R&R is a public corporation that, as of December 31, 2009, is subject to a
year-end integrated audit by its independent auditing ﬁrm, Young & Young. An
excerpt of Young & Young’s audit opinion state:
In our opinion, the consolidated ﬁnancial statements present fairly, in all material respects, the ﬁnancial position of R&R and its subsidiaries as of December 31, 2009, and the results of their operations and their cash ﬂows for the ﬁscal year ended December 31, 2009 in conformity with U.S. GAAP. Also in our opinion, R&R maintained, in all material respects, effective internal control over ﬁnancial reporting as of December 31, 2009, based on criteria established in Internal control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
(a) What kind of opinion did Young & Young give R&R for its 2009 year-end ﬁnancial statements?
(b) Under which set of ﬁnancial reporting standards does R&R report? Which set of auditing standards does Young & Young use in its audit of R&R?
(c) Under which ﬁnancial reporting standards might R&R report if it were a corporation based in Germany?
Your professor has asked you to complete a research paper concerning the link between the auditing profession and financial reporting standard setters and regulators.
For each independent situation, determine which regulating or standard-setting body you should research:
(a) The entity that sets accounting standards for the government sector.
(b) The entity that decides what is required to become a licensed CPA and conduct work as a CPA.
(c) The entity that sets standards for audits of publicly traded companies.
(d) The entity that sets ﬁnancial reporting standards in the U.S.
(e) The entity that prepares and administers the Uniform CPA Exam.
(f) The entity that has ultimate authority over public company reports as well as accounting and reporting standards.
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