AC410 Assignment Unit 1
1–20. Public accounting firms are sometimes grouped into categories of local firms, regional firms, national firms, and international firms. Explain briefly the characteristics of each. Include in your answer the types of services stressed in each group.
1–26. The Sarbanes-Oxley Act of 2002 created the Public Company Accounting Oversight Board.Explain the major responsibilities of this board.
2-7. Evaluate the following quotation: “If a CPA firm completes a nonpublic company audit of Adam Company’s financial statements following AICPA generally accepted auditing standards and is satisfied with the results of the audit, an unmodified audit report may be issued. On the other hand, if no audit is performed of the current year’s financial statements, but the CPA firm has performed satisfactory audits in prior years, has confidence in the management of the company, and makes a quick review of the current year’s financial statements, a qualified report may be issued.”
Do you agree? Give reasons to support your answer.
2–28. Reed, CPA, accepted an engagement to audit the financial statements of Smith Company. Reed’s discussions with Smith’s new management and the predecessor auditor indicated the possibility that Smith’s financial statements may be misstated due to the possible occurrence of errors, fraud, and illegal acts.
a. Identify and describe Reed’s responsibilities to detect Smith’s errors and fraud. Do not
identify specific audit procedures.
b. Describe Reed’s responsibilities to detect Smith’s material noncompliance with laws. Do
not identify specific audit procedures.
c. Identify and describe Reed’s responsibilities to report Smith’s noncompliance with laws.