Terms in this set (21)Relationship of GAAS to the SQCS An individual audit engagement is governed by GAAS, whereas a CPA firm's collective portfolio of accounting and auditing services (sometimes called the "A&A" practice, which involves entities' financial statements and, thereby, involves the "public interest") is governed by the AICPA's SQCS. SQCS are issued by the AICPA's Auditing Standards Board The purpose of AU 220 on "Quality Control for an Engagement Conducted in Accordance with [GAAS]" The purpose of AU 220 on "Quality Control for an Engagement Conducted in Accordance with [GAAS]" is to assist the auditor in implementing the firm's quality control procedures specifically at the engagement level. This pronouncement states that the auditor's objective is to implement quality control procedures at the engagement level that provide reasonable assurance that (a) the audit complies with professional standards and applicable legal and regulatory requirements and (b) the auditor issues an appropriate report. Focus of the System of Quality Control A CPA firm is required to have a "system of quality control" for its accounting and auditing services (covering audit, attestation, compilation, and review services; Note that the SQCS are not applicable to tax or consulting services) to provide reasonable assurance that engagements are performed in accordance with professional standards and applicable regulatory and legal requirements, and that the issuance of reports are appropriate in the circumstances. Focus of the System of Quality Control Nature and Scope Nature and scope -- The policies and procedures will vary with the circumstances (e.g., firm size and number of offices, complexity of services offered, and the level of experience of the professional staff). Focus of the System of Quality Control Inherent limitations Inherent limitations -- Similar to any internal control system, a quality control system provides "reasonable" (a high, but not absolute) assurance, reflecting implicit cost-benefit trade-offs. System Six Elements of a Quality Control These are interrelated (e.g., monitoring and the quality of personnel involved affect the other elements) 1. Leadership responsibilities for quality Six Elements of a Quality Control Leadership responsibilities for quality Leadership responsibilities for quality -- Policies and procedures should promote an internal culture that emphasizes a commitment to quality (sometimes called the "tone at the top"). For an individual audit engagement, the engagement partner should take responsibility for overall audit quality, although performance of certain procedures may, of course, be delegated to other members of the engagement team. Six Elements of a Quality Control Relevant ethical requirements Relevant ethical requirements -- Policies and procedures should address the independence of personnel as necessary (should obtain written confirmation of compliance with independence requirements from all appropriate personnel at least annually). Note: If the engagement team identifies a threat to independence that safeguards may not eliminate or reduce to an acceptable level, the engagement partner is required to report the matter to the relevant person(s) in the firm to determine the appropriate action (to either eliminate the threat or withdraw from the engagement when withdrawal is allowed under applicable law or regulation). Six Elements of a Quality Control Acceptance and continuance of client-relationships and engagements Acceptance and continuance of client-relationships and engagements -- Policies and procedures should carefully assess the risks associated with each engagement (including issues related to management integrity) and the firm should only undertake engagements that can be completed with professional competence. Six Elements of a Quality Control Human resources Human resources -- Policies and procedures should address important personnel issues (including initial hiring, assignments to engagements, professional development and continuing professional education, and promotion decisions). Six Elements of a Quality Control Engagement performance Engagement performance -- Policies and procedures should focus on compliance with all applicable firm and professional standards and applicable regulatory requirements, and encourage personnel to consult as necessary with professional (or other) literature or other human resources within or outside of the firm for appropriate guidance. Six Elements of a Quality Control Monitoring Monitoring -- Policies and procedures should provide an ongoing assessment of the adequacy of the design and the operating effectiveness of the system of quality control. Controls that are effective at one point in time, may deteriorate over time owing to neglect or changed circumstances. It is important that the controls are properly monitored so that timely adjustments can be made as necessary to keep the quality control policies and procedures working effectively over time. Differences of Opinion The firm should establish policies and procedures for dealing with and resolving differences of opinion within the engagement team, with those consulted, and between the engagement partner and the engagement quality control reviewer (including that the conclusions reached are documented and implemented and that the report is not released until the matter is resolved). Documentation of the Operation of Quality Control Policies and Procedures The firm should establish policies and procedures requiring appropriate documentation of the operation of each element of the system of quality control. Engagement quality control review Engagement quality control review -- A process designed to provide an objective evaluation, before the report is released, of the significant judgments the engagement team made and the conclusions it reached in formulating the auditor's report. (The engagement quality control review process is only for those audit engagements, if any, for which the firm has determined that an engagement quality control review is required, in accordance with its policies and procedures.) Engagement quality control reviewer Engagement quality control reviewer -- This is the person in the firm, a suitably qualified external person, or a team made up of such individuals, none of whom is part of the engagement team, with sufficient and appropriate experience and authority to objectively evaluate the significant judgments that the engagement team made and the conclusions it reached in formulating the auditor's report. Engagement team - means all partners and staff performing the engagement, and any individuals engaged by the firm or a network firm who perform procedures on the engagement. This excludes external experts engaged by the firm or a network firm. Engagement partner Engagement partner - means the partner or other person in the firm who is responsible for the audit engagement and its performance, and for the auditor's report that is issued on behalf of the firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body. "Engagement partner" should be read as referring to a public sector equivalent where relevant. The Main Difference Between the Clarified SAS and the Corresponding International Standard on Auditing The SAS requires that the quality control review must be completed before the engagement partner releases the auditor's report, whereas the ISA requires that the quality control review be completed before the engagement partner dates the auditor's report. Who is responsible for the administration of a quality control system? May be vested in one person but everyone shares responsibility. Services for which a CPA firm is required to have a sytem of quality control. Audits, attestation, compilation and review services. (Not applicable to tax or consulting services.) Sets with similar terms1.5 Quality control18 terms pharris9 Audit Chapter 212 terms penny_phoon Audit Chapter 212 terms coolmandrew Audit Chapter 2 (II)10 terms marissanc Sets found in the same folderAudit: Revenue and collection Cycle16 terms gconde Auditing ch 1013 terms jake_swallow Auditing - Chapter 438 terms antoinette_christina CPA Exam Becker Audit 697 terms nobiny Other sets by this creatorOracle E-Business Suite (Accounts Receivable)23 terms jeffmhowarth Regulations: Business Law43 terms jeffmhowarth Resume Questions (Apartment Management)153 terms jeffmhowarth Inventory19 terms jeffmhowarth
Verified questions
COMPUTER SCIENCE Write a Circle class that has the following member variables: - radius: a double - pi: a double initialized with the value 3.14159 The class should have the following member functions: - Default Constructor. A default constructor that sets radius to 0.0. - Constructor. Accepts the radius of the circle as an argument. - setRadius. A mutator function for the radius variable. - getRadius. An accessor function for the radius variable. - getArea. Returns the area of the circle, which is calculated as area = pi * radius * radius - getDiameter. Returns the diameter of the circle, which is calculated as diameter = radius * 2 - getCircumference. Returns the circumference of the circle, which is calculated as - circumference = 2 * pi * radius Write a program that demonstrates the Circle class by asking the user for the circle’s radius, creating a Circle object, and then reporting the circle’s area, diameter, and circumference. Verified answer COMPUTER SCIENCE The following pseudocode describes how a bookstore computes the price of an order from the total price and the number of the books that were ordered. Read the total book price and the number of books. Compute the tax (7.5 percent of the total book price). Compute the shipping charge ($2 per book). The price of the order is the sum of the total book price, the tax, and the shipping charge. Print the price of the order. Translate this pseudocode into a Python program. Verified answer
COMPUTER SCIENCE Write two different code segments that may be used to wrap an index back around to the beginning of an array when it moves past the end of the array. Use an if/else statement in one segment and modular arithmetic in the other. Verified answer
COMPUTER SCIENCE The following member functions has errors in the way it performs a linked list operation. Find as many mistakes as you can. void NumberList::appendNode(double num) { ListNode *newNode, *nodePtr; // Allocate a new node & store num newNode = new listNode; newNode->value = num; // If there are no nodes in the list // make newNode the first node. if (!head) head = newNode; else // Otherwise, insert newNode. { // Find the last node in the list. while (nodePtr->next) nodePtr = nodePtr->next; // Insert newNode as the last node. nodePtr->next = newNode; } } Verified answer Recommended textbook solutions
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The PCAOB board dictates the professional auditing standards that registered auditing firms must use. These standards are utilized to monitor accounting firms. Prior to the PCAOB, standards were set by the AICPA.
Which section of the AICPA professional standards defines the elements of a system of quality control?AU-C section 220, Quality Control for an Engagement Conducted in Accordance With Generally Accepted Auditing Standards, for example, addresses quality control procedures for engagements conducted in accordance with generally accepted auditing standards.
Which element of quality control focuses on compliance with professional standards legal obligation and regulatory requirements?What is the objective of SQC-1? with applicable professional standards as well as the regulatory and legal requirements in addition to the firm's policies in respect of quality and ethics.
What professional standards require accounting firms to develop quality controls for their audit practices?Registered firms are required to comply with the PCAOB auditing and related professional practice standards, which include the Interim Quality Control Standards.
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PCAOB describes the hiring assignment promotion and professional development of staff
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