Regulatory Compliance & Standards Flashcards

Under the Sarbanes-Oxley Act, how long must audit workpapers be retained by a registered public accounting firm?

Answer: 7 years

SOX Section 802 requires audit workpapers to be retained for 7 years.

Which body sets auditing standards for audits of non-public (private) companies in the United States?

Answer: AICPA Auditing Standards Board

The AICPA Auditing Standards Board issues Statements on Auditing Standards (SAS) for private company audits.

A CPA discovers a material misstatement in a client's previously issued financial statements. Under AU-C Section 560, what is the primary required action?

Answer: Advise the client to restate and reissue the financial statements

AU-C 560 requires the auditor to advise the client to make appropriate disclosure and restate prior period financials when a material misstatement is discovered.

Under PCAOB AS 2201, an auditor's report on internal control over financial reporting must be integrated with which other report?

Answer: The audit report on financial statements

AS 2201 requires the ICFR report to be integrated with the audit report on the financial statements for public companies.

Which Treasury Circular governs the practice of CPAs, attorneys, and enrolled agents before the IRS?

Answer: Circular 230

Treasury Department Circular 230 regulates practitioners who practice before the IRS, including CPAs.

Under GAAS, the concept of 'professional skepticism' primarily means the auditor should:

Answer: Apply a questioning mind and critically assess audit evidence

Professional skepticism requires a questioning mind and critical assessment of evidence rather than assuming either honesty or dishonesty.

The AICPA Code of Professional Conduct Rule 1.700.001 addresses which fundamental ethical issue?

Answer: Confidential client information

Rule 1.700.001 (Confidential Client Information Rule) prohibits CPAs from disclosing confidential client information without consent.