AICPA- only for private companies

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All members of the Committee are volunteers; ASB consists of CPA volunteers in the ASB, for a limited pd
of time, and some staff that works for the AICPA
Standard Setter (Senior Technical Body)
ASB- Auditing Standards Board: Private Company Auditing; Governs the following:
SASs- Clarified Statement on Auditing Standards (AU-C)= IAS (International
Standards on Auditing- IAASB)
o Only these standards converged w/ international standards; both of them are
GAAP neutral (Clarity Project)
o Last SASs issued is 1-129
o SAS 122 on Clarified Auditing Standards
o How SASs Arranged?
o These standards are broken into parts and how to tell the diff btw the two:
Introduction: Scope & Objective- summary and characteristics
Requirements: Contains words Must, Should, Should consider,
Required, Unconditional Responsibility, Presumptive Mandatory
Responsibility
Paragraphs are numbered 1,2,3,4, etc
Application & Other Explanatory Material: Assists in providing
additional information to the auditor in complying w/ the requirement;
Contains words could, might, may
o Provide examples of things
Can be used as a resource if you dont understand something
Paragraphs are numbered A1, A2, A3, etc
Holds your hand and enhances; but does not trigger
BOTH are authoritative/ Anything in AU-C is authoritative
Same hierarchy
o Website Directory: AICPAResearchStandardsAudit & Attest
StandardsClarified Statements on Auditing Standards
ONLY use Clarified Statements on Auditing Standards (AU-C)
Divided into sections
Interpretations are for that standard
Do not use Pre-clarify statements (AU) -any number lower than
122 and without a C
SSAE- AT (soon)- Attestation Standards (AT-C)
o Last SSAE is #17; similar to format of auditing standards
o In three digits; same lvl of hierarchy in terms of having requirements,
application, and other explanatory material
o Contains interpretations- four digits; interpreting off of the 101 section
SQCS- QC- Quality Control
o Last QC is #8 (converged with QC #1 with International Standards)
ASB will sometimes issue Technical Practice Ads (TPA)- white papers that are non
authoritative

ARSC- Accounting and Review Standards Committee

Compilation and Reviews
o Made up of volunteers- they write, amend, and revise compilation and review
standardsreferred to as SSARs
o The last SSARs is 21; SSARs codified-AR; when 21 is codified, it will become AUC
o Compilations and reviews are not audits
o Hierarchy: 1) SSARs 2) Interpretations Q&A format
Website Directory: AICPA.org Research Standards Compilation and Review
Standards
PEEC- Ethics

Peer Review- (PR) Peer Review Standards; peer on peer

Accounting firms are subject to peer review

Peer review rules are different for every state
Firms of two or more people are required for peer review
One firm reviewing the work papers of the another firm; making sure that we all adhere
to the system of quality control
Firm under AICPA are subject to peer review every three years
Theres a specific standard-setting body in the AICPA that sets the standards for peer
review
Quality control and peer review standards work together!
Peer Review Reports are a matter of public
Difference between AICPA and PCAOB on Peer Review:
AICPA
Peer Review- for audit firms of private companies
Peer on Peer
Every three years

PCAOB
Called Inspections
PCAOB Inspectors work for
For audit firms of public com
broker dealers
Less than 100 public compa
More than 100 every year

Exposure Draft
For research paper, start with AICPA then PCAOB.
12/15/2012, the clarified auditing standards became effective
The Clarity Project for auditing started in 2008
o Its purpose was to make the standards easier to read & understand; not to create additional requirements
o Converged w. IASs issued by IAASB- IFAC
o Try to avoid unnecessary conflict w/ PCAOB standards
o Not create additional requirements

PCAOB- it was created in 2003 by the Sarbanes Oxley Act to be their quasi- ??
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Only two standards:

Interim Standards- old AICPA- AU
PCAOB Standards- AS 1- AS18
Only companies registered as public needs to follow the PCAOB
Harder to do because standards are all over the place; not in orderjump btw interim and PCAOB
standards
Dont really have interpretations; they issue Staff Audit Practice Alerts
Under Standards Guidance
Notice Audit Alert No. 11
Like the FASB, members of PCAOB have to relinquish their connections with firms
Members are paid; Two out of five are attorneys
When a PCAOB issues exposure drafts, receive comment, they may or may not consider your comments.
On the other side, the private company side is more likely to consider comments.
The SEC has to approve of PCAOB standards before it becomes law
SEC creates a top 10 list of auditing deficiencies and suggest to PCAOB
What standard setter would a PCAOB use when doing an interim review of a 10Q?
It is NOT under the jurisdiction of ARSC!!! ARSC is only for private!
Know for Auditing Test: If you were engaged to audit a private company and was asked to do an
interim review, you would be under SSARs.

GAAS Hierarchy (AICPA does not have one)

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SASs (AU-C)- Authoritative; Highest level of authority

Section in Professional Standards- AU-C sec. _ _ _
Auditing Interpretations - Authoritative; but not the most authoritative b/c it is interpreting smth
that is already written in the SASs; it did not go through the same due diligence process
AU-C sec. 9_ _ _

The following three numbers are the numbers for the SASs it is referring to
Written in Q&A Format
Are not exposed for comment therefore you cant give it the same level of authority as the
standards (it is authoritative though)
o Ex) Content in Section 700 contradicts the Interpretations S9700you would use S700.
Clarifies on a unique issue
Audit and Accounting Guides- Authoritative on the GAAS; approved by an ASB member or vice
president of AICPA; industry guides gives accounting and auditing procedures for specific industry
Statement of Positions (SOPS)- Authoritative; can be issued by ASB; take a position of smth like
analytical procedures
Other: Audit Risk Alert/ Journal of Accountancy- bring attention to emerging issues that are risk
to the auditor
o Audit risk alerts- make sure we look at specific issues
o Technical practice aids- white papers/ not authoritative (issued by AICPA)

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IFAC
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IAASB- auditing
IASs= AU-C (converged w/ SASs)
Review standards not converged; Diff standards for review
No compilation guidance for IFAC
Theres nothing on Attestation;
Review report is moderate assurance instead of limited assurance

ETHICS
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Enforcement: Joint Trial Board- independent from the others; for appeals
Disciplinary actions: public record
AICPA
PEEC- Professional Ethics Executive Committee- standard-setter;
Issue Ethic Rules (AICPA Code of Professional Conduct) and Bylaws
Two Subgroups:
o INS- independent
o TNS- technical
If you are not an AICPA member, the PEEC has no jurisdiction on you
Interpretations Under the Interpretation Rule
Acts Discreditable Rule
Broken up into 3 parts: member in public practice (CPA), private practice/ business (CFO &
controller), and other members (looking for work)
Agenda, exposure drafts, Comment letters are a matter of public record
Cant take away your license
PCAOB- only CPA that are registered with the PCAOB are under this jurisdiction; CPAs involved w/
public companies
Ethics and Independence- rules issued by PCAOB and interim standards (copied from the
AICPAPCAOB far more restrictive)
Cant take away your license
IFAC IAASB- International Auditing and Assurance Standards Board
IESBA- International Ethics Standards Board of Accounting
Independence rules apply internationally; the standard setting body is IESBA
Expose new comments/ guidance and is SIMILAR but NOT identical to the AICPAs Code
DOL- Department of Labor has specific rules for auditors of employment benefit plans
GAO- has more restrictive rules
NASBA - National State Boards of Accountancy- Make sure you are in compliance with state board
of accountancy!

Review

All AICPA Standard Setters, PCAOB, IFAC

AICPA
o There is a hierarchy
o ASB- Standard-setter body for private companies

SASs- AU-C- Auditing Standards

A) Requirement- required (1), must (1), should (2), should consider (2), unconditional requirement
(1), presumptive mandatory (2)

B) Application & Other Explanatory Material- could, may, might

All volunteers and AICPA members

SSAEs- AT-C- Attestation Standards

SQCS- Quality Control Standards

The last SASs issued is AT-C 1-129

Hierarchy

SASs

Interpretations (starts with 9_ _ _ _)

December 15, 2012, standards became clarified (convergence with IAS)

o ARSC- Accounting and Review Services Committee- Standards Setter

SSARswhen codified, it becomes AR

SSARs has interpretations

The words above are applicable to SSARs, too

The last SSARs issued is 21

Comprised of volunteers
o Peer Review (PR)- peer on peer review

Reports are issued and are a matter of public

Only members of the AICPA are subject to Peer Review

The licensing board may subject you to peer review

Every 3 years
o Ethics- PEEC (Professional Ethics Executive Committee)

Volunteers; does not have to be all CPAs, there is one member whos notcalled Public Member (bring the
public into it)

AICPA Code of Professional Conduct- has 3 categories:

CPA (public practice)

CFOs (private practice)

Other

If you are not AICPA member, PEEC no jurisdiction on you

JEEP (Joint Ethics Enforcement Program)

Almost all state societies have signed onto it

o Ex) You are a member of State Society and the AICPA, the AICPA will take the lead instead
of having all of the societies interview you the same questions
o If the AICPA and State Society reach a decision that you did not agree with, you go to court
called the Joint Trial Board and appeal the case. If the Joint Trial Board does not agree
w/ you, then you would not have any alternative.

You can find the above words in Ethics and present in the standards

There are Interpretations; are authoritative but not as authoritative

You could be suspended, admonished, expelled, case could be dismissed, no further action, deferral,
required corrective action (RCA), or RCA with subsequent follow-up (like somebody shadowing yousomeone checking your audit reports)

You can find disciplinary actions on the AICPA website

NASBA- National Association of State Boards of Accountancy
PCAOB- standard setter for Issuances/ Registrants
o There is no hierarchy for PCAOB
o Board: Paid; Five members/ only 2 out of 5 are CPAs

Auditing- Latest standard is PCAOB AS 1-18; Interim standards from AICPA (AU) and PCAOB standards;
PCAOB standards have same level hierarchy as AICPA

Attestation- only 2 attestation standards used primarily for brokers/ dealers

Ethics- they took from the AICPA and own

Inspection- (peer review)- inspectors are employed by the PCAOB; theyre not other firms

They just inspect the public company side

Every three years if less than 100 public companies

Every year if more than 100 public companies

Enforcement
IFAC- International Federation of Accountants
o December 15, 2012- Clarified standards became effective
o Clarified standards in ASB- to not cause necessary conflict with PCAOB standards
o Clarified standards are converged AICPA auditing standards with IAS
o IAASB- International Auditing & Assurance Standards Board

Converged with AU-C

o IESBA- International Ethics Standards Board

Ethics
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IFAC Ethics

AICPA- Code of Professional Conduct

PCAOB
IESBA (IFAC)
State Boards of Accountancy
DOL- Department of Labor (Employee Benefit Plan)
GAO- Government
50% of Ethics Cases are from DOL and GAO