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Role of Independent CPA: Auditing

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 New Jersey's please).
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.

Solution Preview

In accordance to BrainMass rules this is not a completion of assignment but background help.

a. Examine the CPA profession and licensing requirements (use your own state's licensing requirements for this report). I live in New Jersey

After July 1, 2000 the licensing requirements for New Jersey are:

1. The applicant must have at least 150 credit hours of education, including a baccalaureate or higher degree from an institution of higher education acceptable to the New Jersey Board of Accountancy.

2. They must sit for and pass the Uniform CPA Examination comprising 15.5 hours. This exam is held in May and November on a Wednesday and a Thursday.

3. An applicant must pass all the sections of the exam to qualify for a certificate.

4. For certification the candidate must provide evidence of one year of experience in the practice of public accounting or its equivalent, under the direction of a licensee and the experience should include evidence of intensive and diversified experience in auditing or accounting.

5. In case an individual is holding a current valid license as a certified public accountant, he may apply to the Board for Endorsement.

b. Explain how a licensed CPA (as an outside auditor) could be of value to your company.

1. The auditor is an agency independent of the management for auditing of accounts, financial transactions and the financial statements he is valuable because of his independence.

2. The auditor is ...

Solution Summary

This posting examines the role of independent CPAs. It examines how a licensed CPA can help business and includes references.