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CPA Questions for Auditing - ethics, regulation, integrity

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1. How much should the government regulate the CPA profession?
2. Given the recent accounting scandals, how much confidence should the public really have in financial statement audits?
3. Are audits as important for internal managers as they are for outside investors? Why or why not?
4. In light of recent audit failures, are current audit standards sufficient to ensure the integrity of audit opinions? Why or why not?
5. What can be done to ensure auditors are abiding by the Code of Ethics?

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Solution Summary

The 514 word solution gives a comprehensive paragraph in response to each question. The concepts of ethics, regulation and integrity have been challenged. The solution discusses the changes in the framework to minimize future abuse.

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1. There is more government regulation now than there ever has been, but as is typical with government intervention, not all of it is positive. Sarbanes-Oxley was needed after several notable failures in the system, but the subsequent compliance cost to companies and the consolidation of the attest function to a very few companies are negative results. Another consequence in the chain is the movement of M&A activity offshore to more compliant business cultures.

2. Unfortunately, humans got involved to create accounting scandals. My personal view is that certain accountants were sucked into the culture of the greedy CEO and wanted to play the game as Skilling, Koslosky, Ebbers, Lay, Grasso and others did. Certainly all were wrong, but it is a sad commentary on the profession that ...

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