Summary of Cpa Responsibilities
Date added: 17-09-15
Category: Advertising Essay
| |University | Memo To:Mary Manyinterests, Manager From:Jane Doe, CPA CC:CPAs Forever, Inc. Date:February 1, 2010 Re:Summary of CPA Responsibilities On Monday, January 25, 2010, you requested that I provide the external CPAs answers to questions about deferred taxes, accounting changes and error corrections, and establishing the subsidiary as a corporation. The attached brief contains answers to those questions.
Additionally, you requested information about my professional responsibilities as a CPA and the difference between a review and an audit. Professional Responsibilities as a CPA Certified Public Accountants (CPAs) must follow the American Institute of Certified Public Accountants (AICPA) Code of Professional Conduct. The code contains six areas dealing with professional behavior including responsibilities; the public interest; integrity; objectivity and independence; due care; and scope and nature of services. 1. Responsibilities – deals with exercising perceptive professional and ethical reasoning in all activities.
CPAs have a duty to collaborate amongst themselves to enhance the field of accounting, preserve the public’s trust, and fulfill the profession’s unique duties of self-regulation (Rampulla, 2002). 2. The Public Interest – deals with honoring public trust, serving public interest, and demonstrating commitment to professionalism. A CPA’s public includes clients, creditors, governments, owners, investors, the financial and trade community, and anyone depending on the impartiality and honesty of CPAs to preserve the organized operation of commerce.
CPAs must give superior service, make fee arrangements with clients, and provide a variety of services while demonstrating professionalism consistent with the code of conduct (Rampulla, 2002). 3. Integrity – deals with demonstrating the highest level of integrity. CPAs must be truthful and straightforward while maintaining client confidentiality. Superior service and the public confidence cannot be secondary to personal profit or rewards. CPAs should analyze all choices and actions by questioning if they are emulating a person of integrity (Rampulla, 2002). 4.
Objectivity and Independence – deals with maintaining impartiality and remaining free of conflicts of interest when fulfilling professional duties. CPAs must be independent, in fact, and appearance when offering auditing or attestation assistance. CPAs must be unbiased, intellectually truthful, and liberated from conflicts of interest. CPAs can provide attestation, consulting, or tax services; assemble financial statements as an employee, complete internal audit functions, serve in fiscal administration roles for government or education, and train people interested in entering the profession.
Therefore, they must safeguard the reliability of their work, remain impartial, prevent undermining of their reasoning, and be conscientious in applying generally accepted accounting principles (Rampulla, 2002). 5. Due Care – deals with observing specialized and moral standards, frequently improving skills and excellence of services, and discharging professional duties to the best of their capability. Competence is gained from education, experience, and mastering a universal set of facts required for the CPA title. The CPA must constantly update this knowledge through continuing professional education. CPAs must provide services quickly and recisely, be detailed, and follow appropriate professional and moral standards. Additionally, due care compels the accountant to plan effectively and direct all professional endeavors they undertake (Rampulla, 2002). 6. Scope and Nature of Services –deals with observing the code of conduct when deciding the extent and type of services they will provide to clients. Each principle of the code should be considered to determine whether or not to provide certain services based on the particular circumstances. In some cases there may be constraints on the consulting services that can be provided to a certain client.
CPAs should ensure the extent and type of other services offered to a client does not create a conflict of interest in performing the audit function for the client (Rampulla, 2002). Difference between a Review and an Audit CPAs are allowed to either prepare or assist in the preparation of financial statements, and must also issue a report about those financials in the form of an audit, a review, or a compilation. Compilations are the most basic service because the CPA prepares general ledgers or scans financial statements for any obvious departures from GAAP.
However, no assurance is communicated that the financials conform to generally accepted accounting principles (GAAP). A review is more detailed than a compilation but less involved than an audit. Analytical procedures and inquiries are made to complete a review. In the review report the CPA asserts: that the review was performed according to AICPA professional standards; is less in scope than an audit; and the CPA is unaware of any material changes required in order for the statements to conform to GAAP or some other basis of accounting.
A review provides “limited assurance” about the prepared financial statements (Knowledge to Solutions Certified Public Accountants and Advisors, 2007). Reviewed financial statements are usually created for external investors, bank loans, or creditors not requiring audited financials. Audited financial statements are the greatest level of assurance service a CPA can provide to a client. The CPA performs the work of a compilation, review, and also completes verification and substantive testing.
An audit is more detailed because the CPA performs inspections, confirmations, observations, inquiries, and other tests to corroborate the existence, completeness, and value of assets and liabilities detailed in the financial statements. An audit also confirms the rights to assets, obligations to creditors, and if the information in the financial statements are presented accurately and disclosed properly. In the audit report the CPA asserts that the audit was performed according to GAAP, and expresses an opinion that the financial statements fairly represent the company’s financial situation and outcome from operations.
Auditing provides “positive assurance” about the prepared financial statements (Knowledge to Solutions Certified Public Accountants and Advisors, 2007). The objective of an audit is to give a reasonable foundation to express an opinion about the entirety of the financial statements. Meanwhile, a review does not give a foundation for expressing an opinion because knowledge of the internal control environment is not acquired, control risks are not assessed, and accounting records are not tested.
I hope the information provided is helpful and facilitates an understanding of the professional responsibilities of a CPA and the difference between a review and an audit. Please do not hesitate to contact me with any additional questions or concerns. References Rampulla, Renee (2002). What Are My Professional Responsibilities?. American Institute of Certified Public Accountants (AICPA) Retrieved January 27, 2010 from http://www. aicpa. org/pubs/cpaltr/apr2002/supps/busind3. htm Knowledge to Solutions (K2S) Certified Public Accountants and Advisors. (2007). What's the Difference Between an Audit, Review and Compilation. Retrieved from