QUALITY CONTROL

Question 1

Statements on Quality Control Standards

Answer 1

SQCSs apply to all CPA firms

Question 2

The 6 elements of a system of quality control

Answer 2

Leadership responsibilities: tone at the top
Relevant ethical requirements
Acceptance and continuance of client relationships/specific engagements
Human resources
Engagement performance
Monitoring

Question 3

Acceptance and continuance of client relationships encompass

Answer 3

Consider client’s integrity

Having personnel with the competence, capabilities, and resources to perform the engagement

Question 4

Human resources involve

Answer 4

Having engagement partner with appropriate competence, capabilities, and authority

Question 5

Sarbanes Oxley quality control standards

Answer 5

For firms with one or more public clients
Second partner review and approval is required of audit reports
LEAD auditor and REVIEWING partner must be rotated every 5 years
Prohibits auditor from providing certain nonaudit services
MANAGEMENT assess effectiveness of internal control and issues a report
AUDITOR audits internal control and expresses opinion
CLIENT’s CEO and CFO must certify appropriateness of financial statements and disclosures

Question 6

What is a necessary part of the practice monitoring requirement for AICPA membership?

Answer 6

Peer review

Second partner review is a requirement under SOX