The SEC has considerable influence in setting generally acceptedaccounting principles and disclosure requirements for financial statementsbecause of its authority for specifying reporting requirements considerednecessary for fair disclosure to investors. In addition, the SEC has power toestablish rules for any CPA associated with audited financial statements submitted to the Commission. 2-5 The AICPA is the organization that sets professional requirements forCPAs. The AICPA also conducts research and publishes materials on many different subjects related to accounting, auditing, management advisory services, and taxes. The organization also prepares and grades the CPA examinations,provides continuing education to its members, and develops specialty designations to help market and assure the quality of services in specialized practice areas. 2-6 Statements on Standards for Attestation Engagements provide a frameworkfor attest engagements, including detailed standards for specific types of attestation engagements. 2-7 The PCAOB has responsibility for establishing auditing standards for U.S. public companies, while the Auditing Standards Board (ASB) of the AICPA establishes auditing standards for U.S. private companies. Prior to the creation of the PCAOB, the ASB had responsibility for establishing auditing standards forboth public and private companies. Because existing auditing standards were adopted by the PCAOB as interim auditing standards for public company audits, there is considerable overlap in the two sets of auditing standards. 2-8 Auditing standards represent the combination of the four principles and all the Statements on Auditing Standards (SASs) that are codified in the AU-C sections. While the 10 GAAS standards highlighted in Table 2-3 are no longer referenced as general, fieldwork, and reporting standards, the underlying concepts contained in those continue to be relevant in U.S. auditing standards. Examples of auditing standards include any of the SASs (e.g., SAS No. 125) . Generally accepted accounting principles are specific rules for accounting for transactions occurring in a business enterprise. Examples may be any of the opinions of the FASB, such as accounting for leases, pensions, or fair value assets. 2-2
2-9 Auditors develop their competency and capabilities for performing an audit through formal education in auditing and accounting, adequate practicalexperience, and continuing professional education. Auditors can demonstratetheir proficiency by becoming licensed to practice as CPAs, which requiressuccessful completion of the Uniform CPA Examination. The specific requirements for licensure vary from state to state. 2-10 For the most part, auditing standards, including SASs, are general rather than specific. Many practitioners along with critics of the profession believe thestandards should provide more clearly defined guidelines as an aid indetermining the extent of evidence to be accumulated. This would eliminate some of the difficult audit decisions and provide a source of defense if the CPA is charged with conducting an inadequate audit. On the other hand, highly specific
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- Spring '12
- Financial audit