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Chapter 2

BU477 Chapter Notes - Chapter 2: Sole Proprietorship, Public Company Accounting Oversight Board, Risk Management

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Helena Keirstead

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Chapter 2:
Public Accounting Profession and Audit Quality
Public Accounting Firms:
More than 5000 public accounting firms
Big Four International: They have offices throughout Canada and the world.
o Deloitte
o EY
National: Have offices in the major cities and perform the same things as
international but are much smaller.
o Grant Thornton
o Collins Barrow
Regional and Local Firms: Fewer than 50 public accounting firms in this
category. Some of these firms only have one office and serve close clients.
o Richtner
o Mallette
o Crowe MacKay
Small Local Firms: Fewer than 25 professionals in a single office and do not
perform audits.
Structure of Public Accounting Firms:
Sole proprietorship or partnership structure
Generally, are limited liability Only liable for the amount you have contributed
Hierarch consist of partners, managers, supervisor, senior, staff accountant
Manager and partner will review the staff accountants work
Requirements to be a Public Accountant:
Undergrad and CPA designation
Must choose one technical area of depth and two areas of breadth
To be a public accountant but choose assurance as depth
Organizations Affecting the Canadian Public Accounting Profession:
CPA Canada
o Represents CPA profession nationally and internationally
o It combined all the different designations and combined it under one
o Helps assist in creating uniform standards for admission in different
o Individual CPA’s are members of their provinces organizations and not
CPA Canada
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o These provincial bodies responsible for
Maintaining admission
Mandatory continuing education
Conduct reviews of PA firms
Investigating complaints
Auditing and Assurance Standards Board (AASB)
o Authority to set federal and provincial rules for financial statement audits
and auditing practices
o Funded by CPA Canada
International Auditing and Assurance Standards Board:
o Independent standard setting body that sets international standards for
auditing and assurance
o Responsible for the convergence of international and national auditing
Canadian Public Accountability Board (CPAB):
o Contribute to public’s confidence in integrity of financial reporting
o Focus on
Effective inspections
Risk management
Thought leadership
Stakeholder engagement
o They basically audit, auditors
Public Company Accounting Oversight Board (PCAOB):
o They inspect registered accounting firms to asses if they are complying
with various rules
o Annual inspections of accounting firms
o Have ability to create standards
Provincial Securities Commissions:
o Companies that issue securities must abide by rules created by PSC
o Responsible for administering the purchase and sale of securities in their
Securities and Exchange Commission (SEC):
o Assists in providing investors in public corporations with reliable
information upon investment decisions
o Power to establish rules regarding PA and as well prosecute them
Canadian Auditing Standards:
Standards for financial statement audit
o Purpose of Audit:
Provide opinion of financial statements
o Personal Responsibilities of Auditor:
Must have the correct competency and capabilities
Comply with ethical requirements
Exercise professional judgement
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