EBK AUDITING+ASSURANCE SERVICES
EBK AUDITING+ASSURANCE SERVICES
17th Edition
ISBN: 9780135171219
Author: ARENS
Publisher: PEARSON CO
Question
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Chapter 2, Problem 1RQ
To determine

Describe the important characteristics of the organization and conduct of CPA firms that allows them for fulfilling the social functions competently and independently.

Expert Solution & Answer
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Explanation of Solution

The following are three important characteristics:

  • Organizational form: To avoid the employer-employee relationship with the clients the CPA firms are existing as the separate entities. This firm employs one person as a professional staff of sufficient size for preventing one client from constituting an important portion of its total income and thereby endangering the independence of the firm.
  • Conduct: For providing a broad range of expertise, continuing education and to promote the professional independent attitude and competence, the CPA employs a professional staff for the particular groups.
  • Peer Review: This helps in evaluating the performance of CPA firm in order to keep the competence high.

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