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Philippine Standards On Auditing: Review Questions
Philippine Standards On Auditing: Review Questions
Review Questions
1.
Foreign public accounting firms have found that to retain their multinational
clients, they have had to develop the capacity to provide services worldwide.
Although the roots of at least two of the big firms in the United States are
traceable to European ancestry, public accounting firm involvement in
international activities has paralleled the gradual involvement of businesses in
international activities. In the early 1900s, some public accounting firms
established representative offices in foreign countries. As business activity
expanded, the firms opened offices in foreign cities. During the 1970s, some
countries forced these firms to close their offices. To be able to serve their
clients, the firms established correspondent relationships with locally owned
accounting firms; in these relationships, local partners remain separate, local,
autonomous organizations. Because domestic and foreign partners in a
correspondent relationship agree to follow a common code of ethics and practice
guidelines, each is able to rely on the work the other performs. A big firm
auditing a U.S. business with significant activities in France, for example, would
rely on its Paris office to audit the activities of the business in France.
The largest firms have organized worldwide partnerships to achieve a greater
uniformity of quality, to facilitate management of personnel, and to coordinate
research and professional development of personnel. Many small public
accounting firms establish correspondent relationships with foreign public
accounting firms or join a federation. Firms in a federation call on one another
to perform services for clients, following agreed-upon standards in conducting
the work they do for one another.
2.
3.
6-2
5.
6.
7.
8.
9.
d
b
b
4.
5.
6.
d
c
c
7.
8.
9.
c
d
d
10. a *
11. d