AUDITS AND ASSURANCE SERVICES

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AUDITS AND ASSURANCE SERVICES

• The Attest Function
• Chapter 1

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Attestation services

• To help improve the reliability and relevance of
  information
• Types
• Audit of financial statements expressing an
  opinion about whether the financial statements
  are in conformity with GAAP
• Review of financial statements
• Agreed upon procedures

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Non - Attestation services

• Types
• Accounting
• Bookkeeping services
• Tax services
• Management consulting services
• Litigation support
• Fraud investigation
• Personal financial planning

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Economic Demand for Auditing

• Business risk risk associated with a companys
  survival and profitability
• Information risk reflects the possibility that
  the information upon which the business risk
  decision was made was innacurate. Causes are
• Remoteness of information
• Biases and motives of provider
• Voluminous data
• Complex exchange transactions

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Nature of Auditing

• Auditing is the accumulation and evaluation about
  information to determine and report on the degree
  of correspondence between the information and
  established criteria. Auditing should be done by
  a competent, independent person.

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Types of Audits

• Financial statements audits - to determine
  whether the overall financial statements are
  stated in accordance with GAAP
• Operational audits to review any part of an
  organizations operating procedures and methods
  for the purpose of evaluating EFFICENCY
  EFFECTIVENESS
• Compliance audits to determine whether the
  auditee is following specific procedures, rules,
  or regulations set by some higher authority

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Types of Auditors

• Certified public accountants all types of
  audits
• General Accounting Office compliance and
  operational audits
• Contralor de PR compliance audits
• Auditores de Hacienda compliance audits
• Internal auditors compliance and operational
  audits

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The CPA Profession

• Certified Public Accounting Firms
• Big Four
• Ernst Young
• Price Waterhouse Coopers
• KPMG
• Deloitte and Touche
• National firms
• Regional firms
• Small local firms
• Kiosks

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Organizational Structure of a CPA Firm

• Proprietorship
• Partnership
• Limited liability partnership
• Professional corporation

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Staff Levels and Responsibilities

• Staff 0-2 years. Performs most of the detailed
  audit work. 40,000
• Senior 2-5 years. Coordinates and is
  responsible for the field work, including
  supervision. 45,000-50,000
• Manager 6-10 years. Helps senior and manage the
  audit. 60,000-85,000
• Partner Reviews the overall audit work,
  clients relationship (tennis golf). 100,000 -
  250,000

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American Institute of Certified Public Accountants

• Voluntary membership
• Standards and rules
• Code of professional conduct
• Professional requirements for CPAs
• Prepares and grades the exam
• Publishes the Journal of Accountancy
• Conducts research
• Advocate for the accounting profession

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Securities and Exchange Commission

• Agency of the federal government
• Assist in providing investors with reliable
  information upon which to make investment
  decisions
• Requires audited financial statements every year
• Requires unaudited quarterly financial statements
  every quarter
• Sets generally accepted accounting principles and
  disclosures
• Watchdog

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Salaries by Age Certification

• 31,068
• 44,133
• 56,024
• 58,920
• 73,638
• 51,831

• 38,583
• 59,346
• 75,136
• 90,389
• 81,367
• 69,322

19-29 30-39 40-49 50-59 Overall
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THE NEW CPA EXAM
CPA JUAN M. GARCIA MERCED
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4 PARTS of the CPA EXAM

• Auditing
• Financial Accounting and Reporting
• Regulation
• Business Environment and Concepts
• Effective date April 2004

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AUDIT

• 100 Auditing Attestation

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Financial Accounting Reporting

• 80 Business enterprises
• 10 Governmental entities
• 10 Not for profit organizations

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Regulation

• 60 Taxation
• 40 Law and professional responsibilities

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Business Environment Concepts

• 20 Business structure
• 10 Managerial (measurement)
• 70 All areas other than Business structure and
  measurement
• 40 of the content was not previously tested on
  the CPA exam

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Testlet Approach

• FAR, AUD, and REG will each contain 5 testlets 3
  multiple-choice and two simulations
• FAR and AUD 90 M/C
• REG 72 M/C
• BEC will be three testlets of all multiple-choice
  questions (90 total).

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Multiple-Choice Testlets

• Answers are radio button approach (not A, B, C,
  D).
• Calculator onscreen is only available calculator.
• Candidate must complete testlets in order and
  cannot move ahead or back.

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Simulations

• Each simulation is approximately 20-40 minutes in
  length and will complement the multiple choice
  portion
• Most of the simulation will contain some research
  activity, usually involving an electronic search
  or access to authoritative literature or IRS
  documents

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Simulations

• Candidates are expected to know how to use common
  spreadsheet and word processing functions,
  including writing formulas for spreadsheets

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Simulations

• Candidates must also have the ability to use a
  financial calculator or a spreadsheet to perform
  standard financial calculations
• Candidates will be asked to use authoritative
  literature in the creation of formal audit
  communications

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Comprehensive Assessment

• Entry-level foundational knowledge (standards and
  regulations)
• Entry-level skill sets (communication, research,
  analysis and organization, understanding and
  judgment

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Length of New Exam
Examination Length Auditing attestation FARE Regulation Bus. Environment Concepts
14 hours 4.5 hours 4 hours 3 hours 2.5 hours
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Granting of Credit Transitioning

• Candidates will be allowed to sit for each
  section individually, and in any order
• Candidates will retain credit for any section(s)
  passed for 18 months.
• Candidates will not be allowed to retake a failed
  section(s) within the same examination window

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• HOW TO APPLY FOR THE NEW CPA EXAM

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The New Exam Administrative Changes

• Calendar year divided into quarters. Testing
  occurs in the first two months of each quarter
  and third month is closed.
• Candidates can sit for one or more parts during
  any testing window, but not the same part more
  than once in a testing window.
• Candidates can generally sit at any Prometric
  site authorized to administer the CPA Exam.

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Application Process

• Key is applying early!!!
• Candidates apply to CPA Examination Services.
• Expectation is that new applications will take
  approximately 4-6 weeks to process at state
  level. Re-examination candidates will take
  considerably less time.

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Application Process

• EDUCATIONAL REQUIREMENTS MUST BE MET AT THE TIME
  APPLICATIONS ARE MADE FOR THE EXAMINATION

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Application Process First Step

• Application form (notarized)
• 2 x 2 photograph
• Official transcript
• Fee payable to CPA Examination (certified checks
  or money orders only)
• Character Reference Affidavit
• A receipt indicating that a Certificate of Good
  Conduct has been requested from the Police. The
  original certificate must subsequently be mailed
  directly to CPA Examination Services

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Fees Timing

• Two fees application fee and examination fee.
• Application fees 210.
• Examination fees are as follows
• AUD 187.00
• BEC 140.78
• FAR 175.44
• REG 152.33

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Application Process Step 2

• Receive your NOTICE TO SCHEDULE
• This NOTICE TO SCHEDULE is valid for six months

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Application Process Step 3

• Schedule your examination
• Have your Notice to Schedule ready
• As soon as possible
• Have a first, second, and third choice of dates
  for each section
• Walk in are not accepted

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Application Process Step 3

• Options to schedule
• Visit www.prometric.com/cpa
• (Confirmation by e-mail)
• Call 1-800-580-9648
• (No confirmation)
• Call Prometric Puerto Rico

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Application Process Step 4

• Take your Examination
• Arrive early
• Bring your NOTICE TO SCHEDULE
• Bring 2valid personal identifications
• There are breaks, however, clock will keep
  running during the break!!!

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Application Process Step 5

• RECEIVE YOUR SCORES

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Scheduling Parameters

• Recommended to schedule 45 days before you want
  to sit.
• Date chosen must be within the time period the
  NTS is valid and before it expires.
• No appointments can be made fewer than 5 days
  from when you call (i.e. call Monday earliest can
  sit is Saturday).

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Changing Schedules

• Candidates can make changes, but fees may apply.
• If canceling (without reschedule) or do not show,
  no refunds will be issued.

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Test Center Procedures

• Candidates must arrive 30 minutes before
  appointment time.
• Candidate MUST bring NTS to the test center.
• Security measures include digital photograph, two
  forms of identification (with signature and
  valid).
• Specifics on types of approved identification are
  found in the Candidate Bulletin.

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Test Center Regulations

• All personal belongings must be placed in a small
  locker at the test center.
• Candidates must remain in seats except when
  authorized by test center staff.
• Scratch paper and pencils will be provided to
  candidates.
• Most items are prohibited in the testing room.
  An extensive list is in the Candidate Bulletin.
• Before beginning test, Confidentiality and Break
  Policy Statement must be accepted.

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Scores

• At start of CBT, advisory scores and diagnostic
  information will be sent by AICPA to NASBA at the
  end of each testing window.
• NASBA then forwards scores to State Boards for
  distribution (approximately 1 week).
• State Boards then decide when to release to
  candidates.
• Appeal process is available.

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Scoring Weights

• Questions were psychometrically evaluated and
  assigned weights.
• Points are accumulated based upon correct
  responses. Overall scores are then adjusted to
  ensure scores for all candidates are comparable.
• 75 is passing score that represents examination
  performance that represents knowledge and skills
  necessary to protect the public.

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Scoring Weights

• Human graders will score all written
  communication questions.
• Approximately 20 of questions will be pretest
  questions.

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Questions?
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Questions?????