CPA Profession and Audit Process
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The privately owned company that you work for has been awarded a contract that will require submission of the company's audited financial statements. The owner of the company is not familiar with audits and audited financial statements. As the Controller, prepare a 700-1,050-word report to the owner explaining the work of independent CPAs, auditing standards, ethics in auditing, and how an audit could help your company reduce its information risk. Be sure to perform the following:
a. Examine the CPA profession and licensing requirements (use your own state's licensing requirements for this report).
b. Explain how a licensed CPA (as an outside auditor) could be of value to your company.
c. Critique current auditing standards.
d. Analyze the importance of ethics in the audit process.
e. Assess the role of auditing in reducing information risk for decision makers
f. Explain how independent audits could help the decision makers at your company.
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Solution Summary
The solution discusses the CPA profession requirements and auditing standards and processes.
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a. Examine the CPA profession and licensing requirements (use your own state's licensing requirements for this report).
There are various licensing requirements in the New York State related with the moral values of the candidate, his/her age, academic, examination and experience status. First of all there is a certain necessity of an acceptable moral character. The candidate should be at least 21 years old and he/she should complete an accounting program registered by the Department or an accrediting body accepted by the Department or he/she should have at least 15 years of public accounting experience acceptable to the State Board for Public Accountancy. If the candidate qualifies these characteristics then he/she needs to get the minimum scores for each part of the CPA exam within 18 months at least. Any applications needs to have at least two years of qualifying experience in private or governmental accounting or auditing of a character.
b. Explain how a licensed CPA (as an outside auditor) could be of value to your company.
As an outside auditor a CPA can examine the financial statements that a firm's management has prepared and create a written report that contains an opinion as to whether the financial statements are fairly stated and comply with GAAP and can also use sophisticated testing ...
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