Chapter 2 LO1

Question 1

what is the PCAOB

Answer 1

Public Company Accounting Oversight Board

Question 2

what are the 3 size categories for CPA firms

Answer 2

1. big four international firms 2. national/regional 3. local

Question 3

what do CPA firms provide (7)

Answer 3

1. audit services 2. other attestation services other than audit 3. other assurance services 4. accounting and bookeeping 5. tax services 6. management consulting 7. risk advisory services

Question 4

Although the Sarbanes-Oxley Act and the SEC restrict auditors from providing many consulting services to public company audit clients, audit firms are not restricted from ?

Answer 4

providing consulting to private companies and public companies that are not audit clients

Question 5

if a company audits a public company they can’t do what?

Answer 5

provide consulting services

Question 6

what restrict auditors from providing many consulting services to public company audit clients? (2)

Answer 6

1. sarbanes oxley act 2. SEC

Question 7

the legal right to perfrom audits is granted to CPA firms by what?

Answer 7

the regulation in each state

Question 8

cpa firms prepare corp and indiv tax returns for who?

Answer 8

audit and nonaudit clients

Question 9

except for certain governmental organ, the audit of all general use financial statements in the US are done by who?

Answer 9

CPA firms

Question 10

what is a compilation report?

Answer 10

a report that indicates the CPA assembled the statemewnts but provides no assurance to third parties