Professional Documents
Culture Documents
There are currently more than 5000 PA firms. The four largest firms are alled the big 4 in canad; National
network firms have offices in most cities but are smaller than the big 4. Regional and large local firms
are those with a staff more than 50 that serve a specific geographic market. Small local firms are those
with less than 25 people. They perform reviews and compilations as well as accounting and tax services.
Structure of PA firms
Most firms are sole proprietorships or partnerships. Typically individuals start as a staff accountant.
Require an undergraduate degree, CPA designation with grad level education, professional exams, and
practical experience. Also a public accountant license is needed. Two kinds of competencies are needed,
pervasing qualities and skills, and six competencies (financial reporting, staragy and governance,
management accounting, audit, finance, and taxation. One area is picked for depth.
CPA Canada
Motivation behind the merger was to increase convergence in global accounting and auditing standards.
One united profesion. Sets accounting, auditing, and assurance standards. Also responsible for
developing the CPA pep and CFE.
Provincial CPA organizations – individual cpas are net a member of CPA Cnaada, instead each provincial
body.
Sets generally accepted auditing standards or GAAS for financial statement audits. Also set assurance
standards for nonfinancial information, review engagements, and compilations.
International auditing and assurance standards board is an intependant standard seting body that sets
international standards.
Role is to contribute to publics confidence in the integrity of financial reporting. Places emphasis on four
things, effective inspections, risk management, thought leadership and steakholder engagement.
Provides oversight for auditors of public companies and performs inspections of the audit firms. It also
sets audit and quality control standards for pubic company audits.
Securities regulation in Canada is a provincial matter, therefore companies that issue securities in
Canada must abide by them.
SEC is the securities and exchange commission those companies that are listed on the asx must follow it.
Sec assists in providing investors with reliable information.
Legal Liability
Individuals have the ability to sue public accounting ferms. This impacts the way they perform business.
We refer to the CPA Canada handbook -assurance represents the authoritative requirements underlying
financial statement audits.
Canadian auditing standards – are the standards for financial statement audit. Four things of focus
Purpose
Resonsibilities
Performance
Reporting
The purpose is to provide users of financial statemtns that the statements are presented fairly in
accordance for applicable financial reporting framework. CAS state that an auditor can conduct the audit
only if management agrees to provide the supporting evidence and both acknowledges and understands
its responsibilits
Auditors Responsibilities
Professional competence and due care – have to have the ability to perform the audit, consists of formal
education and practical experience.
Auditors must comply with ethical requirements and independence. Integrity, objectivity,
confidentiality, and professional behavior.
Auditors have to be skeptical and excecise their professional judgement during an audit. Skepticism
meens to have a questioning mind.
Comprehensive performance
Determining and applying materiality levels – Auditor has to determine and apply an appropriate
materiality level. A material misstatement is occurring if the knowledge of it will affect a decision of a
user of the financial statements
Assessing risks of material msitatements – In order to understand the risks in financial statements you
must understand the clients business and industry. You must be aware of the internal controls for
mitifcating client business risks.
Obtaining sufficient evidence – The auditor is responsible to obtain appropriate evidence of the
misstatements.
Reporting – auditor has to express an opinion in the form of a written report about wheter the
statements are presented failry. If no reservations than an unqualified audit is issued, if reservations
qualified is sissued.
PCAOB highlights audit qualitys as meeting investors needs for independent and reliable audits on
financial statements, assurance about internal control and going concern warnings
Quality control
These are the methods used to make sure that the firm meets the responsibilities to clients and others.
Elements
CAS – Quality controls are applied consistently on every engagement, they are established for the entire
public accounting firm.
Leadership responsibilityies for quality within the firm – firm should have a culture that
promotes that quality is essential in engagements
Relevant ethical requirements – maintain independence
Acceptance and continuation of clients and engagements
o Policies and procedures need to established for deciding to accept or continue a
relationship These policies should minizmize risk.
Human respurces – policies and procedures to ensure that workers have adqaute training,
continued professional education
Engagement performance – politcies to ensure that work meets applicable standards
Monitoring – ensure that other quality control elements are being applied
External inspections – Provincial cpa orgs conduct practice inpections to pretect public interest, and to
help cpas improve their standards.
Three top priorties