Connect Access Card for Principles of Auditing & Other Assurance Services
21st Edition
ISBN: 9781260299366
Author: Ray Whittington, Kurt Pany
Publisher: McGraw-Hill Education
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Question
Chapter 2, Problem 21RQ
To determine
Explain whether quality control standard requires a CPA firm to implement similar quality control procedures.
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The following questions concern quality control standards. Choosethe best response.a. The nature and extent of a CPA firm’s quality control policies and procedures dependon The CPA The Nature of the Cost-benefitFirm’s Size CPA Firm’s Practice Considerations(1) Yes Yes Yes(2) Yes Yes No(3) Yes No Yes(4) No Yes Yesb. Which of the following are elements of a CPA firm’s quality control that should beconsidered in establishing its quality control policies and procedures?Human Resources Monitoring Engagement Performance(1) Yes Yes No(2) Yes Yes Yes(3) No Yes Yes(4) Yes No Yesc . One purpose of establishing quality control policies and procedures for decidingwhether to accept a new client is to(1) enable the CPA firm to attest to the reliability of the client.(2) satisfy the CPA firm’s duty to the public concerning the acceptance of new clients.(3) provide reasonable assurance that the integrity of the client is considered.(4) anticipate before performing any field work whether an unqualified…
Which of the following elements of a system of quality control is related to firms receiving independence confirmations from its professionals with respect to clients?a. Acceptance and continuance of client relationships and specific engagements.b. Engagement performance.c. Monitoring.d. Relevant ethical requirements.
What is meant by the term quality control as it relates to CPA firm?
Chapter 2 Solutions
Connect Access Card for Principles of Auditing & Other Assurance Services
Ch. 2 - Prob. 1RQCh. 2 - Prob. 2RQCh. 2 - Prob. 3RQCh. 2 - Prob. 4RQCh. 2 - Prob. 5RQCh. 2 - Prob. 6RQCh. 2 - Prob. 7RQCh. 2 - Prob. 8RQCh. 2 - Prob. 9RQCh. 2 - Prob. 10RQ
Ch. 2 - Prob. 11RQCh. 2 - Prob. 12RQCh. 2 - Prob. 13RQCh. 2 - Prob. 14RQCh. 2 - Prob. 15RQCh. 2 - Prob. 16RQCh. 2 - Prob. 17RQCh. 2 - Prob. 18RQCh. 2 - Prob. 19RQCh. 2 - Prob. 20RQCh. 2 - Prob. 21RQCh. 2 - Prob. 22RQCh. 2 - Prob. 23RQCh. 2 - Prob. 24RQCh. 2 - Prob. 25QRACh. 2 - Prob. 26QRACh. 2 - Jane Lee, a director of a nonpublic corporation...Ch. 2 - Prob. 28QRACh. 2 - Prob. 29QRACh. 2 - Prob. 30AOQCh. 2 - Prob. 30BOQCh. 2 - Prob. 30COQCh. 2 - Prob. 30DOQCh. 2 - Prob. 30EOQCh. 2 - Prob. 30FOQCh. 2 - Prob. 30GOQCh. 2 - Prob. 30HOQCh. 2 - Prob. 30IOQCh. 2 - Prob. 30JOQCh. 2 - Prob. 30KOQCh. 2 - Prob. 30LOQCh. 2 - Prob. 31OQCh. 2 - Prob. 32OQCh. 2 - Prob. 33OQCh. 2 - Prob. 34OQCh. 2 - Prob. 35OQCh. 2 - Joe Rezzo, a college student majoring in...Ch. 2 - Prob. 37PCh. 2 - Hide-It (HI), a family-owned business based in...Ch. 2 - Prob. 39RDC
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Similar questions
- The following is an example of a CPA firm’s quality controlprocedure requirement: “Any person being considered for employment by the firm musthave completed a basic auditing course and have been interviewed and approved by anaudit partner of the firm before he or she can be hired for the audit staff.” Which elementof quality control does this procedure affect and what is the purpose of the requirement?arrow_forwardFor each of the following procedures taken from the quality control manual of a CPA firm, identify the applicable element of quality control from; A. All potential new clients are reviewed before acceptance. The review includes consultation with predecessor auditors and background checks. All new clients are approved by the firm management committee, including assessing whether the firm has the technical competence to complete the engagement. B. The partners accept responsibility for leading and promoting a quality assurance culture within the firm and for providing and maintaining a quality assurance manual and all other necessary practical aids and guidance to support engagement quality. C. Each office of the firm shall be visited at least annually by review persons selected by the director of accounting and auditing. Procedures to be undertaken by the reviewers are illustrated by the office review program. D. Appropriate accounting and auditing research requires adequate technical…arrow_forwardQ1. Based on Sarbanes-Oxley, who is ultimately responsible for the independence of the external auditor? (In your response, identify all of the requirements placed upon the Audit Committee by Sarbanes-Oxley, and why you think the Act placed these responsibilities with this group). Q2. Which of the following is an example of the appropriate implementation of a system of quality control? (in your response, describe the purpose of a system of quality control for an audit firm, and what the six elements of quality control are).arrow_forward
- What is an engagement quality control review What are the qualification of engagement quality control reviewers What are the pertinent timetable rules for the following Completion of the audit file or documentation Retention of audit file or documentationarrow_forwardCritically Analyse the importance of quality management in auditing and assuranceand recommend how audit firms can address any quality control issues and ensurecompliance with auditing and assurance standards.arrow_forwardWhat do you think is meant by the term ethical auditing with respect to the principles and rules of professional conduct in the AICPA Code?arrow_forward
- Each of the following quality control policies and procedures is typical of ones that can be found in public accounting firms’ systems of quality control. Identify each of them with one of the six elements of quality control identified by SQCS 8.a. Assign management responsibilities in such a manner that commercial considerations do not override the quality of work performed.b. Establish policies and procedures for resolving differences of opinion among firm personnel that arise during professional engagements.c. Develop policies and procedures to ensure that professionals are provided appropriate professional development opportunities.d. Review engagement documentation, reports, and the client’s financial statements.e. Develop effective performance evaluation, compensation, and advancement procedures.f. Identify circumstances and relationships that create threats to independence and take appropriate action to eliminate those threats or reduce them to an acceptable level.g. Identify…arrow_forwardAny person any person being considered for employment by the firm must have completed a basic auditing course and have been interviewed and approved by an audit partner of the audit staff " which element of the quality control does this procedure affect and what is the purpose of the requirements?arrow_forwardAudit firms are expected to establish and maintain a system of quality control. PCAOB inspections often cite the lack of quality controls as a deficiency of audit firms. What role does leadership play in developing the kind of quality control system that supports ethical decision making in audits?arrow_forward
- Discuss the relationship between quality control and generally accepted auditing standards.arrow_forwardRefer to Exhibit 2.5 and answer the following questions. a. (Sections 101, 104, and 105) How does the establishment and operation of the PCAOB help to ensure quality external audits? How will audit firm inspections and investigations by the PCAOB help ensure high audit quality? b. (Sections 201-203) How do Sections 201-203 address audit ()r independence concerns? c. (Section 206) What is a cooling-off period, and how does it address auditor independence concerns? d. (Section 301) How do the audit committee requirements help ensure effective corporate governance? e. (Sections 302 and 906) How do the officer certification requirements help to address the risk of fraud in publicly traded organizations? What is the likelihood that a CFO who is committing fraudulent financial reporting would sign the certification falsely, and what are your reactions to that possibility? f. (Section 401) How does this section relate to the Enron fraud? g. (Section 404) How do the management assessment and audit or attestation of internal controls contained in this section help to address the risk of fraud in publicly traded organizations? h. (Section 407) Why is it important that at least one member of the audit committee be a financial expert? What are the financial reporting implications if the audit committee does not have any individuals serving on it who possess financial expertise? i. (Section 802) How does this section relate to the Enron fraud?arrow_forwardWhich statement best describes how audit firms should apply the general standard in the SEC independence rule? a. Firm should ensure that all services and relationships comply with specific proscriptions in the rule only. b. Firms should apply the general standard only when the specific rules do not address a service or relationship. c. Firms should examine all services and relationships in light of the rule's general standard. d. Firms should consider the general standard as an optional provision in the SEC independence rule.arrow_forward
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