Advocacy, TSPs, Gen Standards and Acct Principles

Question 1

Who can and cannot advocate for a client?

Answer 1

1 Members doing attest (audit) work may not advocate for client
2 Members providing non-attest services may advocate for their clients

Question 2

Use of TSPs (Third-party Srvc Provider)

Answer 2

1 Outsourcing, like to India, can cause a threat to objectivity or integrity
2 No issues if only doing Admin work
3 Clients should be notified, preferably in writing, if TSP is used

Question 3

If client objects to TSPs…

Answer 3

Either don’t outsource or decline engagement

Question 4

What are the General Standards that members must follow that are set by appropriate bodies?

Answer 4

1 Take on jobs only if you can reasonably expect to complete with professional competence
2 Need not be perfect but should always exercise due professional care (is firm big enough to handle job)
3 Always adequately plan and supervise your provision of professional services
4 Never render conclusions or recommendations w/o sufficient relevant data to support them

Question 5

Accounting Principles follow…

Answer 5

GAAP (general accepted accounting principles)

Question 6

What is the exception to following GAAP?

Answer 6

Demonstrates that due to unusual circumstances, following GAAP would be misleading

Question 7

What are the circumstances that justify GAAP departure?

Answer 7

1 New legislation

2 Evolution of a new form of business

Question 8

What are the three things needed to describe departure of GAAP?

Answer 8

1 The departure
2 It’s approximate effects
3 The reason why compliance with GAAP would be misleading

Question 9

What are the circumstances that do NOT justify GAAP departure…

Answer 9

1 An unusual degree of materiality

2 Conflicting industry practice (no one else does it)

Question 10

What is the General Standards of competence?

Answer 10

It means the member or his or her staff has appropriate technical qualifications and the member can supervise and evaluate the quality of work performed

Question 11

What is the General Standards when using TSP?

Answer 11

1 Ensure any 3rd party service provider you use has the required professional qualifications, technical skills and needed resources
2 Adequately plan and supervise the 3rd party service providers services and obtain the date needed to evaluate the job