The CPA Profession

Chapter 2

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Learning Objective 1
Describe the nature of CPA firms,
what they do, and their structure.

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Certified Public Accounting Firms

The legal right to perform audits is granted
to CPA firms by each state.
CPA firms also provide many other services to
their clients, such as tax and consulting services.
CPAs continue to develop new products and
servicessuch as financial planning, business
valuation and information technology.
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Certified Public Accounting Firms

Big Four international firms
National firms
Regional and large local firms
Small local firms

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Certified Public Accounting

Firms
The four largest CPA firms in the United States
are called the Big Four international CPA firms.
These four firms have offices in most major
cities in the United States and in many
cities throughout the world.

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Certified Public Accounting

Firms

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Akuntan Publik di Indonesia

Dasar Hukum: UU No. 5 Tahun 2011 tentang Akuntan Publik
Regulator: Pusat Pembinaan Profesi Keuangan Setjen Kemenkeu
berdasarkan PMK No.206/PMK.01/2014.

Akuntan Publik di Indonesia

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Activities of CPA Firms

Accounting and bookkeeping services
Tax services
Management consulting services

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Structure of CPA Firms

Three main factors influence the organizational
structure of all firms:
1. The need for independence from clients.
2. The importance of a structure to encourage
competence.
3. The increased litigation risk faced by auditors.

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Organizational Structure
Proprietorship
Professional corporation
General partnership
Limited liability company
General corporation
Limited liability partnership

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Akuntan Publik di Indonesia

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Akuntan Publik di Indonesia (2013)

Akuntan Publik di Indonesia (2013)

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Hierarchy of a Typical
CPA Firm
Breadth of Experience
10+ years

Partners

5-10

Managers
Seniors and
In-charge Auditors

2-5

Staff Assistants

0-2

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Hierarchy of a Typical
CPA Firm
Staff Level Experience Typical Responsibilities
Staff
assistant
Senior or
in-charge
auditor

0-2 years

Performs most of the

detailed audit work

2-5 years

Responsible for the audit

field work, including
supervising staff work

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Hierarchy of a Typical
CPA Firm
Staff Level Experience Typical Responsibilities
Manager

Partner

Helps plan the audit,

manages the audit,
5-10 years
reviews work, and works
with the client
10+ years

Reviews audit work and

makes significant audit
decisions

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Learning Objective 2
Understand the impact of the PCAOB and
Sarbanes-Oxley on the CPA profession.

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Sarbanes-Oxley Act
This Act is considered by many observers to
be the most important legislation affecting
the auditing profession since the 1930s.
The provisions of the Act apply to publicly
held companies and their audit firms.

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Sarbanes-Oxley Act
SEC

PCAOB
(Public Company
Accounting
Oversight Board)

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Learning Objective 3
Summarize the role of the Securities and
Exchange Commission in accounting and
auditing.

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Securities and Exchange

Commission
The purpose is to assist in providing investors
with reliable information upon which to make
investment decisions
The Securities Act of 1933
The Securities Exchange Act of 1934

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Securities and Exchange

Commission
Form S-1
Form 8-K
Form 10-K
Form 10-Q

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Learning Objective 4
Describe the key functions performed by the
AICPA.

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AICPA
Performs the following services for CPAs:
Sets professional requirements
Conducts research
Publishes materials related to services
performed
Empowered to set standards (guidelines)
and rules
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Establishing Standards
and Rules
1. Auditing standards
2. Compilation and review standards
3. Other attestation standards
4. Code of Professional Conduct

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Other AICPA Functions

The CPA examination
Research and Grants
Publishes a variety of materials
Provides seminars and
continuing education
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Learning Objective 5
Understand the role of international auditing
standards and their relation to U.S. auditing
standards

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Statements on Auditing
Standards
Classification of Statements on Auditing Standards
GAAS and Standards of Performance

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International Standards
on Auditing
IFAC is the worldwide organization
for the accountancy profession.

The IFAC works to improve the

uniformity of auditing practices and
related services throughout the world.

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International Standards
on Auditing

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Learning Objective 6
Use U.S. auditing standards as a basis for
further study

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GAAS

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Generally Accepted Auditing

Standards United States
General Standards
1. Adequate training and proficiency
2. Independence in mental attitude
3. Due professional care

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Generally Accepted Auditing

Standards United States
Standards of Field Work
1. Proper planning and supervision
2. Understanding of the entity
3. Sufficient appropriate evidence

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Generally Accepted Auditing

Standards United States
Standards of Reporting
1. Statements prepared in accordance with GAAP
2. Circumstances when GAAP not followed
3. Adequacy of disclosures
4. Expression of opinion on financial statements
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Relationship Between GAAS and

PCAOB Auditing Standards
PCAOB

GAAS

Public
company
audits

Private
company
audits

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Statements on Auditing
Standards
The 10 generally accepted auditing standards
are too general to provide meaningful guidance.
SAS interpret the 10 generally accepted
auditing standards and are the most
authoritative references available to auditors.

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STANDAR PROFESIONAL AKUNTAN PUBLIK (SPAP)

IAPI / ASOSIASI PROFESI AKUNTAN PUBLIK
SA 100 PERNYATAAN STANDAR AUDITING PENGANTAR
SA 150 STANDAR AUDITING
SA 200 STANDAR UMUM >> General Standards - GAAS
SA 300 STANDAR PEKERJAAN LAPANGAN >> Standards of Field Work - GAAS
SA 400 STANDAR PELAPORAN PERTAMA, KEDUA, DAN KETIGA
SA 500 STANDAR PELAPORAN KEEMPAT
SA 400 & SA 500 >> Standards of Reporting - GAAS
SA 700 TOPIK KHUSUS
SA 800 AUDIT KEPATUHAN
STANDAR ATESTASI (SAT)
STANDAR JASA AKUNTANSI DAN REVIEW (SAR)
STANDAR JASA KONSULTANSI (SJK)
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STANDAR PENGENDALIAN MUTU KAP
(SPM)

Learning Objective 7
Identify quality control standards and
practices within the accounting profession.

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Elements of Quality Control

Independence, integrity, and objectivity
Personnel management
Acceptance and continuation of clients
and engagements
Engagement performance
Monitoring
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Relationships

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CPAs Encouraged to Conduct

Themselves at a High Level
CPA
examination

Quality
control

GAAS and
interpretations

Continuing
education
requirements

Conduct of
CPA firm
personnel

Peer
review

Legal
liability

AICPA practice
sections
PCAOB
and SEC

Code of
Professional
Conduct

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End of Chapter 2

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