chap1 - It’s a Great Time It’s to Be an Accountant...

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Unformatted text preview: It’s a Great Time It’s to Be an Accountant It’s a Great Time It’s to Be an Accountant Thanks to the Sarbanes–Oxley Act, the –Oxley demand for accountants has rarely been greater, even in tough economic times. times. What is a financial statement audit? An audit provides assurance assurance about the reliability of the reliability financial statements financial Definition of Auditing Auditing is the accumulation and evaluation of evidence about evaluation information to determine and information report on the degree of report correspondence between the information and established criteria. Auditing should be done by a competent, independent person. competent independent person. Why do audits exist? Why Why do audits exist? Why Need to reduce information risk Need information (Risk that information on which an (Risk investment or other decision is based, such as financial statements, is not reliable) reliable) Lower Lower Information Risk Lower Cost of Capital for Auditee Key point: Audit benefits the auditee Audit (even if required by lender or other user) user) Sources of information risk Sources • • • • Remote information Biases of provider of Volume of transactions Complex transactions transactions Relation of Audit, Attestation and Assurance Services Assurance ASSURANCE SERVICES ATTESTATION SERVICES Audits Reviews NON-ASSURANCE SERVICES Other management Consulting Certain Management Consulting Accounting and Bookkeeping Tax Services Internal Control over Financial Reporting Other Attest Services Other Assurance Services Audit, Attestation and Assurance Audit, Assurance Service to improve the quality of Assurance information information Attest Audit Report on reliability of an Report assertion (Attestation Standards) (Attestation Written report on whether F/S Written are in accordance with GAAP are (Auditing Standards) (Auditing Attestation Services Attestation Engagement where CPA issues a Engagement report about an assertion report • Forecasts • Internal control • Web sites • Historical financial statements Attestation Services Attestation Any quantifiable information with Any established criteria is capable of being attested to. being Examples: Emmy Awards, Miss Emmy America Pageant, Lottery America MC 1-14 (c) MC Which of the following services would be Which considered an attestation engagement? considered 1. A consulting engagement to provide 1. computer procession advice. computer 2. An engagement to report on statutory requirements. requirements. 3. An income tax engagement to prepare state and federal tax returns state 4. The compilation of financial statements from a client’s financial records. from records. Assurance Services Assurance Services to improve the quality of Services information information Give an example of an assurance Give provided by: provided 1. 2. 3. Government An independent party other than a An CPA CPA A CPA Additional Assurance Services Additional Web site controls Web site “hits” Circulation audits Royalty agreements Compliance with investment policy Customer satisfaction surveys Why is there increased demand for other attestation and assurance services? and Why are attestation and assurance services expanding? services New types of information require assurances about the quality of the information. Auditor Reputation Auditor Co. Investors Auditor MC 1-14 (a) Which of the following best explains why MC independent auditors are asked to express an opinion on financial statements? opinion 1. It is difficult to prepare financial stmts. 1. without the expertise of an auditor. without 2. It is management’s responsibility to seek independent aid in the appraisal of financial statement information. statement 3. The opinion of an independent party is needed because a company may not be objective with respect to its financial statements. respect 4. It is a customary courtesy that all stockholders receive an independent report on management’s stewardship of the business. stewardship Types of Audits Types Financial Statement Audit Operational audit - concerned Operational with efficiency and effectiveness with Compliance audit - compliance Compliance with rules and regulations with CPA Background CPA Becoming a CPA has three requirements Education CPA Exam Work experience CPA license is granted by individual state CPA Exam is uniform for all states, but licensure CPA and education requirements vary by state and CPA Exam Questions CPA • 150-hour rule – Forty-three states require 150 hours of education to become a CPA become • New York rule became effective August New 1, 2009 1, • New York now allows 120 to sit (as does New NJ, MA, CT) NJ, • 150 hours required for licensure; 150 requirements vary by state requirements Registering for the CPA Exam Registering New York information is best accessed at New www.op.nysed.gov/cpa.htm www.op.nysed.gov/cpa.htm Easiest way to access other states is through Easiest www.cpa-exam.org www.cpa-exam.org “Getting started” “Steps to becoming a CPA” Click jurisdiction link You will now be at National Association of State You Boards of Accountancy (NASBA) site www.nasba.org www.nasba.org Application Application Three Forms Application – CPA Examination Services Registered Program Form (education) – CPA Registered Examination Services Undergraduate students submit to Deedee Thousand in Suite 215 Suite Graduate students submit to Rick DiRubbo in Suite 315 They will arrange transcripts Licensure (Form 1) – New York State 150 Hour Rule – Other States 150 Most states require 150 hour requirement to Most sit for the exam sit Having 150 credit hours alone is generally not Having sufficient sufficient Need to check the education requirements in the Need state in which you seek licensure state Access through www.cpa-exam.org or Access www.cpa-exam.org www.nasba.org www.nasba.org Key point: Many states require additional accounting as part of the 30 credits accounting CPA Exam Questions CPA • Other issues • • • • Computerized exam When to sit Review course Register early CPA Exam Length CPA Time Breakdowns by Section for Uniform CPA Examination Examination Length (hours) 14 Auditing & Attestation 4.5 Financial Accounting & Reporting 4 Regulation 3 Business Environ. & Concepts 2.5 Computerized CPA Exam Computerized Exams can be taken during any of four exam windows Open window Jan/Feb April/May July/Aug Oct/Nov Closed March March June June Sept Sept Dec Dec Candidates may sit for each section of the exam individually Candidates and in any order and Retain credit for a passed section for 18 months beginning on Retain the date the first section passed is taken the Section pass rate near 45% (approximately 30% for old paper Section exam) exam) Exam Pass Rates Exam Number of Sections Taken Per Window 1 Pct. Of Candidates Passed 0 sections Passed 1 section Passed 2 sections Passed 3 sections Passed 4 sections 63.6 55.6 44.4 2 28.3 44.9 26.3 28.8 3 4.7 39.0 20.7 16.2 24.1 4 3.4 40.8 15.5 12.0 11.8 20.0 MS Accounting Program MS 30 credit hour program - students with an 30 undergraduate accounting CPA degree undergraduate Additional credits are required for other students, Additional depending on previous accounting and business coursework coursework Application available online http://whitman.syr.edu/apply.asp http://whitman.syr.edu/apply.asp Or see Shannon Hiemstra in Room 315 Qualifying GMAT score is required Key point: Prepare for GMAT early (seniors who registered received a GMAT voucher this year; expect program to continue) program Benefits of the MS Benefits Better long-term career Better performance performance Ability to transfer CPA license Qualified for promotions and Qualified positions positions Better performance on CPA exam Somewhat higher salary May reduce years of work May experience required to receive CPA license CPA Maximizing Public Accounting Maximizing Partner CFO Controller Accountant 2 5 8 12 Ptnr Compensation and Rank based on years in public accounting Flexibility/Meeting 150 hours Flexibility/Meeting Start taking graduate classes in senior year if Start course schedule allows course Spend 1 or 2 semesters in MS program Spend Complete remaining courses in iMS program Complete You can design a plan that works for you Careers in Public Accounting Careers Optimal time to leave (opinion only): Law school Law MBA Job offer Or never Or 2 years 3 - 5 years years 5 - 8 years Partners make big $ ...
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This note was uploaded on 03/18/2011 for the course ACCT 422 taught by Professor Smith during the Spring '11 term at UMBC.

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