Chapter 2 Flashcards
(33 cards)
One of the main advantages of a “big” public accounting firm is
their ability to audit nearly all the largest companies worldwide.
National network firms are those with
offices in all major Canadian cities.
The most common organizational form used by public accounting firms is
sole proprietorship or partnership.
Most international and national accounting firms in Canada are comprised of professional accountants with the designation
CPA
The Canada Business Corporation Act gave authority to Canadian accounting and auditing standard-setters by stating that financial statements
should be prepared in accordance with the standards in the CPA Canada Handbook.
Zara works as an auditor for Quincy, Quentin and Quaid, a public accounting firm in Richmond Hill, Ontario. Zara has decided to leave the firm and establish her own firm in Whitby, Ontario. She plans to offer audits and taxation services. Which organization is responsible for licensing Zara?
CPA Ontario
Jessica is a summer junior at Branes & Castle, a PA firm. Jessica has only completed three accounting courses in university and has not yet taken her auditing class. A team of auditors from Branes & Castle are starting an audit and Jessica was sent to help them. CPA practice requirements mandate that Jessica
can perform work for the audit engagement as long as she is supervised and proper review of her work is performed.
The implementation of the Sarbanes-Oxley requirements in the United States resulted in the creation of the Public Company Accounting Oversight Board (PCAOB) to oversee listed companies’ auditors and develop audit standards. The impact of this requirement in Canada was
the creation of the Canadian Public Accountability Board (CPAB) to oversee Canadian audit professionals.
Stafford & Sandiford is a public accounting firm with 30 clients who are reporting issuers. Stafford & Sandiford can expect to be inspected by the Canadian Public Accountability Board
once every 3 years.
Larger audits may have established procedures that utilize an audit committee whenever there is a dispute between management and the auditors. What is the purpose of such procedures?
to facilitate the auditors’ independence from management
The primary role of security regulators in Canada includes to
protect investors.
A crucial role of security regulators in Canada includes to
foster fair, efficient, and competitive capital markets companies.
The Canadian Public Accountability Board’s (CPAB) mission is to
contribute to the public’s confidence in the integrity of financial reporting
All of the following are roles of the Canadian Public Accountability Board (CPAB) except:
opine on the financial statements of public companies.
The term reporting issuers
describes publicly held companies and mutual funds listed on a Canadian stock exchange.
In Canada, the organization responsible for setting auditing standards is
Auditing and Assurance Standards Board (AASB).
The most authoritative requirements for public accountants performing financial statement audits in Canada are the
CPA Canada Handbook requirements.
What is an auditor required to do with respect to a client’s financial reporting framework?
assess whether the framework selected by management is suitable
Canadian Auditing Standards (CASs) require that an audit be conducted using a
risk-assessment approach.
When conducting an audit, the auditor should look at Canadian Auditing Standards as
minimum standards of performance.
Which of the following rights is necessary for the completion of an audit?
The right to have access to the necessary records, information, and explanations.
Adequate planning and execution to reduce risk to an acceptable level is a requirement of which category of Canadian auditing standards (CAS)?
performance responsibility
The risk response phases of conducting the financial statement audit using a risk assessment approach includes
gathering evidence to assess the likelihood of material misstatement.
Communicating the findings of the audit in accordance with CASs is a requirement of which category of generally accepted auditing standards?
reporting
