ORGANIZATIONS THAT AFFECT AUDITING AND ACCOUNTING (The Alphabet Soup)

1
ORGANIZATIONS THAT AFFECT AUDITING AND ACCOUNTING
(The Alphabet Soup)

• Securities and Exchange Commission (SEC)
• Oversight and regulation of securities market.
• De jure authority to set accounting and auditing
  standards.
• Ultimate authority in all matters that affect
  publicly-traded companies.
• Financial Accounting Standards Board (FASB)
• De facto authority to set accounting standards
• Establish GAAP.
• Public Companies Accounting Oversight Board
  (PCAOB) was created by Sarbanes-Oxley. Sets
  auditing standards for publicly-traded companies
  and regulates the financial reporting process.

2
ORGANIZATIONS THAT REGULATE THE ACCOUNTING
PROFESSION (More Alphabet Soup)

• Auditing Standards Board (ASB) AICPA committee
• De facto authority to set auditing standards for
  entities that are not publicly traded.
• Establish GAAS through issuance of SASs and other
  pronouncements.
• State Boards of Accountancy (KSBA)
• License CPAs.
• Monitor profession (including disciplinary
  action).
• American Institute of Certified Public
  Accountants (AICPA)
• Voluntary membership for CPAs.
• Maintains Code of Conduct.
• State Societies of CPAs (KSCPA)

3
Assurance to Public that CPA Firms Perform
High-Quality Audits (Figure 2-3)

• Training.
• Education.
• CPA Exam.
• Continuing professional education (CPE).
• Regulatory Oversight
• Primarily, the SEC, AICPA, and State Boards of
  Accountancy.
• Increasingly, the PCAOB.
• Code of Professional Conducts.
• Professionalism.
• Generally Accepted Auditing Standards (GAAS).
• Quality control.
• Peer review.
• Legal Sanctions (Auditors can and ARE sued.)