Auditing Chapter 1

Sarbanes-Oxley Act

A set of reforms that toughened penalties for corporate fraud, restricted the kinds of consulting CPAs can perform for audit clients, and created the Public Company Accounting Oversight Board to oversee CPAs and public accounting.

PCAOB

Oversees auditors of public companies, and establishes various other requirements, including Section 404’s requiring of audits of internal control and Section 201’s restrictions on the types of activities that CPA’s may perform for public company audit clients.

Dodd-Frank Act (The Wall Street Reform and Consumer Protection Act)

Promote financial stability by improving accountability and transparency in the financial system and to protect the U.S. taxpayer by ending bailouts of “too-big-to-fail” institutions

Institute of Internal Auditors (IIA)

International organization of internal auditors, that has developed various standards relating to internal auditing and administers the certified internal auditor (CIA) examination.

Government Accountability Office (GAO)

Work includes compliance, operational, and financial audits. Includes audits of government agencies to determine that spending programs follow the intent of Congress and operational audits to evaluate the effectiveness and efficiency of selected government programs.

Internal Revenue Service (IRS)

They are responsible for enforcement of the federal tax laws. Agents conduct compliance audits of the income tax returns of individuals and corporations to determine that income has been computes and taxes paid as required by federal law.

American Institute of Certified Public Accounting (AICPA)

A voluntary organization with more than 418,000 members. 5 areas of work:

1. Establish standards and rules to guide CPA in conduct of professional services.

2. Carry on program of research and publication.

3. Promoting continuing professional education.

4. Contributing to the profession’s self regulation

5. Developing and grading the Uniform CPA Examination.

Auditing Standards Board (ASB)

Has responsibility assigned by the AICPA for establishing auditing standards for nonpublic organizations.

Statement on Auditing Standards (SASs)

The ASB issues SASs (series of pronouncements), which serve as the AICPA’s official guidance for audits of nonpublic organizations.

Statements on Standards for Accounting and Review Services (SSARS’s)

Series of pronouncements that must be followed when a firm complies or reviews a nonpublic company’s financial statements.

State Boards of Accountancy

Grant permits to practice as a CPA, regulate the profession and may suspend or revoke an accountant’s certificate. and are organized through NASBA (National Association of State Boards of Accounting)

Financial Accounting Standards Board (FASB)

SEC and AICPA hace designated the FASB as the body with power to set forth GAAP for entities other than federal, state, and local governments.

Governmental Accounting Standards Board (GASB)

Formed to establish and improve standards of financial accounting for state and local government entities. Operational structure is similar to FASB.

Federal Accounting Standards Advisory Board

The BAO established the FASAB to develop accounting standards for the U.S. government, and it issues standards that are used to audit a number of major federal agencies and the U.S. government as a whole.

Securities and Exchange Commission (SEC)

The SEC is an agency of the U.S. government. The SEC has oversight responsibility for the PCAOB. It’s primary function is to protect investors and the public by requiring full disclosure of financial information by companies offering securities for sale to the public.

A second objective is to prevent misrepresentation, deceit, or other fruad int eh sale securities.

International Federation of Accountants (IFAC)

Global organization of accounting professional bodies. Membership consists of approximately 175 professional accounting bodies. It was established to help foster a coordinated world wide accounting professional with harmonized standards.

Sustainability Accounting Standards Board (SASB)

It was established to assist businesses and investors by developing common set of criteria related to a company’s environmental. social, and governance prospects. Board has established standards across a range of industries to guide managements in disclosure of sustainability of information to investors.