Exercises Code of Conduct Exercises

Instructions: Answer the following in complete sentences using the AICPA's revised Code of Conduct, providing the ET references for each of your responses. For questions with multiple parts, include multiple ET references as appropriate.

What are the three broad categories of safeguards identified in Part 1 of the Code, in the Conceptual Framework for members in public practice? Which category of safeguard cannot be relied upon, by itself, to reduce threats to an acceptable level?

Jim, a retired CPA, neglected to file his tax return this year. What does the Code say about this?

Auditing Standards (and Related Topics) Exercises

Consider AICPA guidance. Why should an auditor perform risk assessment procedures? Also, what are three risk assessment procedures an auditor should undertake in order to assess an entity's risks of material misstatement in an audit?

Consider AICPA guidance. Can analytical procedures be sued as a form of substantive testing? Citing from the applicable AU-C, justify your response.

Locate the PCAOB's audit standard on performing integrated audits. When an auditor is reporting on the results of an audit, must the auditor issue separate or combined reports on the company's financial statements and internal controls?

Locate a PCAOB Staff Audit Practice Alert. Briefly, summarize the main issue addressed in this particular alert. Next, describe the role you think these alerts plan in establishing auditing requirements for registered public accounting firms.

Under "Inspections" on the PCAOB website, locate the link to Firm Inspection Reports. Review a firm inspection report and describe some of the findings (or deficiencies) cited by the PCAOB. In particular, look for firm inspection reports that say: "QC criticisms are now public".

Exercises Related to Other Professional Services Standards

Respond to each part.

a. What performance requirements apply to a financial statement review? Specifically, what are the procedures that will "ordinarily" provide an accountant with a reasonable basis for obtaining limited assurance?

b. Can an accountant perform a review for a client in an industry for which he or she has no prior experience?

John is performing a compilation engagement and must assemble his documentation. Generally speaking, what should the goal of John's documentation be? What are three items (or pieces of information) that John should include in his documentation?

Chapter 10 - Governmental and Industry Accounting Research (exercises 3, 5, 11, 15 & 16 in your text)

Governmental Accounting Research Exercises

Locate the Status page for GASB Statement No. 22, Accounting for Taxpayer-Assessed Tax Revenues in Governmental Funds. When did this standard initially become effective? What GASB Statement superseded this standard?

Assume the Town of Olson is undergoing a bankruptcy, and a bankruptcy plan of adjustment, restructuring the town's debt, has been confirmed by a court. Locate the appropriate accounting guidance, then respond to the following questions.

a. When (i.e., at what date) is it appropriate for the town to recognize gains for adjustments to its pre-bankruptcy debt? Cite your source.

b. Locate the summary of the original standard for this issue, and describe the objective of this standard.

Locate SFFAS 5, Accounting for Liabilities of the Federal Government, then respond to the following:

a. How does the FASAB define a "nonexchange transaction"? Provide and example of a nonexchange transaction. Cite your sources for these responses.

b. Should a liability be recognized for federal nonexchange transactions? Cite your source.

Governmental Auditing Research Exercises

Locate the Yellow Book appendix that includes information to accompany Chapter 3.

a. Using that appendix, name one example circumstance of a self-interest threat to auditor independence.

b. Explain how this appendix might help a researcher interpret guidance within the main body of a Yellow Book chapter.

Locate the auditor's report included within the 2014 federal government-wide financial statements (Financial Report of the U.S. Government).

a. Who performed the audit of the federal government-wide financial statements?

b. Name one management responsibility described in the audit report. To respond, look for the document actually labeled Independent Auditor's Report.

c. In this context, who exactly is management? Explain your response.

d. Identify on the of the auditor's summary findings described on the first page of the audit report.