Cipcommunity

Auditing and Assurance Services

Auditing and Assurance Services

CHAPTER 1 Auditing and Assurance Services LEARNING OBJECTIVES | |Exercises and | | | |Problems | | |Review Checkpoints | | | | | | |Define information risk and explain how auditing and assurance services play|1, 2, 3 |48, 51 | |a role in reducing this business risk. | | | | | | |Define and contrast accounting, auditing, and assurance services. |4, 5, 6, 7, 8 |47 | | | | | |Describe and define the management assertions embodied in financial |9, 10, 11 |49, 53 | |statements, and why auditors use them as a focal point of the audit. | | | | | | |Explain some characteristics of professional skepticism. |12 | | | | | | |Describe the organization of public accounting firms and identify the |13, 14 |56 | |various services they offer. | | | | | | | |Describe the audits and auditors in governmental, internal, and operational |15, 16, 17, 18 |50, 52, 55 | |auditing. | | | | | | |List and explain the requirements for becoming a certified information |19, 20, 21, 22 |54 | |professional. | | | SOLUTIONS FOR REVIEW CHECKPOINTS 1. 1Business risk is the collective risk faced by a company that engages in business. It encompasses all threats to and organization’s goals and objectives. It includes the chance that customers will buy from competitors, that product lines will become obsolete, that taxes will increase, that government contracts will be lost, or that employees will go on strike. 1. 2The conditions of complexity, remoteness, time-sensitivity, and consequences increase demands by outside users for relevant, reliable (useful) information.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

They cannot produce the information for themselves because of these conditions. Company managers and accountants produce the information. 1. 3Information risk, in contrast to business risk, is the risk (probability) that the information (mainly financial) disseminated by a company will be materially false or misleading. This risk creates the demand for objective outsiders to provide assurance to decision makers. 1. 4Students can refer to the AAA and AICPA definitions in Chapter 1. Some instructors may want to extend the consideration of definitions to include the internal and governmental definitions (located in Module D). In response to “What do auditors do? ,” students can refer to Exhibit 1. and respond in terms of: (1) obtaining and evaluating evidence about assertions management makes about economic actions and events, (2) ascertaining the degree of correspondence between the assertions and the appropriate reporting framework, and (3) providing an audit report (opinion). Students can also respond more generally in terms of “lending credibility” to financial statements presented by management (attestation). 1. 5An attest engagement is: “An engagement in which a practitioner is engaged to issue or does issue a written communication that expresses a conclusion about the reliability of a written assertion that is the responsibility of another party. ” To attest means to lend credibility or to vouch for the truth or accuracy of the statements that one party makes to another.

The attest function is a term often applied to the activities of independent CPAs when acting as auditors of financial statements. 1. 6Assurance engagements are independent professional services that improve the quality of information, or its context, for decision makers. Since information (financial statements) are prepared by managers of an entity who have authority and responsibility for financial success or failure, an outsider may be skeptical that the information is objective, free from bias, fully informative, and free from material error, intentional or inadvertent. The services of an independent-CPA auditor helps resolve those doubts because the auditor’s success depends upon his independent, objective, and competent assessment of the information (e. g. the conformity of the financial statements with the appropriate reporting framework). The CPA’s role is to lend credibility to the information; hence the outsider will likely seek his independent opinion. 1. 7CPAs serve as independent intermediaries who lend credibility to information. Hence, assurance services are natural extensions of the well-regarded audit and attest services. CPAs can use their expertise in internal control and measurement methods. Assurance services are natural extensions of attestation services, which earlier evolved from financial statement audit services. Attestation and audit services are highly structured and intended to be useful for large groups of decision makers (e. g. , investors, lenders).

On the other hand, assurance services are more customized and intended to be useful to smaller, targeted groups of decision makers. In this sense, assurance services bear resemblance to consulting services. 1. 8There are four major elements of the broad definition of assurance services: Independence. CPAs want to preserve their attestation and audit reputations and competitive advantages by preserving integrity and objectivity when performing assurance services. Professional Services. Virtually all work performed by CPAs is defined as “professional services” as long as it involves some element of judgment based in education and experience. Improving the Quality of Information or its Context. The emphasis is on “information”– CPAs’ traditional stock in trade.

CPAs can enhance quality by assuring users about the reliability and relevance of information, and these two features are closely related to the familiar credibility-lending products of attestation and audit services. “Context” is relevance in a different light. For assurance services, improving the context of information refers to improving its usefulness when targeted to particular decision makers in the surroundings of particular decision problems. For Decision Makers. They are the “consumers” for assurance services, and they personify the consumer focus of new and different professional work. They may or may not be the “client” that pays the fee, and they may or may not be one of the parties to an assertion or other information. The decision makers are the beneficiaries of the assurance services. 1. Accountants record, classify, and summarize (report) a company’s assets, liabilities, capital, revenue, and expense in financial statements. Auditors gather evidence related to the assertions management makes in financial statements and render a report. Accountants produce the financial statements; auditors audit them. 1. 10There are three major classifications of ASB assertions with several assertions in each classification: Transaction Assertions: Occurrence assertion: The objective is to establish with evidence that transactions giving rise to assets, liabilities, sales and expenses actually occurred. Key questions include “Did the recorded sales transactions really occur? ”

Completeness and cutoff assertion: The objective is to establish with evidence that all transactions of the period are in the financial statements and all transactions that properly belong in the preceding or following accounting periods are excluded. Completeness also refers to proper inclusion in financial statements of all assets, liabilities, revenue, expense and related disclosures. Key questions related to completeness include: “Are the financial statements (including footnotes) complete? ” and “Were all the transactions recorded in the right period? ” Accuracy assertion: The objective is to establish with evidence that transactions have been recorded at the correct amount. Key questions relate to “where the expenses recorded at the proper dollar amount? ” Classification assertion: The objective is to establish with evidence that transactions were posted to the correct accounts.

Key questions relate to “was this expense recorded in the appropriate account/” Balance Assertions: Existence assertion: The objective is to establish with evidence that balance represents assets, liabilities, sales, and expenses that are real and in existence at the balance sheet date. Key questions relate to “does this number truly represent assets that existed at the balance sheet date? ” Rights and obligations assertion: The objectives related to rights and obligations are to establish with evidence that assets are owned (or rights such as capitalized leases are shown) and liabilities are owed. Key questions related to this assertion include: “Does the company really own the assets? and “Are related legal responsibilities identified? ”

Completeness assertion: The objective is to establish with evidence that all balances of the period are in the financial statements. Key questions related to completeness include: “Are the financial statements (including footnotes) complete? ” Valuation assertion: The objective is to establish with evidence that balances have been valued correctly. Key questions include “Are the accounts valued correctly? ” and “Are expenses allocated to the period(s) benefited? ” Presentation and Disclosure assertion: Occurrence assertion: The objective is to establish with evidence that transactions giving rise to assets, liabilities, sales and expenses actually occurred.

Key questions include “are we properly presenting and disclosing transactions that occurred during this period. Rights and obligations assertion: The objectives related to establishing with evidence the proper presentation of assets, liabilities, revenues and expenses to which the company has a legal right or a legal obligation Key questions related to this assertion include: “Has the company properly presented the assets in its possession? and “Are related legal responsibilities identified and properly disclosed? ” Completeness assertion: The objective is to establish with evidence that all balances of the period are presented and/or disclosed in the financial statements.

Key questions related to completeness include: “Are the financial statements (including footnotes) complete? ” Accuracy and valuation assertion: The objectives are to establish with evidence that balances presented and disclosed in the financial statements have been recorded accurately and have been valued correctly. Key questions include “Are the accounts valued correctly? ” and “Are expenses allocated to the period(s) benefited? ” Classification and understandability assertion: The objective is to establish with evidence that presentation and disclosures are properly classified on the financial statements and that financial statements including footnotes are understandable to the financial statement users.

Key questions relate to “Is this account properly presented in the correct financial statement category” and “are the footnote disclosures presented to promote an understanding of the nature of the account” 1. 11The ASB’s assertions are important to auditors because they are the focal points for audit procedures. Furthermore, audit procedures are the means to answer the key questions posed by management’s assertions. The ASB assertions are in more detail than the PCAOB assertions and are categorized into transaction assertions, balance assertions, and presentation and disclosure assertions. They include the following additional assertions: cutoff, accuracy, valuation, classification, and understandability. Exhibit 1. explains the difference between ASB and PCAOB assertions. 1. 12Holding a belief that a potential conflict of interests always exists causes auditors to perform procedures to search for errors or frauds that would have a material effect on financial statements. This tends to make audits more extensive for the auditor and more expensive for the client. The situation is not a desirable one in the vast majority of audits where no errors or frauds exist. However, errors and financial reporting frauds have happened too often. Users of financial statements and audit reports expect auditors to detect material misstatements. 1. 13Some examples of assurance engagements include: Internet Website certification (CPA WebTrust) • Accounts receivable review and cash enhancement • Third-party reimbursement maximization • Rental property operations review • Customer satisfaction surveys • Benchmarking/best practices • Evaluation of investment management policies • Fraud and illegal acts prevention and deterrence • Information systems security reviews (SysTrust) • Internal audit strategic review 1. 14Major areas of public accounting services: • Assurance services (including audit services and other attestation engagements) • Tax consulting services • Consulting services 1. 5Operational auditing is the study of business operations for the purpose of making recommendations about the economic and efficient use of resources, effective achievement of business objectives, and compliance with company policies. The AICPA views operational auditing as a type of management advisory service offered by public accounting firms. 1. 16The elements of expanded-scope auditing include: (1) financial and compliance audits, (2) economy and efficiency audits, and (3) program results audits. 1. 17Compliance auditing involves a study of an organization’s policies, procedures, and performance in following laws, rules, and regulations.

An example is a school’s policies, procedures, and performance in determining eligibility for a free meal program. 1. 18Other kinds of auditors include IRS agents/auditors, state and federal bank examiners, state insurance department auditors, and fraud auditors. 1. 19The purpose of continuing education is to ensure that CPAs in practice maintain their expertise at a sufficiently high level in light of evolving business conditions and new regulations. For CPAs in public practice, 120 hours of continuing education is required every three years, with no less than 20 hours in any one year. For CPAs not in public practice, the general requirement is 120 or fewer (90 in some states) every three years. 1. 0Everything cannot be learned in the classroom, and some on-the-job experience is helpful before a person is foisted off on the public as a licensed professional. Also, the experience weeds out some persons who do not want to take the trouble to be involved in accounting work. 1. 21State boards administer the state accountancy laws. State boards make physical arrangements to give the CPA examination, collect the examinations, receive the grades from the AICPA grading activity, and notify candidates whether they passed or failed. After satisfying state requirements for education and experience, successful candidates are awarded the CPA certificate by a state board. At the same time, new CPAs must pay a fee to obtain a state license to practice.

Thereafter, state boards of accountancy regulate the behavior of CPAs under their jurisdiction (enforcing state rules of conduct) and supervise the continuing education requirements. 1. 22After becoming a CPA licensed in one state, a person can obtain a CPA certificate and license in another state. The process is known as reciprocity. CPAs can file the proper application with another state board of accountancy, meet the state’s requirements, and obtain another CPA certificate. Many CPAs hold certificates and licenses in several states. From a global perspective, individuals must be licensed in each country. Similar to CPAs in the United States, “Chartered Accountants” (CAs) practice in Australia, Canada, Great Britain, and India.

Efforts are currently underway through NASBA to streamline the reciprocity process so that CPAs can practice across state lines without having to have 50 different licenses. SOLUTIONS FOR MULTIPLE CHOICE-QUESTIONS 1. 23a. IncorrectThis is an attestation to the prize promoter’s claims. b. IncorrectThis is an audit engagement to give an opinion on financial statements. c. IncorrectThis is an assurance engagement on newspaper’s circulation data. d. IncorrectThis is an assurance engagement on the performance of golf balls. e. CorrectSince attestation and audit engagements are subsets of assurance engagements, all are assurance engagements. 1. 24a.

CorrectThis statement characterizes professional skepticism. b. Incorrect“Exclusively an auditor” is not an idea that seems to speak of “skepticism. ” c. IncorrectProfessional obligations” is not an idea that seems to speak of “skepticism. ” d. IncorrectThis is more an assumption of necessity than of skepticism. 1. 25a. Incorrect While work on a forecast is covered by the attestation standards, the auditors should give assurance or a disclaimer. b. Correct This is the basic definition of attestation–giving a report on reliability of an assertion one party makes to another. c. Incorrect Tax work is not an attestation service. d.

Incorrect Litigation and expert witness services are not attestation services. 1. 26a. IncorrectThe objective of environmental auditing is to help achieve and maintain compliance with environmental laws and regulations and to help identify and correct unregulated environmental hazards b. IncorrectThe objective of financial auditing is to obtain assurance on the conformity of financial statements with generally accepted accounting principles. c. Incorrect The objective of compliance auditing is the entity’s compliance with laws and regulations. d. CorrectOperational auditing refers to the study of business operations for the purpose of making recommendations about the conomic and efficient use of resources, effective achievement of business objectives, and compliance with company policies. 1. 27a. IncorrectWhile not the primary objective of an operational audit, auditors should still be concerned about compliance with financial accounting standards. b. CorrectThis statement is part of the basic definition of operational auditing. c. IncorrectAn operational audit does not focus on the financial statements. d. IncorrectAnalytical tools and skills are an important part of financial auditing. 1. 28a. CorrectThe proper reference is to the appropriate reporting framework. b. IncorrectThe AICPA does not refer only to the FASB for the appropriate reporting framework. c.

IncorrectThe reference to the SEC is wrong. d. IncorrectThis is an abstract of the AAA definition. 1. 29d. CorrectWhile “complexity,” “remoteness,” and “consequences” are good answers, “skepticism,” or potential conflict of interest, generally drives the demand for audited financial statements. 1. 30d. CorrectSarbanes-Oxley prohibits the provision of all of the services listed in answers a, b, and c, therefore, d (all of the above) is the best response. 1. 31a. IncorrectAuditors do not reduce business risk. b. CorrectAuditors give some assurance that the information risk is low. c. IncorrectComplexity creates demand for accounting services, but is not an audit objective. d.

IncorrectAuditors only indirectly control the timeliness of financial statements. 1. 32d. CorrectAnswers a, b, and c refer to a financial statement audit, an internal controls attestation engagement, and an operational audit, respectively. Compliance refers to following laws, rules, regulations, and policies. 1. 33d. CorrectWhile answers a, b, and c are true, experience, education, and successful completion of the Uniform CPA are all necessary to be licensed as a CPA. 1. 34d. CorrectThe mission of the U. S. Government Accountability Office is to ensure that public officials are using public funds efficiently, effectively, and economically. 1. 5b,d CorrectThe two categories of performance audits are economy and efficiency audit and program audits. 1. 36c. CorrectReview of credit ratings of customers gives indirect evidence of the collectibility (valuation) of accounts receivable. 1. 37a. IncorrectRhonda’s representations are not sufficient evidence to support assertions made in the financial statements. b. IncorrectDespite Rhonda’s representations, Jones must gather additional evidence to corroborate Rhonda’s assertions. c. IncorrectRhonda’s representations are a form of evidence (albeit weak) that should neither be disregarded, nor blindly regarded without professional skepticism. d.

CorrectRhonda’s assertions need corroboration. 1. 38a. IncorrectAlthough there is a high level of risk associated with client acceptance, this phrase was created by the authors. b. CorrectInformation risk is the probability that the information circulated by a company will be false or misleading. c. IncorrectMoral hazard is the risk that the existence of a contract will change the behavior of one or both parties to the contract. d. IncorrectBusiness risk is the probability an entity will fail to meet its objectives and, ultimately, fail. 1. 39a. CorrectCompleteness includes cutoff which refers to accounting for revenue, expense, and other transactions in the proper period (neither ostponing some recordings to the next period nor accelerating next-period transactions into the current-year accounts). 1. 40d. CorrectThe objective related to rights and obligations is to establish with evidence that amounts reported as assets of the company represent its property rights and that the amounts reported as liabilities represent its obligations. 1. 41b. CorrectManagement’s existence assertion states that reported assets, liabilities, and equities actually exist. 1. 42a. IncorrectUnder Sarbanes-Oxley, professional service firms are prevented from acting in a managerial decision making role for an audit client. b. IncorrectUnder Sarbanes-Oxley, professional service firms are prevented from auditing the firm’s own work on an audit client. c.

IncorrectUnder Sarbanes-Oxley, professional service firms may only provide tax consulting service to an audit client with the audit committee’s approval. d. CorrectSarbanes-Oxley prevents professional service firms from engaging in any of the above listed capacities. 1. 43 d. CorrectReciprocity refers to the process through which CPAs licensed in one state can obtain a CPA certificate and license in another state. 1. 44a. CorrectAuditing is a subset of attestation engagements that focuses on the certification of financial statements. b. IncorrectAuditing is a subset of attestation that provides higher assurance than that provided by an attestation engagement. c. IncorrectConsulting engagements focus on providing clients with advice and decision support. d.

IncorrectAssurance engagements are designed to improve the quality of information, or its context, for decision makers. 1. 45d. CorrectAlthough auditing is a subset of attestation, and attestation is a subset of assurance, the focus of the engagements tends to be very specific. 1. 46d. CorrectCredibility, advancement, and monetary rewards are all reasons to become certified. SOLUTIONS FOR EXERCISES AND PROBLEMS 47. Audit, Attestation, and Assurance Services Students may encounter some difficulty with this matching because the Special Committee on Assurance Services listed many things that heretofore have been considered “attestation services” (long before assurance services were invented).

Maybe this is a good vehicle for discussing the considerable overlap between attestation services (attestation standards) and assurance services. • Real estate demand studies — Assurance service (listed by SCAS but not in the textbook chapter) • Ballot for awards show — Assurance service (listed by SCAS but not in the textbook chapter) [But PwC attested to the Academy Awards ballot results long before assurance services were invented] • Utility rate applications — Attestation service (or maybe a consulting service; I’m somewhat surprised the SCAS did not list it as an assurance service. ) • Newspaper circulation audits –Assurance service (listed by SCAS but not in the textbook chapter) [But this work has appeared in prior years in examples of attestation services] Third-party reimbursement maximization — Assurance service (listed by SCAS and listed in the textbook chapter) • Annual financial report to stockholders — Audit service • Rental property operations review — Assurance service (listed by SCAS and listed in the textbook chapter) • Examination of financial forecasts and projections — Attestation service (but also listed by SCAS as an assurance service) • Customer satisfaction surveys– Assurance service (listed by SCAS and listed in the textbook chapter) • Compliance with contractual requirements — Attestation service (but also listed by SCAS as an assurance service) • Benchmarking/best practices — Assurance service (listed by SCAS and listed in the textbook chapter) Evaluation of investment management policies — Assurance service (listed by SCAS and listed in the textbook chapter) • Information systems security reviews — Assurance service (listed by SCAS and listed in the textbook chapter) • Productivity statistics — Attestation service (but also listed by SCAS as an assurance service under various descriptions) • Internal audit strategic review — Assurance service (listed by SCAS and listed in the textbook chapter) • Financial statements submitted to a bank loan officer — Audit service 1. 48Controller as Auditor When the CPA is hired by Hughes Corporation, he can no longer be considered independent with respect to the annual audit.

The annual audit may then be unnecessary in a short-run view and unnecessary to the extent of services exclusive of the attest opinion. It is true that the in-house CPA can perform all the procedural analyses that would be required of an independent audit; however, it is extremely unlikely that he could inspire the confidence of users of financial statements outside the company. He cannot modify the perception of potential conflict of interest that creates demand for the independent audit. As a matter of ethics rules, this CPA would be prohibited from signing the standard unqualified attest opinion. Moreover, if Hughes were a public company, they would be restricted from hiring one of their auditors. 1. 49 ASB Assertions PCAOB Assertion |Corresponding ASB assertion |Nature of assertion | |Existence or Occurrence |Existence |Balance | | |Occurrence |Transactions | | | |Disclosures | |Rights and Obligations |Rights and Obligations |Balances | | | |Disclosures | |Completeness |Completeness |Transactions | | | |Balances | | | |Disclosures | | |Cutoff |Transactions | |Valuation and Allocation |Accuracy |Transactions | | | |Disclosures | | |Valuation |Balances | | | |Disclosures | |Presentation and Disclosure |Classification |Transactions | | | |Disclosures | | |Understandability |Disclosures | 1. 50Operational Auditing Bigdeal cannot hire the GAO. This government agency does not perform operational audits for private industry.

One possibility is the management advisory services department of a large CPA firm. The major advantage may be total objectivity. The CPA firm has no stake in making a report reflect favorably or unfavorably on Smalltek (provided there are no prior relations of the CPA firm with Bigdeal managers that may suggest a bias or with Smalltek). The possible disadvantage is that the CPA firm may not possess the required expertise in Smalltek’s type of business. Another possibility is the Bigdeal internal audit department. The major advantage may be a thorough appreciation of Bigdeal’s managerial effectiveness and efficiency standards and a longstanding familiarity with Bigdeal’s business.

The possible disadvantage could be that the internal auditors may not be independent enough from internal management pressures for making or breaking the deal for reasons other than Smalltek’s efficiency and effectiveness. Another possibility is a nonCPA management consulting firm. The major advantage of objectivity would be similar to the CPA firm, and such firms often have experts in manufacturing, sales, and research and development management. The major disadvantage could be a lack of appreciation and familiarity with Bigdeal’s management standards (as possessed by the Bigdeal internal auditors). 1. 51Auditor as Guarantor. The neighbor appears to be uninformed on the following points: According to auditors’ dogma, the auditors did not prepare the |Inform your neighbor that Dodge management is primarily | |Dodge Corporation financial statement. |responsible for preparing the financial statements and | | |deciding upon the appropriate accounting principles. | |An unqualified opinion does not mean an investment is safe. |Tell your neighbor that the financial statements are history. | | |The value of his investment depends on future events, | | |including the many factors that affect market prices.

Tell | | |him the opinion only means that the statements conform to the| | |appropriate reporting framework (and you can add that the | | |auditor knows of no material fraud or error). | 1. 52Identification of Audits and Auditors The responses to this matching type of question are ambiguous. The engagement examples are real examples of external, internal and governmental audit situations. You might point out to students that the distinctions among compliance, economy and efficiency and program results audits are not always clear.

The “solution” is shown below in matrix form, showing some engagement numbers in two or three cells. The required schedule follows. | |Type of Audit | | |Financial Statement | |Economy, Efficiency |Program | |Auditor | |Compliance | |Results | |Independent CPA |2, 10 | | | | |Internal Auditor | |6, 8 4, 8 | | |Governmental (GAO) | | |1, 3 |1, 3, 9 | |IRS Auditor | |5 | | | |Bank Examiner | |7 | | | |Proprietary school’s training expenses |Economy and Efficiency Program Results |Governmental (GAO) | |Advertising agency financial statements |Financial statement |Independent CPAs | |Dept. f Defense launch vehicle |Economy and Efficiency or Program Results |Governmental (GAO) | |Municipal services |Economy and Efficiency |Internal auditors | |Tax shelters |Compliance |IRS auditors | |Test pilot reporting |Compliance |Internal auditors | |Bank solvency |Compliance |Bank examiners | |Materials inspection by manufacturer |Compliance or Economy and Efficiency |Internal auditors | |States’ reporting chemical use data |Program goal |Governmental (GAO) | |Sports complex forecast |Financial statement |Independent CPAs | 1. 53Financial Assertions and Audit Objectives The objectives for the audit of Spillane’s securities investments at December 31 are to obtain evidence about the assertions implicit in the financial presentation, specifically: 1. Existence. Obtain evidence that the securities are bona fide and held by Spillane’s or by a responsible custodian. Occurrence.

Obtain evidence that the loan transaction and securities purchase transactions actually took place during the year under audit. 2. Completeness. Obtain evidence that all the securities purchase transactions were recorded. 3. Rights. Obtain evidence that the securities are owned by Spillane. Obligation. Obtain evidence that $500,000 is the amount actually owed on the loan. 4. Valuation. Obtain evidence of the cost and market value of the securities held at December 31. Decide whether any write downs to market are required by the appropriate reporting framework. 5. Presentation and Disclosure. Obtain evidence of the committed nature of the assets, which should mean they should be in a non-current classification like the loan.

Obtain evidence that restrictions on the use of the assets are disclosed fully and agree with the loan documents. 1. 54Internet Exercise: Professional Certification These answers will be dependent upon the student’s state of residence. Many states have recently reduced the experience requirements, either 1) reducing or eliminating an audit experience requirement, and/or 2) reducing the experience requirement in lieu of additional education. For a quick link to each state, visit the National Association of State Boards of Accountancy (www. nasba. org). 1. 55Internet Exercise: Professional Certification The Institute of Internal Auditors does a good job explaining the benefits of becoming a certified internal auditor. The exam consists of four parts.

The parts are the Internal Audit Activity’s Role in Governance, Risk, and Control, Conducting the Internal Audit Engagement, Business Analysis and Information Technology, and Business Management Skills. You must have at least a bachelor’s degree to sit for this exam. The Institute of Management Accountants also does a good job of explaining the benefits of the certification. The parts of the exam includes: Business Analysis, Management Accounting and Reporting, Strategic Management, and Business Applications. You must have at least a bachelor’s degree to sit for this exam. The Association of Certified Fraud Examiners also does a good job of explaining the benefits of the certification.

The areas of study tested on the exam include: criminology and ethics, financial transactions, fraud investigation, and legal elements of fraud. You must have at least a bachelor’s degree to sit for this exam. The Information Systems Audit and Control Association website explains the benefits of becoming certified. You must have at least an associates’ degree to sit for this exam. 1. 56Mini-Case: The Market for Audit Services NOTE TO INSTRUCTOR: For this assignment, question 4 from this Mini-Case is applicable. 4. The impact of a smaller number of major, international accounting firms on public companies include: • The potential for a less competitive market for audit services (from the client’s standpoint), providing the existing firms with greater levels of pricing power. The inability to receive as wide an array of nonaudit services from large accounting firms, assuming that some of the Sarbanes-Oxley prohibitions discussed in (3) above are not repealed. • The potential need for public companies to consider smaller audit firms, if the smaller number of major firms cannot absorb the excess capacity created by the demise of one or more major, international accounting firms. Some of the negative impacts of a smaller number of major, international accounting firms can be evidenced by the actions of the other major accounting firms as KPMG resolved its federal litigation issues. See “No Poaching from KPMG, Say Audit Firms,” www. cfo. com, August 24, 2005 (http://www. cfo. com/article. cfm/4315600? ), in which the other firms allegedly ordered their partners to not approach KPMG clients.

x

Hi!
I'm Iris

Would you like to get such a paper? How about receiving a customized one?

Check it out