Explain the roles of the AICPA and the PCAOB in the development of auditing standards.

Explanation of Solution
American Institute of Certified Public Accountants (AICPA):
It is an association of certified public accountant founded in 1887. It establishes audit and ethics standard for the purpose of audit. AICPA also conducts the Uniform Certified Public Accountants examination.
Public Company Accounting Oversight Board (PCAOB):
The main aim of PCAOB is the protection of the investors and stakeholder’s right. The purpose of the PCAOB is that the companies have followed the accounting and auditing standards.
Role of PCAOB in the development of auditing standards:
In 2002, due to the increasing number of fraudulent financial reporting, the government passed the Sarbanes-Oxley Act of 2002.
This act has changed the
- It helped in the creation and adoption of the audit, quality control, professional and ethical standards.
- It provides the registration of the CPA firms.
- It provides the inspection of the CPA firms.
- It helped in the enforcement in the audit, professional, and ethical standards.
Role of AICPA in the development of auditing standards:
AICPA sets professional and technical standards for a certified public accountant in many areas. Some of them are as follows:
- AICPA helped in the formation of the Statements on Standards for Accounting and Review Services (SSARSs).
- AICPA helped in the formation of the Code of Professional Conduct.
Thus, the AICPA has contributed in the audit literature by developing various professional, ethical, and technical standards.
Want to see more full solutions like this?
Chapter 2 Solutions
PRINCIPLES OF AUDITING & OTHER ASSURANC
- What income will be earned if the investment generatesarrow_forwardDuring 2018, the band Maroon 5 is touring across the U.S. on its "Red Pill Blues Tour 2018." Two of those concerts, on October 14 and 15, will be held at Madison Square Garden in New York City. Madison Square Garden has a seating capacity for concerts of approximately 19,000. According to a Business Insider article in December 2016, Maroon 5 had an average concert ticket price of $165.Assume that these two Madison Square Garden concerts were sold out on the first day the tickets were available for sale to the public, November 4, 2017. Also assume, for the sake of simplicity, that all tickets are sold directly by Maroon5.Question:How will Maroon 5's balance sheet and income statement be impacted by the sale of the Madison Square Garden tickets on November 4, 2017 and what specific accounts will be impacted and will it be increased or decreased?arrow_forwardAnalysts are projecting that Capital Railways will have earnings per share of $4.20. If the average industry P/E ratio is 22, what is the current price of Capital Railways?arrow_forward
- ???!arrow_forwardWhat are the proceeds from the note on July 1?arrow_forwardDuring 2018, the band Maroon 5 is touring across the U.S. on its "Red Pill Blues Tour 2018." Two of those concerts, on October 14 and 15, will be held at Madison Square Garden in New York City. Madison Square Garden has a seating capacity for concerts of approximately 19,000. According to a Business Insider article in December 2016, Maroon 5 had an average concert ticket price of $165.Assume that these two Madison Square Garden concerts were sold out on the first day the tickets were available for sale to the public, November 4, 2017. Also assume, for the sake of simplicity, that all tickets are sold directly by Maroon 5.Question:How will Maroon 5's balance sheet and income statement be impacted by the performance of the October 14, 2018, concert at the Madison Square Garden tickets?arrow_forward
- Requirement $1; During its first month of operation, the True Consulting Corporation, which specializes in management consulting, completed the following transactions. July 1 Gruod 15,000 shares of the company's commanstack in exchange for $15,000. July 3 Purchased a truck for $8,000. A down payment of $3,000 war made, with the balance on account. July 5 Paid $1,200 to cover rent from July 1 through September 30. July 7 Purcharod $2,000 af supplier an account. July 10 Billed customers for consulting servicos porfarmed, $3,700. July 14 Paid $500 toward the amount owed for the supplies purchased on July 7. July 15 Paid $1750 in cash for employee uages. July 19 Callected $1600 in cash from customers that were billed on July 10. July 21 Received $4,200 cash from customers for services performed. July 31 Paid $350 in cash for truck repairs. July 31 Declared and Paid $700 in cash dividends. Propuro journal entries to record the July transactions in the General Journal boluu. Ground Bote…arrow_forwardNeed To ask Right Expert for this solutionsarrow_forwardHow much would Laura expect his total car costs to be in may if he drives 1,680 miles?arrow_forward
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage LearningAuditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College PubBusiness/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage

