The CPA Profession
‫مهنة التدقيق‬
Chapter 2
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
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Certified Public Accounting
Firms
The legal right to perform audits is granted to CPA firms by regulation
of each state. CPA firms also provide many other services to their clients,
such as tax and consulting services
More than 45,000 CPA firms exist in the USA ranging in size 1 person to
20,000 partners and staff.
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Certified Public Accounting
Firms
 Big Four international firms. In 2005 , the big four size by revenue
As follow: (1) Deloitte & Touche :$7,814 millions , 2650 partner, 23841 professionals
(2) Ernst & Young :$6,330 millions, 2130 partner, 15 900 professionals
(3) PricewaterhouseCoopers: 6,167 millions, 2019 part , 20056 professional
(4) KPMG: $4,715 millions, 1607 partner, 13184 professionals
 National firms
 Regional and large local firms
 Small local firms
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Certified Public Accounting
Firms
The four largest CPA firms in the United States
are called the “Big Four” international CPA firms.
These four firms have offices in most major
cities in the United States and in many
cities throughout the world.
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Activities of CPA Firms
 Accounting and bookkeeping services
 Tax services
 Management consulting services
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Structure of CPA Firms
Three main factors influence the organizational
structure of all firms:
1. The need for independence from clients.
2. The importance of a structure to encourage
competence.
3. The increased litigation risk faced by auditors.
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Organizational Structure
‫الهيكل التنظيمي‬
 Proprietorship: one owner
 Professional corporation: owned by one or more shareholders
 General partnership: multiple owners
 Limited liability company: its owners have limited personal liability
 General corporation:
 Limited liability partnership: owned by one or more partners
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Hierarchy of a Typical CPA Firm
‫التسلسل الهرمي لشركة التدقيق‬
Staff level
Experience
Typical responsibilities
Staff assistant
0-2 years
Perform most of the detailed audit work
Senior or in –
charge auditor
2-5 years
Responsible for the audit work,
supervising and reviewing audit work
Manager
5-10 years
Helps the in-charge plan and manage
the audit, review the in-charge work,
and manage relations with the client.
May be is responsible for more than
one engagement at the same time.
Partner
10+ years
Review the overall audit work and
involved in the significant audit
decisions.
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E-Commerce and
CPA Firm Operations
CPA firms are using the Internet to market
their services.
Firm Web sites also feature online software tools
and databases to subscribers.
Firms take advantage of online resources and
databases to help their staffs stay current on
emerging business and standards-setting issues.
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Securities and Exchange
Commission
The overall purpose of the Securities and
Exchange Commission (SEC) is to assist in
providing investors with reliable information
upon which to make investment decisions.
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AICPA
The AICPA sets professional requirements
for CPAs, conducts research, and publishes
materials on many different subjects related
to accounting, auditing, attestation and
assurance services, management
consulting services, and taxes.
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Establishing Standards
and Rules
The AICPA is empowered to set standards
(guidelines) and rules that all members
and other practicing CPAs must follow.
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Establishing Standards and Rules
‫تأسيس المعايير والقواعد‬
The AICPA is empowered to set standards (guidelines) and rules
that all members and other practicing CPAs must follow.
1. Auditing standards: the auditing standard board (ASB)‫معايير التدقيق‬
is responsible for pronouncements, which are called
Statement on Auditing Standards SASs
2.
Compilation and review standards
‫تجميع ومراجعة المعايير‬
3.
4.
Other attestation standards
Consulting standards
5. Code of Professional Conduct: professional ethics
‫نظام االجراءات المهنية‬
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Other AICPA Functions
Writes and grades the CPA examination.
Supports research by its own staff and
provides grants to others.
Publishes a variety of materials.
Provides seminars and education in a
variety of subject matters.
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Generally accepted auditing standards (GAAS)
‫معايير التدقيق المتعارف عليها‬
1.
2.
3.
General standards
Standards of field works
Reporting standards
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General Standards ‫معايير عامة‬
1.
The audit is to be performed by a person or persons having adequate
technical training and proficiency as an auditor.
‫التدقيق يجب ان ينجز من قبل شخص لدية تدريب ومهارة مناسبة كمدقق‬
2.
The auditor must maintain independence in mental attitude in all
matters relating to the audit.
‫يجب على المدقق ان يكون مستقال ذهنيا في كل االمور المتعلقة بالتدقيق‬
3.
The auditor must exercise due professional care in the performance
of the audit and the preparation of the report.
‫المدقق يجب ان يمارس الحذر المهني في اداء التدقيق واعداد تقرير التدقيق‬
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Standards of Field Work ‫معاييرمتعلقة بحقل العمل‬
1.
The auditor must adequately plan the work and must properly
supervise any assistants. ‫يجب ان يخطط بشكل مناسب عملية التدقيق‬
‫ويشرف بشكل مناسب على المساعدين‬
2. The auditor must obtain a sufficient understanding of the entity and its
environment, including its
internal control, to assess the risk of material
misstatement and to design further audit procedures.
, ‫ وبيئتها ونظام الرقابة الداخلي‬, ‫المدقق يجب ان يكون لدية فهم كافي للشركة التي يدقق عليها‬
‫لتقدير محاطر التحريف المادي ولتصميم اجراءات التدقيق الالحقة‬
3.
The auditor must obtain sufficient appropriate audit evidence by performing
audit procedures to afford a reasonable basis for an opinion regarding the
financial statements under audit.
‫يجب على المدقق ان يحصل على اثباتات تدقيق كافية اثناء القيام باجراءات التدقيق لتكون قاعدة معقولة العطاء رأي‬
‫فيما يتعلق بالقوائم المالية للشركة الواقعة تحت التدقيق‬
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Standards of Reporting
1.
The report shall state whether the financial statements are presented in
accordance with generally accepted accounting principles.
‫التقرير يجب ان ينص فيما اذا تم اعداد القوائم المالية حسب المعاييرالمحاسبية المتعارف عليها‬
2. The report shall identify those circumstances in which such principles
have not been consistently observed in the current period in relation to
the preceding period.
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Standards of Reporting
3. Informative disclosures ‫ افصاح فية معلومات مفيدة‬in the financial
statements are to be regarded as reasonably
adequate unless otherwise stated in the report.
4. The report shall contain an expression of
opinion regarding the financial statements,
taken as a whole.
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Generally Accepted Auditing Standards
General Standards
1. Adequate training and proficiency
2. Independence in mental attitude
3. Due professional care
Standards of Field Work
1. Proper planning and supervision
2. Understanding of the entity
3. Sufficient appropriate evidence
Standards of Reporting
1. Statements prepared in accordance with GAAP
2. Circumstances when GAAP not followed
3. Adequacy of disclosures
4. Expression of opinion on financial statements
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Statements on Auditing Standards
The 10 generally accepted auditing standards
are too general to provide meaningful guidance.
SASs interpret the 10 generally accepted
auditing standards and are the most
authoritative references available to auditors.
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Statements on Auditing Standards
 Classification of Statements on Auditing Standards
 GAAS and Standards of Performance
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International Standards
on Auditing
International Standards on Auditing (ISAs)
are issued by the International Auditing
Practice Committee of the International
Federation of Accountants (IFAC).
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International Standards
on Auditing
IFAC is the worldwide organization
for the accountancy profession.
The IFAC works to improve the
uniformity of auditing practices and
related services throughout the world.
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Elements of Quality Control
 Independence, integrity, and objectivity
 Personnel management
 Acceptance and continuation of clients
and engagements
 Engagement performance
 Monitoring
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Relationships
Quality control
standards
Generally accepted
auditing standards
AICPA practice
sections
Peer
review
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