Question 1-23

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1-23 (Organizations associated with the public accounting profession) Several private and public sector organizations are associated with the profession. Listed below are activities pertaining to these organizations. 1. License individuals to practice as CPAs. State Boards of Accountancy 2. Promulgate GAAP. Securities & Exchange Commission (SEC), American Institute of Certified Public Accountants (AICPA), Financial Accounting Standards Board (FASB), and Government Accounting Standards Board (GASB). 3. Issue Statements on Auditing Standards. PCAOB for publicly traded companies and the Auditing & Attest Standards Team from the AICPA for private companies. 4. Regulate the distribution and trading of securities offered for public sale. SEC 5. Establish its own code of professional ethics. AICPA and PCAOB 6. Issue Statements of Financial Accounting Standards. SEC can issue statements but they recognize the pronouncements of the FASB and GASB for publicly traded companies. Financial Standards for private companies would be set by FASB and GASB. 7. Impose mandatory continuing education as a requirement for renewal of license to practice as a CPA. 8. Issue disclosure requirements for companies under its jurisdiction that may exceed GAAP. 9. Issue auditing interpretations.

10. Cooperate with the AICPA in areas of mutual interest such as continuing professional education and ethics enforcement. 11. Take punitive action against an independent auditor.
12. Establish accounting principles for state and local governmental entities. 13. Establish GAAS.
14. Suspend or revoke a CPA’s license to practice.
15. Establish quality control standards.
16. Operate as proprietorships, partnerships, or professional corporations. 17. Issue government auditing standards.
18. Administer federal tax laws.
Indicate the organization or organizations associated with each activity.
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