Acc_491_Wk_2

1-23 (Organizations associated with the public accounting profession) Several private and public sector organizations are associated with the profession. Listed below are activities pertaining to these organizations. 1. License individuals to practice as CPAs. State boards of accountancy issue licenses to practice as a CPA. 2. Promulgate GAAP. The Financial Accounting Standard Board (FASB) promulgates GAAP. 3. Issue Statements on Auditing Standards. The Auditing Standards Board (the senior technical body of the American Institute of Certified Public Accountants [AICPA]) issues Statements on Auditing Standards (SAS). 4. Regulate the distribution and trading of securities offered for public sale. The Securities and Exchange Commission (SEC) regulates the distribution and trading of securities offered for public sale. 5. Establish its own code of professional ethics. The AICPA Professional Ethics Division is responsible for establishing the AICPA Code of Professional Conduct. 6. Issue Statements of Financial Accounting Standards. The FASB issues Statements of Financial Accounting Standards. 7. Impose mandatory continuing education as a requirement for renewal of license to practice as a CPA. State boards of accountancy impose mandatory continuing education for license renewal. 8. Issue disclosure requirements for companies under its jurisdiction that may exceed GAAP. The Securities and Exchange Commission issues disclosure requirements for companies under its jurisdiction. 9. Issue auditing interpretations. The Auditing Standards Board (a division of AICPA) issues auditing interpretations. 10. Cooperate with the AICPA in areas of mutual interest such as continuing professional education and ethics enforcement. State societies of CPAs cooperate with the AICPA in areas such as continuing education. 11. Take punitive action against an independent auditor. State and Federal courts and the SEC can take punitive action against independent auditors. 12. Establish accounting principles for state and local governmental entities. The Government Accounting Standards Board develops generally acceptable accounting principles for state and local government entities. 13. Establish GAAS. GAAS was established by the AICPA. 14. Suspend or revoke a CPA’s license to practice. State boards of accountancy can revoke or suspend a CPA’s license to practice. 15. Establish quality control standards. Public Companies Accounting Oversight Board (PCAOB) and the AICPA Practice Monitoring Program both establish quality control standards. 16. Operate as proprietorships, partnerships, or professional corporations. Practice units (CPA firms) operate as proprietorships, partnerships, or professional corporations. 17. Issue government auditing standards. The General Accounting Office (GAO) issues government auditing standards. 18. Administer federal tax laws. The Internal Revenue Service administers federal tax laws. Required Indicate the organization or organizations associated with each activity.