Professional Standards
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CPA Auditing and Attestation (AUD) › Professional Standards
An auditor of a non-issuer must conduct the audit in accordance with A) ASB Standards B) PCAOB Standards
A
B
Both
Neither
Explanation
An auditor of a non-issuer must conduct the audit in accordance with ASB Standards.
An auditor has been prevented from conducting full due diligence and proper audit procedures for the engagement of a company. He does not feel that he has examined enough evidence and is deciding how to issue an opinion. Which should be his choice?
Unmodified
Modified
Disclaimer of opinion
Misstatement
Explanation
The auditor cannot issue a positive or negative opinion, simply disclaiming the opinion since he was unable to determine anything about the company.
John Rich is a CPA auditor with Biggs, CPA. Rich is an avid investor and has a rather larger portfolio. Rich has a 6% stake in Sigma Corp a public company client of Biggs. Rich is not on the Sigma account but notified the partners of his investment. Because of Rich’s investment:
independence is impaired
independence is not impaired.
independence is not impaired if disclosed.
independence is not impaired because Rich does not work on the Sigma account.
Explanation
Under this scenario, independence is impaired when according to PCAOB ET 101 “During the period of the professional engagement, a partner or professional employee of the firm, his or her immediate family, or any group of such persons acting together owned more than 5 percent of a client’s outstanding equity securities or other ownership interests.”
The following roles fall under the FROR:
Staff Accountant
Chief Financial Officer
Marketing Director
Information Systems Director
Explanation
The Financial Reporting Oversight Role as defined by Rule 3501 of the PCAOB: “The term "financial reporting oversight role" means a role in which a person is in a position to or does exercise influence over the contents of the financial statements or anyone who prepares them, such as when the person is a member of the board of directors or similar management or governing body, chief executive officer, president, chief financial officer, chief operating officer, general counsel, chief accounting officer, controller, director of internal audit, director of financial reporting, treasurer, or any equivalent position.”
Issuers of public company financial statements are governed by:
AICPA
GOA
SEC
APB
Explanation
Issuers of public company financial statements are governed by the Securities Exchange Commission under audit standards as promulgated by the PCAOB.
Of the following, which provides the most authoritative guidance for an audit of an issuer?
Specific guidance provided by the Statement on Auditing Standards
Audit disclosure checklists obtained from a continuing professional education class
General guidance provided by the PCAOB
An article in the AICPA CPA letter addressing frequently asked questions on a new auditing standard
Explanation
General guidance by the PCAOB is the most authoritative level of auditing guidance for audits of issuers.