[seva]

Hey Everyone!

I’ve been a regular lurker of this website since last April and finally got around to creating an account. I am preparing for the Audit exam the third time now and have finally decided to put my heart into this a 100%. I absolutely hated audit, but I think I am finally starting to grasp it. I have a few questions and I would really appreciate your help in answering them. This is such a supportive community. Thank you in advance!

1. So apparently, independence of an Auditor is considered to be impaired if the auditor is a “distributor” of the client’s products. [Audit- Wiley 2011- Pg 58- Interpretation 101-12 (1)]. My question is would a recommendation of a client’s product to a third party, and that third party subsequently purchases it (1) from the auditor (2) directly from the client also impair independence?

2. Apparently Non-Audit services (Review, Compilation, Examination) of a private entity is governed by the SSARS. My question is what standards govern the non-audit services of a public entity? I understand that the audit services of a public entity are governed by SAS, PCAOB standards, but I did not come across Review, Compilation standards for public entity anywhere…

3. The Code of Professional Conduct applies to all AICPA members, whether they are in public practice or private. But I was wondering if there are any “rules” for Non-AICPA members? I know its possible to practice without being a member, but just wondering how they are regulated…

4. Also, according to Wiley Pg 55, first bullet point (c), a covered member cannot provide more than 10 hours of non-attest services. This implies that providing 10 hours of non-attest services are okay right? Does that mean it would be okay to provide consulting services or actuarial services of 9.5 hours? My main concern here is wouldn’t the work that you provided, even just for 9.5, be under threat of self-review? Is that concern minor/ not practical in the real world?

Some of these may be silly questions, but I was stumped and kept wondering about it. Thank you!

[Ronny010]

well dear thanks for sharing its information but i am not aware of this 🙂

[Tebowwwww]

Let me first say that I've taken Audit twice and I've never come across any questions that are in this much detail so you probably shouldn't lose sleep over them. I'll do my best to help you out though:

2) I'm pretty sure SSARS still applies for non-attest services for public companies, but that there can be some additional SEC requirements for 10-Q reviews.

3) I believe the Code of Professional Conduct applies to all CPA's in public or private, and not necessarily just to AICPA members.

Don't know the answers to 1 and 4 and to be frank I'm not 100% on the above but I think I'm right, and more importantly I doubt that any questions making this minute of a distinction will be on your exam.

REG (7/7/11) 75
FAR (7/28/11) 76
BEC (8/27/11) 81
AUD (10/15/11, 1/20/12) 63, 91

DONE!!!

[Morganf]

AICPA are the people that give the CPA exam; you can't be a CPA and not be a part of them…

BEC - 88
AUD - 69, 74, 93
FAR - 78
REG - 79

[Tebowwwww]

@Morganf Licensing is done by state board, not by the AICPA. The AICPA does create and administer the exam but you don't need to be a member to be licensed.

REG (7/7/11) 75
FAR (7/28/11) 76
BEC (8/27/11) 81
AUD (10/15/11, 1/20/12) 63, 91

DONE!!!

[jeff]

True – I am a licensed CPA, but it's not contingent on my membership to the AICPA. It's a state license.

AUD - 79
BEC - 80
FAR - 76
REG - 92

Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[Morganf]

Hmm sorry for the misinformation. That's weird that they say the Code of Professional conduct applies to AICPA members, not licensed CPAs. I remember a Wiley question testing the link between getting kicked out of your state board & the effect on AICPA membership or vice versa, but I hopefully squeaked through without the details sinking in. C'mon 2/3/12 !!

BEC - 88
AUD - 69, 74, 93
FAR - 78
REG - 79

[seva]

@Tebowww- Thank you for your help! I realized that these are very detailed and I need not worry, but I was actually asked 1) on one of the exam I gave in the past. And I clearly remember this question stumping me. I dont want to break the AICPA rules of the exam, but it is a concept I remember on the test, and have not found the answer anywhere. The most frustrating thing is that the solution should be a straight answer, but I cant find it anywhere.

2) Thank you for that! I thought SSARS specifically applies to non-public entities. I have yet to come across SSARS being recommended for public entities.

3) Yeah, that seems to be the case. I am not going to worry about this too much since I know non-AICPA members too cant be bankrupt, convicted to felony etc or the state board will revoke their license.

@Jeff- Thanks! Would you happen to know the answers to the rest of the questions?

@MorganF- Good luck on your result! It comes out soon 🙂

[seva]

@Teboww: You raised another question that confused me… what do non-attest services mean? (I thought they meant tax, bookkeeping, accounting etc), but it seems that when you used the term non-attest, you meant to say Review, Compilation etc. Thanks. Your help is sincerely appreciated!

[Tebowwwww]

@Seva Non-attest services are pretty broad. An attest service is basically an ‘audit' of something other than historical financial statements, where you are giving some kind of positive assurance. Examples include an examination of agreed-upon procedures or a financial projection. Non-attest means you aren't giving that positive assurance, so reviews (negative assurance), compilations (no assurance) and other things like tax and bookkeeping fit here as well.

REG (7/7/11) 75
FAR (7/28/11) 76
BEC (8/27/11) 81
AUD (10/15/11, 1/20/12) 63, 91

DONE!!!

[seva]

@Teboww: Thanks for the clarification about non-attest services!

[Xenia]

1. Seva, I would recommend u to get RogerCPA CRAM. It should clarify these concepts for u.

2. My son's name is Seva 😉

[Author]

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