Understanding how and why accounting and auditing principles and standards are developed. Read each of the following statements carefully and indicate whether each is true or false. 1. Accounting principles and standards are based on the assumption that statements will be read by individuals who have little understanding of accounting and reporting. 2. The PCAOB regulates CPA firms that audit nonpublic companies. 3. The FASB is a division of the Internal Revenue Service 4. The American Institute of CPAs has, in the past, had a strong influence on the development of auditing principles. 5. Many nonpublic companies are not required to follow GAAP. page 534 6. The Sarbanes-Oxley Act places great emphasis on internal controls and fraud prevention. 7. The FASB and the IASB are working toward convergence of U.S. financial reporting standards and those of the International Accounting Standards Board 8. Because of the Sarbanes-Oxley Act, it is probable that the FASB/IASB conceptual framework will become less important in developing accounting principles and standards. 9. The FASB Standards are designed primarily for the use of the IRS. 10. The IASB has authority to accept or reject financial accounting principles and standards developed by the FASB