules of the stock...
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...Jessica Turner has a master's degree in accounting and an undergrad degree in business. She established Turner Test Prep, a CPA exam review center, after being rejected by the Big Six accounting firms. She decided to bring the company into existence when she was searching for other employment options, and also because she had experience in the field when she worked at a review center's business office before taking up her master's degree. There, she inadvertently started teaching the math portion of the reviews, and received training in teaching. After passing the CPA exam on the first try herself, she decided that she would like to help those who want to take the CPA exam pass on their first try as well. And so she developed a business and marketing plan, convened with various professors to create a comprehensive curriculum, and opened her firm's doors. Instead of the normal review route of using books, software, or online courses, she provided a full service 6 week, 3-6 hours a day review regimen for her clients that include one hour live lectures from various professors, discussions about test taking skills and organizational skills to digest information faster, provided audiotapes that the clients can listen to at home or in their cars, executed timed mini tests as well as practice essay questions, one on one bi weekly client meeting to see how they've progressed and for them to ask questions, and a direct line to her via e mail for any queries the clients may have. She Even...
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...AUDITING AND THE PUBLIC ACCOUNTING PROFESSION AUDITING AND ASSURANCE SERVICES DEFINED Auditing plays a vital role in business, goverment, and our economy. As a vocation, auditing offers the opportunity for challenging and rewarding careers in public accounting, industry and goverment. Many auditors develop a client based with a concentration in one or more key industries. As a result of serving many client in similar industries, few individuals understand the key competitiveness factors for a business better than auditor. Individuals choosing an auditing in a public accounting firm have the opportunity to progress from a starting position of staff assisstant to senior auditor, to manager and then to partner. Regardless of their career path, most auditors are recognized for their expertise in evaluating organizational performance. AUDITING DEFINED The term auditing is used to describe a broad range of activities in our society. The Report of the Committee on Basic Auditing Concepts of the American Accounting Association defines auditing as : “a systematic process of objectively obtaining and evaluating evidence regarding assertion about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.” Several attributes of auditing contained in this definition merit special comment: 1. A systematic process connotes a logical, structured, and organized...
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...rules regarding nonaudit services? a. CPA Dakota Tidrick is a staff assistant II auditor on the Section Co. audit. Upon the audit completion date in January, Tidrick drafted the balance sheet, income statement, comprehensive income statement, statement of cash flows and notes for review by the engagement partner before the auditors’ report was finalized. b. CPA Mel Carnes is a manager in the firm’s consulting division. He spent 100 hours with the Section Co. audit client on an accounts payable information system study which involved selecting the preferred software and supervision Section Co.’s employees in startup operations. c. CPA Nicky Webber working in the public accounting firm’s asset valuation consulting division located in Chicago, prepared for Section Co an appraisal for the fair value of assets purchased in Section’s merger with the Group Co. These valuations were then audited by the engagement team located in Dallas in connection with the purchase accounting for the merger. B.52 Other Responsibilities and Practice Cases (refer to Rule 301 and 502 of the AICPA professional code, pages 610-611 and 613-614 – There is no need to read the entire Module B). Read the following cases. For each, state whether the action or situation shows a violation or potential violation of the AICPA Code of Professional Conduct; if so, explain why an cite the relevant role or interpretation. a. CPA Ron Stout completed a review of the unaudited financial statements of Wolfe...
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...Manila Efficient and Effective Ways on How to Pass the CPA Licensure Examination In Partial Fulfillment of the Requirements in English Communication 2 Presented by: Dela Cruz, Mark Kelvin M. Sumbo, Sherelyn T. Presented to: Prof. Mariedith B. Garcia March 17, 2014 Chapter 1 Introduction CPA board exam is an examination administered to graduates of Accountancy course who wish to become a Certified Public Accountant. Certified Public Accountant is a statutory title given to the qualified accountants and those who have met additional education and experience requirements for certification as CPA. They are also the one who has an adept knowledge in providing public attestation and opinions on financial statements. Every accountant who finished their bachelor’s degree must take the CPA board exam if they want to bring up their profession in another level. The CPA examination is designed to test the entry-level knowledge and skills necessary to protect the public interest. This examination is one of many screening devices to assure the competence of those licensed to perform the attest function and to render professional accounting services. Passing the CPA examination or being a Certified Public Accountant means you are in the forefront of your profession. You are capable enough to render professional service in any of the major fields of work in a business like an auditor, tax consultant, controller and the like. A CPA serves many clients as an objective outsider or in an advisory...
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...CPA Report This memo has been prepared in response to Mr. Butterworth’s inquiry on behalf of the independent audit team reviewing XYZ Corporation, a wholly owned subsidiary of ABC Company. Specifically this memo addressed the methodology used to determine deferred taxes, the procedure for reporting accounting changes and error corrections, and the rationale behind establishing XYZ Corporation as a subsidiary. Also included in this memo, as requested, is a discussion of the responsibilities of a CPA, and the differences between a financial review report and a financial audit report. Methodology used to Determine Deferred Taxes Deferred taxes can be one of two different types of deferred tax entries, permanent or temporary. Permanent deferred tax liabilities are income generating events that do not incur tax liabilities, and thus a permanent adjustment to the financial reports is made to adjust for the discrepancy between income for tax purposes, and income for reporting purposes. A temporary deferred tax liability is a liability where taxable income is different from reportable income, but at some future point, the taxable income will reconcile to the reportable income (Kieso, Weygandt, & Warfield, 2007). Temporary deferred tax liabilities can result in either an excessive or insufficient amount of tax withheld in the current period, which will be reconciled at a later period. An example is the depreciation of a capital asset. If the book depreciation of a...
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...Chapter 2 The CPA Profession Review Questions The four major services that CPAs provide are: 1. Audit and assurance services Assurance services are independent professional services that improve the quality of information for decision makers. Assurance services include attestation services, which are any services in which the CPA firm issues a report that expresses a conclusion about the reliability of an assertion that is the responsibility of another party. The four categories of attestation services are audits of historical financial statements, attestation on the effectiveness of internal control over financial reporting, reviews of historical financial statements, and other attestation services. Accounting and bookkeeping services Accounting services involve preparing the client's financial statements from the client's records. Bookkeeping services include the preparation of the client's journals and ledgers as well as financial statements. Tax services Tax services include preparation of corporate, individual, and estate returns as well as tax planning assistance. Management consulting services These services range from suggestions to improve the client's accounting system to computer installations. 2-1 2. 3. 4. 2-2 The major characteristics of CPA firms that permit them to fulfill their social function competently and independently are: 1. Organizational form A CPA firm exists as a separate entity to avoid an employer-employee relationship with its clients...
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...CPA Report ACC 545/Financial Reporting November 21, 2011 Deborah Asbury Introduction Certified public accountants (CPAs) have many professional responsibilities whether completing a review or an audit of the client’s financials. CPAs can also ask the opinion of other CPAs during the course of completing work for clients. The firm has been asked to provide information on the correct way to calculate deferred taxes, the correct way to report accounting changes and error corrections, and why a company would want to establish a subsidiary as a corporation. CPAs Professional Responsibilities According to the American Institute of CPAs (AICPA) CPAs not only have responsibilities to those who use their services but they must also cooperate with other CPAs to improve the accounting principles, maintain the public’s confidence, and carry out the responsibility of self-governance (www.aicpa.org, 2011). All CPAs must exercise a level of integrity showing they are exercising due care with all responsibilities. CPAs must practice objectivity by being impartial, honest, and free of conflicts of interest. A CPA must also make certain that any relationship they have with clients would not impair the objectivity while completing attestation services, therefore maintaining independence (www.aicpa.org, 2011). Review versus Audit A review and audit both look at the data provided in a company’s financials. The main difference between the two is how in depth the information...
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...created by a specific title or position within an organization. The second form of power is personal power, and encompasses the remaining two bases of power. The first base of power covered under personal power is expert power. Having skills or knowledge that someone else does not is expert power. The last base of power is referent power. “Referent power develops out of admiration of another and a desire to be like that person,” (Robbins & Judge, 2007, p. 472). All individuals possess a degree of personal power. As mentioned previously, all five bases of power are represented within the given scenario. Coercive power, the first base of power, is presented by the marketing manager. He constantly reminds his employees about the yearly review to “encourage” them to work harder and later. His constant reminder is not encouragement but more of a threat. He is implying by them not putting in extra hours they will not receive a good evaluation. This is a fear tactic to have the manager get what he wants from his employees. Employees should be able to...
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