Standards

Question 1

PCAOB - establish standards

Answer 1

• Attestation
• Independence
• Auditing
• Quality Control

Question 2

Foreign Corrupt Practices Act

Answer 2

The Foreign Corrupt Practices Act’s provisions prohibit illegal foreign payments and require publicly held companies to devise and maintain adequate internal control.

Question 3

Statements on Standards for Accounting and Review Services (SSARS)

Answer 3

The SSARS require that an accountant obtain written representations from management for the financial statements for all periods covered by the accountant’s review report.

Question 4

To avoid cash basis statements being mistaken for GAAP financial statements

Answer 4

To avoid cash basis statements being mistaken for GAAP financial statements, SAS 62 requires different titles for them.

• Statement of Assets and Liabilities–Cash Basis
• Statement of Revenues and Expenses–Cash Basis
• Statement of Retained Earnings–Cash Basis

are descriptive titles. The latter two statements can be combined and titled as a Statement of Revenues, Expenses, and Retained Earnings–Cash Basis.

Within cash basis statements, captions can be the same as those found in GAAP statements. Some accountants, however, prefer to use different captions such as “excess of revenue collected over expenses paid” instead of net income. A Statement of Cash Flows is not required for cash basis financial statements.

It is assumed that the interested user can estimate the investing and financing activities by examining comparative cash basis balance sheets.