The Cpa Profession

Auditing Lecture Notes-
Chapter Two
The CPA Profession

Vignette Discussion-

CPA Firms – 4 Types
(Table 2-1…… 26) 1. Big Four
2. National
3. Regional
4. Large Local

Major Activities of these firms
* accounting and bookkeeping
* taxes
* consulting Six Organizational Structures p. 29
1. Proprietorship
2. General Partnership
3. General Corporation
4. Professional Corporation
5. Limited Liability Company
6. Limited Liability Partnership

Typical positions in CPA firms
(Table 2-2…….pg. 29 ) staff assistant, senior or in-charge auditor, manager, partner AICPA – most influential group on CPA’s. PCAOB is kinda creeping in too
4 major functions:
1. Establish standards and rules for the profession
2. Research and publication
3. CPA exam prep and grading
4. Continuing professional education
(Study pg. 31 carefully. It is important to have a good understanding of the AICPA!)

Generally Accepted Auditing Standards (GAAS)
CPA should comply with on every engagement without exception! But they are only a framework….. a guide for our profession.
Must know all 10 of these specifically by category! TIP PIE GCDO Caution future CPA exam takers – this is going to change somewhat as international standards continue to evolve. (Table 2-3…….pg. 35)

Quality Control
(Table 2-4****……….pg. 38) This summarizes the Six Elements of Quality Control Methods used to ensure that CPA firms meet the professional responsibilities to its clients and others Similar in idea to GAAS – realize that Quality Control is established for CPA firm as a whole, GAAS are applicable to each individual engagement(job).

Peer Review
(Figure 2-3 pg. 39 ) when a CPA firm reviews another CPA firm to make sure that they are following their own quality controls AICPA’s Peer Review Program requires peer review every three years. PCAOB’s inspection requirements are every year for large (+100 issuers)

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