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Regulatory environment

Regulatory environment - Click to edit Master subtitle...

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Unformatted text preview: Click to edit Master subtitle style 8/22/11 Regulatory environment 8/22/11 CPA profession’s history • Long time ago – 100% audits (total assurance) – Creation of CPA certification – 1896 – Creation of SEC – 1934 – all public registrants should have audits • Developments – Sampling introduced – Detailed testing main procedures 8/22/11 CPA profession’s history • 1950 – uniform CPA exam across the country • CPAs – prominent figures in society • 1960 – “Big Eight” term coined out by an article in “Fortune” magazine • 1960s to 1970s – First scandals – 1972 Department of justice removes 8/22/11 CPA profession history • 1990s – Focus on analytics – Less test of controls and details testing – Automated audits (checklists) – Steep increase in non-audit services – 1998 – Big 6 to Big 5 • Now – post SOX (Important – how SOX changed profession) 8/22/11 Firms • Top tier – Big 4 – KPMG, EY, Deloitte, PwC • Second tier – Grant Thornton, BDO Siedman • Regional/local firms – 1700 firms registered with PCAOB (has to have a publicly traded client to be registered with PCAOB) 8/22/11 Need for regulation? • Underlying Premise: – Auditing plays a major role in protecting our financial/capital markets and in protecting the general (investing) public. • Requirement: – Auditors must be knowledgeable, objective, and ethical. • Conditioned Response: 8/22/11 Regulation of the auditing • To preserve the integrity of the profession Auditing only adds value to information if it has integrity...
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