Podcast
Questions and Answers
Which of the following best describes an essential characteristic of a profession?
Which of the following best describes an essential characteristic of a profession?
What is the most critical objective achieved by implementing a system of quality control in a CPA firm?
What is the most critical objective achieved by implementing a system of quality control in a CPA firm?
What is the primary goal of developing policies for professional development in an accounting firm?
What is the primary goal of developing policies for professional development in an accounting firm?
To which engagements do the Philippine Standards on Quality Control (PSQCs) apply?
To which engagements do the Philippine Standards on Quality Control (PSQCs) apply?
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Who bears the ultimate responsibility for the overall quality of an audit engagement?
Who bears the ultimate responsibility for the overall quality of an audit engagement?
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For audits of listed entities, what is a necessary step before issuing the auditor's report?
For audits of listed entities, what is a necessary step before issuing the auditor's report?
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Why are quality control policies and procedures necessary when a CPA firm decides to accept a new client?
Why are quality control policies and procedures necessary when a CPA firm decides to accept a new client?
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Whose ultimate responsibility is it to lead quality within a CPA firm?
Whose ultimate responsibility is it to lead quality within a CPA firm?
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Which aspect of quality control involves the CPA firm maintaining records of partners previously employed by clients?
Which aspect of quality control involves the CPA firm maintaining records of partners previously employed by clients?
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Policies ensuring sufficient personnel with the necessary competence and ethical commitment fall under which quality control element?
Policies ensuring sufficient personnel with the necessary competence and ethical commitment fall under which quality control element?
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Study Notes
Auditor's Professional and Legal Responsibilities
- The CPA profession has deemed it essential to promulgate ethical standards and establish means for ensuring their observance because a distinguishing mark of a profession is its acceptance of responsibility to the public.
Quality Control on Audit
- A basic objective of a CPA firm is to provide professional services that conform with professional standards, and reasonable assurance of achieving this basic objective is provided through a system of quality control.
- The objective of quality control mandates that a public accounting firm should establish policies and procedures for professional development, which provide reasonable assurance that all entry-level personnel have the knowledge required to enable them to fulfill responsibilities assigned.
- The Philippine Standards on Quality Control (PSQCs) are to be applied to all services that fall under the AASC's engagement standards.
Engagement Quality Control Reviewer
- The engagement partner is responsible for taking overall quality on each audit engagement.
- For audits of financial statements of listed entities, the partner should determine that an engagement quality control reviewer has been appointed, discuss significant matters arising during the audit engagement with the engagement quality control reviewer, and not issue the auditor's report until the completion of the engagement quality control review.
Quality Control Policies and Procedures
- The primary purpose of establishing quality control policies and procedures for deciding whether to accept a new client is to minimize the likelihood of association with clients whose management lacks integrity.
- The firm's chief executive officer or managing board of partners should assume ultimate responsibility for the firm's system of quality control, including leadership responsibilities for quality within the firm.
- Quality control policies and procedures should require the firm to maintain records indicating which partners or employees of the CPA firm were previously employed by the CPA firm's clients, to satisfy the quality control objective of acceptance and continuance of clients and engagements.
Human Resources and Ethical Requirements
- Establishing policies and procedures designed to provide the firm with reasonable assurance that it has sufficient personnel with the competence, capabilities, and commitment to ethical principles addresses the human resources element of quality control.
- The firm's quality control policies and procedures should promote an internal culture based on the recognition that quality is essential in performing engagements, and require the firm's chief executive officer or managing board of partners to assume ultimate responsibility for the firm's system of quality control.
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Description
Test your knowledge on auditor's professional and legal responsibilities, quality control, and ethical standards. Assess your understanding of the CPA profession's code of conduct and its importance in audit practices.
