Unit 1: Assignment
Professor Paula BeiserSeptember 23, 2014
1-20 Public accounting firms are sometimes grouped into categories of local firms, regional firms, national firms, and international firms. Explain briefly the characteristics of each. Include in your answer the types of services stressed in each group. Local firms typically have one or two offices, include only one CPA or a few CPAs as partners, and serve clients in a single city or area. These firms often emphasize income tax, consulting, and accounting services. Auditing is usually only a small part of the practice and tends to involve small business concerns that find a need for audited financial statements to support applications for bank loans. Regional Firms are many local firms that have become regional firms by opening additional offices in neighboring cities or states and increasing the number of professional staff. Merging with other local firms is often a route to regional status. This growth is often accompanied by an increase in the amount of auditing as compared to other services. National Firms are public accounting firms with offices in most major cities in the United States. These firms may operate internationally as well, either with their own offices or through affiliations with firms in other countries. The International Firms are considered to be the “Big 4”, which includes Deloitte & Touche LLP, Ernst & Young LLP, KPMG LLP, and PricewaterhouseCoopers LLP. These firms audit nearly all of the largest corporations. They offer a wide range of professional services, but auditing constitutes a large share of their work. 1-26 The Sarbanes-Oxley Act of 2002 created the Public Company Accounting Oversight Board. Explain the major responsibilities of this board. The major responsibilities of the PCAOB are to oversee the accounting profession. The PCAOB, which has broad powers to develop and enforce standards for public accounting firms that...
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