Auditing and Assurance Services (16th Edition)
16th Edition
ISBN: 9780134065823
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
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Chapter 2, Problem 17DQP
To determine
Identify the applicable element of quality control for the procedures given from the quality control manual of a CPA firm.
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Compile a full set of notes which you will use to prepare for the training session that you are
required to present. The notes should include:
a) The steps a professional accountant should take in applying the conceptual framework
approach.
b) An explanation of the five categories of threats suggested by the code.
c) A brief description of six general safeguards in an audit firm’s work environment that
will ensure that threats to compliance with the fundamental principles are addressed
appropriately
An accounting firm uses partners and staff to produce an audit. The quality of the audit (as measured by reduction in litigation liability and the likelihood of audit errors) is a function of the composition of the audit team. In particular, ?=??.???.?
where r is the audit quality, P is the partner-hours devoted to the audit, and S is the staff-hours devoted to the audit. Notice that both partners and staff are essential for audit quality, and that audit quality increases in the amount of either, but at a decreasing rate.
The cost of a partner-hour is 50 while the cost of a staff-hour is 5. The budget for this audit is 5000. How many partner and staff hours will the accounting firm choose to maximize quality subject to this budget constraint?
One of an accounting firm’s basic objectives is to provide professional services that conform to professional standards. Reasonable assurance of achieving this objective can be obtained by followinga. Generally accepted auditing standards.b. Standards within a system of quality control.c. Generally accepted accounting principles.d. International auditing standards.
Chapter 2 Solutions
Auditing and Assurance Services (16th Edition)
Ch. 2 - Prob. 1RQCh. 2 - Prob. 2RQCh. 2 - Prob. 3RQCh. 2 - Prob. 4RQCh. 2 - Prob. 5RQCh. 2 - Prob. 6RQCh. 2 - Prob. 7RQCh. 2 - Prob. 8RQCh. 2 - Prob. 9RQCh. 2 - Prob. 10RQ
Ch. 2 - Prob. 11RQCh. 2 - State what is meant by the term peer review. What...Ch. 2 - Prob. 13.1MCQCh. 2 - Prob. 13.2MCQCh. 2 - Prob. 13.3MCQCh. 2 - Prob. 14.1MCQCh. 2 - Prob. 14.2MCQCh. 2 - Prob. 14.3MCQCh. 2 - Prob. 15.1MCQCh. 2 - Prob. 15.2MCQCh. 2 - Prob. 15.3MCQCh. 2 - Prob. 16DQPCh. 2 - Prob. 17DQPCh. 2 - Prob. 18DQPCh. 2 - Prob. 19DQPCh. 2 - Prob. 21DQP
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