Premium Essay

Cpa Audit Wk1

In: Business and Management

Submitted By DeV01
Words 1456
Pages 6
Chapter 2, pp. 41-44: Problems 2-7, 2-10, 2-16, 2-20
Chapter 3, pp. 67-69: Problems 3-23, 3-25, 3-26

2-7 (Objectives 2-2, 2-4, 2-5) Who is responsible for establishing auditing standards for audits of public companies? Who is responsible for establishing auditing standards for private companies? Explain.
A. For public companies, the standards are established by the PCAOB, whereas the standards for all non-public entities are set by the Auditing Standards Board of the AICPA. The split between public and private entities occurred as a result of the passage of the Sarbanes-Oxley Act which set up the PCAOB.

2-10 (Objective 2-6) Generally accepted auditing standards have been criticized by different sources for failing to provide useful guidelines for conducting an audit. The critics believe the standards should be more specific to enable practitioners to improve the quality of their performance. As the standards are now stated, some critics believe that they provide little more than an excuse to conduct inadequate audits. Evaluate this criticism of the 10 generally accepted auditing standards.
B. The standards are provided as a minimum standard, not a maximum, and auditors are encouraged to strive for more. The concern for more specificity in the standards is that it could turn into a mechanistic process of data gathering, removing all professional judgment from the audit. The standards also need to have the flexibility to fit into the specific situation of a company, i.e., determination of sample size.
2-16 (Objective 2-6) The following questions deal with generally accepted auditing standards. Choose the best response.
• a. The first general standard, which states in part that the audit must be performed by a person or persons having adequate technical training, requires that an auditor have o (1) education and experience in the field of auditing. -...

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