ACC M115 Lecture Notes - Lecture 2: Financial Accounting Standards Board, Governmental Accounting Standards Board, Tax Avoidance

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24 Sep 2020

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Certified public accountants (cpa) offer expert service to the general public through the services they perform. Auditing-auditors examine the financial statements of companies and express an opinion as to the compliance with generally accepted accounting. Taxation-tax specialists give tax advice, do tax planning, prepare tax returns, and represent clients before governmental agencies such as the irs. Certified management accountants (cma) work for a single company and focus on internal managerial issues. Private accountants are employees of individual companies, including controllers, accounting managers and members of top management. Not-for-profit accounting includes reporting and control for government units, foundations, hospitals, unions, educational organizations, and charities: generally accepted accounting principles (gaap) - u. s. accounting rule book. Two organizations are primarily responsible for establishing generally accepted accounting principles. The financial accounting standards board (fasb) is a private organization that establishes broad reporting guidelines of general applicability as well as specific accounting rules and principles.

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Please edit and rewrite the following in YOUR OWN WORDS... sothat it cannot be passed as plagiarism. Also, it needs to passturnitin.com inspection. I am just asking for a very skillfullrewording of this passage that is distinguishably and uniquelydifferent.

What is a CPA?

A CPA, or Certified Public Accountant, is a designation reservedfor accountants in the US who pass the CPA exam. This designationshows an expertise in the field. To become a CPA in the US, astudent must pass the exam and meet other state requirements suchas gaining a certain amount of work experience or furtherededucation. The CPA licenses accountants to provide their servicesto the general public. The CPA designation is taken very seriously,as its requirements maintain that only the most knowledgeableaccounts can qualify. The designation is usually used behind apersonâs name to signify the level of experience, and is often apunishable offense if it is used without actually passing the examand requirements.

The CPA Exam Requirements

International students who want to become an expert inaccounting and achieve the CPA designation will first need to passthe CPA exam. The exam is certainly not easy and tests many of themost important accounting principles. The exam is called theUniform CPA exam, and the eligibility to actually take the examdepends on the exact state the student plans to test in. There arethree main requirements for taking the CPA Exam. They arecategorized as the 3 Eâs: Exam, Education, and experience. One ofthe main qualifications to sit for the exam is advanced education.Undergraduate degrees carry 120 credit hours. The CPA exam usuallyrequires 150 credit hours. This means students will have to achieve30 hours of graduate level coursework. It most cases, aninternational student will take the 30 extra hours and thencomplete a few extra classes to earn a masterâs degree inaccounting. The exam also tests some of the laws of the stateincluding contract and state laws and often tests the knowledge offederal laws as well. The third requirement to sit for the exam isusually some type of experience in the field of accounting. Whilenot mandatory in all states, some states require that a CPAcandidate have 2 years of work experience in accounting or taxpreparation. Some states only require general experience inaccounting.

Learn What a CPA Does

While the main function is to offer public accounting services,the CPA designation can allow accountants to do many other things.One of the main functions of a CPA is auditing, either for a smallor large business. Auditors go through financial statements andmake sure there are no discrepancies. Many CPAs go on to theexecutive levels for companies, as either CFOs or CEOs. Inaddition, many CPAs work in the tax field working income taxes andfederal and state taxes for small or mid-sized companies. Otherroles of CPAs include financial analysts, financial planners,forensic accountants, Management consulting, estate planning andcorporate finance.

The Many Benefits of Becoming a CPA

Certified public accountants are at the top of their field.Students interested in studying accounting should give seriousconsideration about getting the CPA in the US. In order to grow inan accounting career a CPA designation is almost necessary. Inaddition, CPAs will usually get paid higher. Those with a masterâsdegree and CPA will see their salary go up even higher. Inaddition, being a CPA in the US will open the door for so many morecareer opportunities. Accounting professional are a hot commodity,and those with an advanced degree and CPA designation will be onthe top of the list for most employers. Certified publicaccountants in the US have a lot of responsibility, but being atthe top of your field is a great feeling! International studentsinterested in studying accounting will find that becoming a CPA andgraduating with a degree in accounting will allow them to chasethere dream, whatever it may be, because it is such a versatilecareer and skillset.

What types of skills will I need?

To begin a successful career in accounting, you will need todevelop a wide array of knowledge, skills and competencies, rangingfrom a strong understanding of accounting and business concepts toeffective leadership and communication skills. You will also needto have a broad business perspective, which will enable you to "seethe big picture" of the internal and external factors that impacthow a business operates. Technology will also be a major enablerthroughout your career, so it's critical to stay abreast of andutilize new computer applications and systems as necessary.

Problem-solving, analytical and researchskills - You should be able to analyze, compare andinterpret facts and figures. The ability to identify and solveunstructured problems in an unfamiliar setting and provideinsightful consulting advice is a valued quality. Creative thinkingwill help you face issues on a daily basis and generate innovativesolutions. Also, it is essential to be able to effectively andefficiently research, organize and report on technical and/orindustry specific issues utilizing print, electronic or humansources.

Personal skills -Accounting is a service activity, and you will have to work well inteams as well as in one-on-one situations. Critical to anyorganization's success is the ability to lead, motivate and empowerteams to attain clear, concrete, timely and measurable results.

Strong communication skills including the ability tobe a good listener- You will becalled upon to persuasively present, discuss and defend your viewsboth formally and informally, in writing and verbally. Clients andco-workers will present you with issues and questions you will needto interpret and respond to quickly. The ability to show empathyand sensitivity to their situations will position you in afavorable light and earn their respect and trust.

Understand emergingtechnologies- You need to keepcurrent on emerging technologies like e-commerce, image processingand workflow technology, and understand how these impact businessoperations and the use of information for decision making. Youshould know how to use the Internet, e-mail and discussion boards,as well as be familiar with the latest spreadsheet, database, wordprocessing, accounting, and business and presentation softwarepackages.

Broad BusinessPerspective- You need a keenbusiness sense and an awareness of current events, both locally aswell as globally. As a key business partner to clients and/orcompany management, you add value to the organization by makingappropriate recommendations based on your understanding of companyoperations, policies, practices and competitive factors.

1â28. Multiple Choice Questions
Select the best answer for each of the following items and give reasons for your choice.
a. Which of the following best describes the relationship between assurance services and
attest services?
(1) While attest services involve fi nancial data, assurance services involve nonfi nancial data.
(2) While attest services require objectivity, assurance services do not require objectivity.
(3) Both attest and assurance services require independence.
(4) Attest and assurance services are different terms referring to the same types of services.
b. Which of the following has primary responsibility for the fairness of the representations
made in fi nancial statements?
(1) Clientâs management.
(2) Independent auditor.
(3) Audit committee.
(4) AICPA.
c. The most important benefi t of having an annual audit by a public accounting fi rm is to:
(1) Provide assurance to investors and other outsiders that the fi nancial statements are reliable.
(2) Enable offi cers and directors to avoid personal responsibility for any misstatements in
the fi nancial statements.
(3) Meet the requirements of government agencies.
(4) Provide assurance that illegal acts, if any exist, will be brought to light.
d. The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board
(PCAOB). Which of the following is not one of the responsibilities of that board?
(1) Establish independence standards for auditors of public companies.
(2) Review fi nancial reports fi led with the SEC.
(3) Establish auditing standards for audits of public companies.
(4) Sanction registered audit fi rms.
e. Which of these organizations has the responsibility to perform inspections of auditors of
public companies?
(1) American Institute of Certifi ed Public Accountants.
(2) Securities and Exchange Commission.
(3) Financial Accounting Standards Board.
(4) Public Company Accounting Oversight Board.
f. Governmental auditing, in addition to including audits of fi nancial statements, often
includes audits of effi ciency, effectiveness, and:
(1) Adequacy.
(2) Evaluation.
(3) Accuracy.
(4) Compliance.
g. In general, internal auditorsâ independence will be greatest when they report directly to the:
(1) Financial vice president.
(2) Corporate controller.
(3) Audit committee of the board of directors.
(4) Chief executive offi cer.
h. Which of the following did not precipitate the passage of the Sarbanes-Oxley Act of 2002
to regulate public accounting fi rms:
(1) Disclosures related to accounting irregularities at Enron and WorldCom.
(2) Restatements of fi nancial statements by a number of public companies.

(3) Conviction of the accounting fi rm of Arthur Andersen LLP.
(4) Ethical scandals at the AICPA.
i. Which of the following organizations establishes accounting standards for U.S. government
agencies?
(1) The Financial Accounting Standards Board.
(2) The Governmental Accounting Standards Board.
(3) The Federal Accounting Standards Advisory Board.
(4) The Public Company Accounting Oversight Board.
j. Which of the following is correct about forensic audits?
(1) All audit engagements are forensic in nature.
(2) Forensic audits are performed by law fi rms; they are not performed by CPA fi rms.
(3) Forensic audits are equivalent to compliance audits.
(4) Forensic audits are usually performed in situations in which fraud has been found or is
suspected.
k. What best describes the purpose of the auditorsâ consideration of internal control in a
fi nancial statement audit for a nonpublic company?
(1) To determine the nature, timing, and extent of audit testing.
(2) To make recommendations to the client regarding improvements in internal control.
(3) To train new auditors on accounting and control systems.
(4) To identify opportunities for fraud within the clientâs operations.
l. Which of the following is an example of a compliance audit?
(1) An audit of fi nancial statements.
(2) An audit of a companyâs policies and procedures for adhering to environmental laws
and regulations.
(3) An audit of a companyâs internal control over fi nancial reporting.
(4) An audit of the effi ciency and effectiveness of a companyâs legal department.

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2-30	2â30. Multiple Choice Questions
	Select the best answer for each of the following items and give reasons for your choice.
A	a. Which of the following organizations can revoke the right of an individual to practice as a
	CPA?
	(1) The Public Company Accounting Oversight Board.
	(2) The American Institute of Certifi ed Public Accountants.
	(3) The Securities and Exchange Commission.
	(4) The applicable state board of accountancy.
B	b. The AICPA over time has played an important role in standards setting. Which of the following
	standards are currently established by the AICPA?
	(1) Accounting standards applicable to nonpublic companies.
	(2) Auditing standards applicable to audits of nonpublic companies.
	(3) Quality control standards applicable to audits of public companies.
	(4) Standards for reviews of the interim fi nancial information issued by public companies.
C	c. Which of the following does the FASB consider a source of nonauthoritative guidance for
	use when there is no authoritative guidance available?
	(1) The FASB Codifi cation.
	(2) FASB Concepts Statements.
	(3) SEC Rules.
	(4) SEC Interpretive Releases
D	d. Financial statement audits performed under PCAOB requirements are designed to provide
	which type(s) of assurance with respect to the detection of material misstatements due to
	errors or fraud?
		Reasonable	Absolute
1		Yes	Yes
2		Yes	No
3		No	Yes
4		No	No
E	e. A basic objective of a CPA fi rm is to provide professional services that conform with professional
	standards. Reasonable assurance of achieving this basic objective is provided through:
	(1) Compliance with generally accepted reporting standards.
	(2) A system of quality control.
	(3) A system of peer review.
	(4) Continuing professional education.
F	f. Which of the following is not explicitly included in a standard report for a nonpublic
	company?
	(1) The CPAâs opinion that the fi nancial statements comply with generally accepted
	accounting principles.
	(2) That generally accepted auditing standards were followed during the audit.
	(3) That internal control of the client was satisfactory.
	(4) An identifi cation of the fi nancial statements audited.
G	g. The general group of the 10 PCAOB Auditing Standards requires that:
	(1) The auditors maintain an independent mental attitude.
	(2) The audit be conducted in conformity with generally accepted accounting
	principles.
	(3) Assistants, if any, be properly supervised.
	(4) The auditors obtain an understanding of internal control.
H	h. Which AICPA quality control standard would most likely be satisfi ed when a CPA fi rm
	maintains records indicating which partners or employees of the fi rm were previously
	employed by the CPA fi rmâs clients?
	(1) Professional relationship.
	(2) Engagement performance.
	(3) Relevant ethical requirements.
	(4) Monitoring.
I	i. An audit provides reasonable assurance of detecting material:
	Fraudulent Financial	Misappropriation
	Reporting	of Assets
1	Yes	Yes
2	Yes	No
3	No	Yes
4	No	No
J	j. Which of the following is not included in an integrated audit report on the fi nancial statements
	of a public company?
	(1) The report states that the audit was performed in accordance with AICPA standards.
	(2) The report indicates that the fi nancial statements are the responsibility of management.
	(3) The report indicates that the auditors have also audited the effectiveness of the companyâs
	internal control.
	(4) The report is signed in the name of the CPA fi rm.
K	k. Audit fi rms that are subject to inspections by the PCAOB staff include:
	(1) All audit fi rms.
	(2) Audit fi rms that are registered with the SEC.
	(3) Audit fi rms that are registered with the PCAOB.
	(4) Audit fi rms that are registered with a state board of accountancy.
L	l. Which of the following is not a difference noted when comparing the AICPA audit report
	to the international audit report?
	(1) The international audit report may use the phrase âtrue and fair view.â
	(2) The international audit report may be signed using the personal name of the audit
	partner, the audit fi rm, or both.
	(3) The international audit report requires inclusion of the city of the CPA fi rm offi ce that
	performed the audit.
	(4) The international audit report includes an opinion on internal control.

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ACC M115 Lecture Notes - Lecture 2: Financial Accounting Standards Board, Governmental Accounting Standards Board, Tax Avoidance

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