Solution manual for
p p
principles of auditing and other as
p p p p p pp
surance services p p
22nd edition p p
by ray whittington kurt
p p p
,CHAPTER 1 p
The Role of the Publi
p p p p
c Accountant in the
p p p
American Economy p
ReviewpQuestions
1-1 Thep―crisispofpcredibility‖plargelyparosepfrompthepnumberpofpcompaniespthatprestatedptheirppreviouslypissu
edpfinancialpstatementspaspapresultpofpaccountingpirregularitiespandpfraud.pEspeciallypresponsiblepwerepthep
verypvisiblepEnronpandpWorldCompfraudpcases.pBothpcompaniespfiledpforpbankruptcypandpconstitutedpthepl
argestpcompaniespinpAmericanphistoryptopdopso.pThepextentpofpthepaccountingpirregularitiespandpfraudpbein
gpinvestigatedpandpdisclosedpbroughtpintopquestionpthepeffectivenesspofpfinancialpstatementpaudits.pInpaddit
ion,pthepcriminalpconvictionpofpArthurpAndersen,pLLP,ponepofpthepthenpBigp5paccountingpfirms,ponpcharges
pofpdestroyingpdocumentsprelatedptopthepEnronpcasepbroughtpintopquestionpthepethicspstandardspofpthepprofe
ssion.
1-2 Assurancepservicesparepprofessionalpservicespthatpenhancepthepqualitypofpinformation,porpitspcontext,pforp
decision-
making.pTheptwoptypespare:p(a)pthosepthatpincreasepthepreliabilitypofpinformationpandp(b)pthosepthatpinvolv
ep puttingpinformationpinpap formporp contextp thatp facilitatesp decision-making.
1-3 Apfinancialpstatementpauditpis,pbypfar,pthepmostpcommonptypepofpattestpengagement.pThepoverallpassertion,p
madepbypmanagement,pmostpfrequentlypispthatpthepfinancialpstatementspfollowpgenerallypacceptedpaccounti
ngpprinciples.
1-4 Aplargepcorporationpwithpsecuritiesplistedponpapstockpexchangepisprequiredpbyptheprulespofpthepstockpexchang
epandpbyptheprulespofpthepSecuritiespandpExchangepCommissionptopprovidepanpauditpreportpwithpthepannualpfi
nancialpstatementspfurnishedptopitspstockholders.p Itpalsopisprequiredptopengagepthepauditorsptopprovidepanpopi
nionponpitspinternalpcontrol.pApartpfromplegalprequirements,phowever,paplargeplistedpcorporationprecognizesp
thatpitpmustpmaintainpinvestorpconfidencepinpthepreliabilitypofpitspfinancialpstatementsp andpinternalpcontrolp o
verp financialpreportingpifp itp isp topcontinueptopbepableptopsecurepcapitalpfromptheppublic.pThepreportpbypapfirm
pofpcertifiedppublicpaccountantspaddspcredibilityptopthepfinancialpstatementsppreparedpbypthepcorporation.p W
henpapsmallpfamily-
ownedpenterprisepelectsptophavepanpaudit,ptheppurposepusuallypisptopusepthepauditors'preportptopsupportpanpapp
licationpforpapbankploan.
,1-5 Apreportpbypanpindependentppublicpaccountantpconcerningpthepfairnesspofpapcompany'spfinancialpstatementspi
spcommonlyprequiredpinpthepfollowingpsituations:
(1) Applicationpforpapbankploan.
(2) Establishingpcreditpforppurchasepofpmerchandise,pequipment,porpotherpassets.
(3) Reportingpoperatingpresults,pfinancialpposition,pandpcashpflowsptopabsenteepownersp(stockholdersp
orppartners).
(4) Issuancepofpsecuritiesp bypapcorporation.
(5) Annualpfinancialpstatementspbypapcorporationpwithpsecuritiesplistedponpapstockpexchangeporptradedp
overpthepcounter.
(6) Salepofpanpongoingpbusiness.
(7) Terminationpofpap partnership.
1-6 Topaddpcredibilityptopfinancialpstatementspisptopincreaseptheplikelihoodpthatptheyphavepbeenppreparedpfollo
wingpthepappropriatepcriteria,pusuallypgenerallypacceptedpaccountingpprinciples.pAspsuch,panpincreasepinpcr
edibilitypresultspinpfinancialpstatementspthatpcanpbepbelievedpandpreliedpuponpbypthirdpparties.
1-7 Businesspriskpispthepriskpthatpthepinvestmentpwillpbepimpairedpbecausepapcompanypinvestedpinpispunableptop
meetpitspfinancialpobligationspdueptopeconomicpconditionsporppoorpmanagementpdecisions.pInformationpris
kpispthepriskpthatpthepinformationpusedptopassesspbusinesspriskpispnotpaccurate.p Auditorspcanpdirectlypreduce
pinformationprisk,pbutphaveponlyplimitedpeffectponpbusinessprisk.
1-8 Atpthepbeginningpofpthepcentury,pthepprincipalpobjectivepofpauditingpwasptheppreventionpandpdetectionpofpfr
aud.pAuditpworkpcenteredponpthepbalancepsheet,pbecausepthepincomepstatementpwaspregardedpasphighlypconf
identialpandpnotpforppublicpdisclosure.p Today,pthepprincipalpobjectivepofpauditingpisptopformpanpopinionponpt
hepfairnesspofpfinancialpstatementspandptheirpconformitypwithpgenerallypacceptedpaccountingpprinciples.pBu
tpthepprofessionalpstandardspalsoprequirepthatpanpauditpbepdesignedptopprovidepreasonablepassurancepofpdete
ctingpmaterialpmisstatements,pdueptoperrorsporpfraud.p Particularpemphasispispplacedponp thepincomepstateme
ntpwhichpispofpgreatpimportanceptopinvestors.pAuditingptodaypalsophaspthepobjectivespofpmeetingptheprequire
mentspofpthepSecuritiespandpExchangepCommissionp(SEC)pandpthepPublicpCompanypAccountingpOversight
pBoardpforppublicpcompanies.
1-9 Thepstatementpispincorrect.pThepincreasingpintegratedpdatabasespofptoday,palongpwithpavailablepauditp
proceduresp makepauditedpentireppopulationsp ap possibilitypinp manypsituations.
1-10 Anpoperationalpauditpattemptsptopmeasurepthepeffectivenesspandpefficiencypofpapspecificpunitpofpanporga
nization.pItpinvolvespmorepsubjectivepjudgmentspthanpapcompliancepauditporpanpauditpofpfinancialpstatem
entspbecausepthepcriteriapofpeffectivenesspandpefficiencypofpdepartmentalpperformanceparepnotpaspclearly
pestablishedpasparepmanyplawspandpregulationsporpgenerallypacceptedpaccountingpprinciples.
Thepreportppreparedpafterpcompletionpofpanpoperationalpauditpispusuallypdirectedptopmanagementpo
fptheporganizationpinpwhichpthepauditpworkpwasp done.
1-11 Apcompliancepauditpispanpauditptopdeterminepwhetherpfinancialpreportsporpotherpassertionsparepinpcomplian
cepwithpestablishedpcriteria.pThepnecessarypingredientsparepverifiablepdatapandpthepexistencepofpstandardsp
establishedpbypanpauthoritativepbody.pAnpoperationalpaudit,ponpthepotherphand,pispapreviewpofpapdepartmen
tporpotherpunitpofpapbusinessporpgovernmentalporganizationptopmeasurepthepeffectivenesspandpefficiencypofp
operations.pInternalpauditorspoftenpperformpoperationalpauditspaspdopauditorspemployedpbypthepGovernme
ntp AccountabilitypOfficep(GAO)p ofp thepfederalpgovernment.
1-12 Internalpauditorspmustpbepindependentpofpthepdepartmentpheadspandpotherplinepexecutivespwhosepworkptheyp
review.pHowever,pinternalpauditorsparepnotpindependentpinpthepsamepsensepaspappublicpaccountingpfirm.
, Theppublicpaccountingpfirmpservespmanypclientspandptheprevenuepobtainedpfrompanyponepclientpisponlypapsm
allppartpofptheprevenuepofpthepfirm.pInternalpauditors,ponpthepotherphand,parepemployeespofponepcompany,pand
parepsubjectptoptheprestraintspinherentpinpthepemployer-
employeeprelationship.pInternalpauditorspcanpachievepapgreatpdealpofpindependencepbypreportingptopthepaudit
pcommitteepofpthepboardpofpdirectors,pbutptheypcannotpachievepthepsamepdegreepofpindependencepaspispposse
ssedpbypthepexternalppublicpaccountingpfirm.
1-13 Thepinternalpauditorsp arepemployeesp ofpSpacecraft,pInc.,pandpmaypbepinfluencedpbypcorporatepmanagement.
Theppublicpaccountingpfirmpispindependentpofpthepcompanypandpispinpapbetterppositionptoptakeppositionspopp
osedptopthosepofpcompanypmanagement.pThepworkpofpthepinternalpauditpstaffpemphasizespmeasurementpofpth
epefficiencypandpeffectivenesspofpvariouspoperatingpunitspofpthepcompanypandpcompliancepwithpallptypespofp
controls,pwhereasptheppublicpaccountingpfirmpispprimarilypconcernedpwithpdeterminingpthepfairnesspofpSpace
craft'spfinancialpstatements.
1-14 ThepGovernmentpAccountabilitypOfficep(GAO)pispapstaffpofpprofessionalpauditorspwhichpreportsptopCongre
ss.pItspfunctionpisptopdeterminepthatpprogramspcarriedpoutpbypfederalpagenciespconformptopthepfinancialpauth
orizationpofpthepCongress.pItpispalsopconcernedpwithpthepcost-
effectivenesspofpgovernmentpprograms.pThepauditpactivitiespincludepinvestigationpofpthepcostspandpperforma
ncepofpcorporationspholdingpgovernmentpcontracts.
1-15 AmongpthepmanypimportantpcontributionsptopauditingpliteraturepbypthepAICPAparepthepseriespofpStatementspo
npAuditingpStandardsp(SASs),pStatementsponpStandardspforpAttestationpEngagementsp(SSAEs),pIndustrypAu
ditpandpAccountingpGuides,pAuditpGuides,pAuditpRiskpAlerts,pStatementsponpStandardspforpAccountingpandp
ReviewpServicesp(SSARSs),p,pandpthepCodepofpProfessionalpConductp(onlyptwoprequired).
1-16 Appeerpreviewpispapcriticalpreviewpofpappublicpaccountingpfirm'sppracticespbypanotherppublicpaccountingpf
irmp(orpotherpCPAspfunctioningpaspappeerpreviewpteam).pTheppurposepofpappeerpreviewpisptopencouragepa
dherenceptopqualitypcontrolpstandardspestablishedpbypthepaccountingpfirmpandpthepprofession.
1-17 ThepSecuritiespandpExchangepCommissionp(SEC)pispanpagencypofpthepfederalpgovernmentpandpispresponsibl
epforpadministeringpapnumberpofpacts,pincludingpthepSecuritiespActpofp1933pandpthepSecuritiespExchangep Ac
tp ofp 1934.p Inp meetingp thispresponsibility,p thep SECpreviewsp financialp statementsp ofpcompaniespofferingpse
curitiespforpsaleptoptheppublic.pItpispparticularlypconcernedpwithprequiringpfullpdisclosurepofpfinancialpinforma
tionpandpwithppreventingpmisrepresentation.pThroughpthepPublicpCompanypAccountingpOversightpBoard,pth
epSECpnowpoverseesppublicpaccountingpfirmspthatpauditppublicpcompanies.pIncludedpinpthispoversightpproces
spincludespdevelopmentpofpauditing,pindependence,pandpqualitypcontrolpstandards;p inspectionp ofp performa
nce;p andpenforcementp ofp thepstandards.
ThepAICPApispthepnationalporganizationpofpcertifiedppublicpaccountants.pItphasplongpbeenpapleaderp
inpaccountingpandpauditingpresearch,pinppublicationpofpauthoritativepaccountingpandp auditingppronouncem
entsp andpstudies,pandpinppromotingp highp professionalp standardsp ofp practice.
1-18 Servicespofferedpbyppublicpaccountingpfirmspinpadditionptopauditingpincludepotherpformspofpattestation,ptaxp
work,pconsultingpservices,plitigationpsupportpservices,pfraudpinvestigationpservices,ppersonalpfinancialpplan
ningpandpaccountingpservices.pThisplastpcategorypincludesppreparationpofpfinancialpstatementspforpsmallerpc
ompaniespthatphaveplimitedpaccountingppersonnelpandpvariousptypespofpwrite-
uppwork.pPublicpaccountingpfirmspalsopperformpapvarietypofpotherpservices.p Consultingpservicespincludepai
dingpclientspinpthepdesignpofpaccountingpsystems,pconversionptopInformationpTechnologyp(IT)psystems,ppre
parationpofpbudgets,pplanningpbusinesspcombinationspwithpotherpcompanies,pexecutivepsearch,pandpnumero
uspotherpprojects.pPublicpaccountingpfirmspareprestrictedpasptopthepconsultingpservicespthatptheypmaypprovid
eptopauditpclientspthatpareppublicpcompanies.
p p
principles of auditing and other as
p p p p p pp
surance services p p
22nd edition p p
by ray whittington kurt
p p p
,CHAPTER 1 p
The Role of the Publi
p p p p
c Accountant in the
p p p
American Economy p
ReviewpQuestions
1-1 Thep―crisispofpcredibility‖plargelyparosepfrompthepnumberpofpcompaniespthatprestatedptheirppreviouslypissu
edpfinancialpstatementspaspapresultpofpaccountingpirregularitiespandpfraud.pEspeciallypresponsiblepwerepthep
verypvisiblepEnronpandpWorldCompfraudpcases.pBothpcompaniespfiledpforpbankruptcypandpconstitutedpthepl
argestpcompaniespinpAmericanphistoryptopdopso.pThepextentpofpthepaccountingpirregularitiespandpfraudpbein
gpinvestigatedpandpdisclosedpbroughtpintopquestionpthepeffectivenesspofpfinancialpstatementpaudits.pInpaddit
ion,pthepcriminalpconvictionpofpArthurpAndersen,pLLP,ponepofpthepthenpBigp5paccountingpfirms,ponpcharges
pofpdestroyingpdocumentsprelatedptopthepEnronpcasepbroughtpintopquestionpthepethicspstandardspofpthepprofe
ssion.
1-2 Assurancepservicesparepprofessionalpservicespthatpenhancepthepqualitypofpinformation,porpitspcontext,pforp
decision-
making.pTheptwoptypespare:p(a)pthosepthatpincreasepthepreliabilitypofpinformationpandp(b)pthosepthatpinvolv
ep puttingpinformationpinpap formporp contextp thatp facilitatesp decision-making.
1-3 Apfinancialpstatementpauditpis,pbypfar,pthepmostpcommonptypepofpattestpengagement.pThepoverallpassertion,p
madepbypmanagement,pmostpfrequentlypispthatpthepfinancialpstatementspfollowpgenerallypacceptedpaccounti
ngpprinciples.
1-4 Aplargepcorporationpwithpsecuritiesplistedponpapstockpexchangepisprequiredpbyptheprulespofpthepstockpexchang
epandpbyptheprulespofpthepSecuritiespandpExchangepCommissionptopprovidepanpauditpreportpwithpthepannualpfi
nancialpstatementspfurnishedptopitspstockholders.p Itpalsopisprequiredptopengagepthepauditorsptopprovidepanpopi
nionponpitspinternalpcontrol.pApartpfromplegalprequirements,phowever,paplargeplistedpcorporationprecognizesp
thatpitpmustpmaintainpinvestorpconfidencepinpthepreliabilitypofpitspfinancialpstatementsp andpinternalpcontrolp o
verp financialpreportingpifp itp isp topcontinueptopbepableptopsecurepcapitalpfromptheppublic.pThepreportpbypapfirm
pofpcertifiedppublicpaccountantspaddspcredibilityptopthepfinancialpstatementsppreparedpbypthepcorporation.p W
henpapsmallpfamily-
ownedpenterprisepelectsptophavepanpaudit,ptheppurposepusuallypisptopusepthepauditors'preportptopsupportpanpapp
licationpforpapbankploan.
,1-5 Apreportpbypanpindependentppublicpaccountantpconcerningpthepfairnesspofpapcompany'spfinancialpstatementspi
spcommonlyprequiredpinpthepfollowingpsituations:
(1) Applicationpforpapbankploan.
(2) Establishingpcreditpforppurchasepofpmerchandise,pequipment,porpotherpassets.
(3) Reportingpoperatingpresults,pfinancialpposition,pandpcashpflowsptopabsenteepownersp(stockholdersp
orppartners).
(4) Issuancepofpsecuritiesp bypapcorporation.
(5) Annualpfinancialpstatementspbypapcorporationpwithpsecuritiesplistedponpapstockpexchangeporptradedp
overpthepcounter.
(6) Salepofpanpongoingpbusiness.
(7) Terminationpofpap partnership.
1-6 Topaddpcredibilityptopfinancialpstatementspisptopincreaseptheplikelihoodpthatptheyphavepbeenppreparedpfollo
wingpthepappropriatepcriteria,pusuallypgenerallypacceptedpaccountingpprinciples.pAspsuch,panpincreasepinpcr
edibilitypresultspinpfinancialpstatementspthatpcanpbepbelievedpandpreliedpuponpbypthirdpparties.
1-7 Businesspriskpispthepriskpthatpthepinvestmentpwillpbepimpairedpbecausepapcompanypinvestedpinpispunableptop
meetpitspfinancialpobligationspdueptopeconomicpconditionsporppoorpmanagementpdecisions.pInformationpris
kpispthepriskpthatpthepinformationpusedptopassesspbusinesspriskpispnotpaccurate.p Auditorspcanpdirectlypreduce
pinformationprisk,pbutphaveponlyplimitedpeffectponpbusinessprisk.
1-8 Atpthepbeginningpofpthepcentury,pthepprincipalpobjectivepofpauditingpwasptheppreventionpandpdetectionpofpfr
aud.pAuditpworkpcenteredponpthepbalancepsheet,pbecausepthepincomepstatementpwaspregardedpasphighlypconf
identialpandpnotpforppublicpdisclosure.p Today,pthepprincipalpobjectivepofpauditingpisptopformpanpopinionponpt
hepfairnesspofpfinancialpstatementspandptheirpconformitypwithpgenerallypacceptedpaccountingpprinciples.pBu
tpthepprofessionalpstandardspalsoprequirepthatpanpauditpbepdesignedptopprovidepreasonablepassurancepofpdete
ctingpmaterialpmisstatements,pdueptoperrorsporpfraud.p Particularpemphasispispplacedponp thepincomepstateme
ntpwhichpispofpgreatpimportanceptopinvestors.pAuditingptodaypalsophaspthepobjectivespofpmeetingptheprequire
mentspofpthepSecuritiespandpExchangepCommissionp(SEC)pandpthepPublicpCompanypAccountingpOversight
pBoardpforppublicpcompanies.
1-9 Thepstatementpispincorrect.pThepincreasingpintegratedpdatabasespofptoday,palongpwithpavailablepauditp
proceduresp makepauditedpentireppopulationsp ap possibilitypinp manypsituations.
1-10 Anpoperationalpauditpattemptsptopmeasurepthepeffectivenesspandpefficiencypofpapspecificpunitpofpanporga
nization.pItpinvolvespmorepsubjectivepjudgmentspthanpapcompliancepauditporpanpauditpofpfinancialpstatem
entspbecausepthepcriteriapofpeffectivenesspandpefficiencypofpdepartmentalpperformanceparepnotpaspclearly
pestablishedpasparepmanyplawspandpregulationsporpgenerallypacceptedpaccountingpprinciples.
Thepreportppreparedpafterpcompletionpofpanpoperationalpauditpispusuallypdirectedptopmanagementpo
fptheporganizationpinpwhichpthepauditpworkpwasp done.
1-11 Apcompliancepauditpispanpauditptopdeterminepwhetherpfinancialpreportsporpotherpassertionsparepinpcomplian
cepwithpestablishedpcriteria.pThepnecessarypingredientsparepverifiablepdatapandpthepexistencepofpstandardsp
establishedpbypanpauthoritativepbody.pAnpoperationalpaudit,ponpthepotherphand,pispapreviewpofpapdepartmen
tporpotherpunitpofpapbusinessporpgovernmentalporganizationptopmeasurepthepeffectivenesspandpefficiencypofp
operations.pInternalpauditorspoftenpperformpoperationalpauditspaspdopauditorspemployedpbypthepGovernme
ntp AccountabilitypOfficep(GAO)p ofp thepfederalpgovernment.
1-12 Internalpauditorspmustpbepindependentpofpthepdepartmentpheadspandpotherplinepexecutivespwhosepworkptheyp
review.pHowever,pinternalpauditorsparepnotpindependentpinpthepsamepsensepaspappublicpaccountingpfirm.
, Theppublicpaccountingpfirmpservespmanypclientspandptheprevenuepobtainedpfrompanyponepclientpisponlypapsm
allppartpofptheprevenuepofpthepfirm.pInternalpauditors,ponpthepotherphand,parepemployeespofponepcompany,pand
parepsubjectptoptheprestraintspinherentpinpthepemployer-
employeeprelationship.pInternalpauditorspcanpachievepapgreatpdealpofpindependencepbypreportingptopthepaudit
pcommitteepofpthepboardpofpdirectors,pbutptheypcannotpachievepthepsamepdegreepofpindependencepaspispposse
ssedpbypthepexternalppublicpaccountingpfirm.
1-13 Thepinternalpauditorsp arepemployeesp ofpSpacecraft,pInc.,pandpmaypbepinfluencedpbypcorporatepmanagement.
Theppublicpaccountingpfirmpispindependentpofpthepcompanypandpispinpapbetterppositionptoptakeppositionspopp
osedptopthosepofpcompanypmanagement.pThepworkpofpthepinternalpauditpstaffpemphasizespmeasurementpofpth
epefficiencypandpeffectivenesspofpvariouspoperatingpunitspofpthepcompanypandpcompliancepwithpallptypespofp
controls,pwhereasptheppublicpaccountingpfirmpispprimarilypconcernedpwithpdeterminingpthepfairnesspofpSpace
craft'spfinancialpstatements.
1-14 ThepGovernmentpAccountabilitypOfficep(GAO)pispapstaffpofpprofessionalpauditorspwhichpreportsptopCongre
ss.pItspfunctionpisptopdeterminepthatpprogramspcarriedpoutpbypfederalpagenciespconformptopthepfinancialpauth
orizationpofpthepCongress.pItpispalsopconcernedpwithpthepcost-
effectivenesspofpgovernmentpprograms.pThepauditpactivitiespincludepinvestigationpofpthepcostspandpperforma
ncepofpcorporationspholdingpgovernmentpcontracts.
1-15 AmongpthepmanypimportantpcontributionsptopauditingpliteraturepbypthepAICPAparepthepseriespofpStatementspo
npAuditingpStandardsp(SASs),pStatementsponpStandardspforpAttestationpEngagementsp(SSAEs),pIndustrypAu
ditpandpAccountingpGuides,pAuditpGuides,pAuditpRiskpAlerts,pStatementsponpStandardspforpAccountingpandp
ReviewpServicesp(SSARSs),p,pandpthepCodepofpProfessionalpConductp(onlyptwoprequired).
1-16 Appeerpreviewpispapcriticalpreviewpofpappublicpaccountingpfirm'sppracticespbypanotherppublicpaccountingpf
irmp(orpotherpCPAspfunctioningpaspappeerpreviewpteam).pTheppurposepofpappeerpreviewpisptopencouragepa
dherenceptopqualitypcontrolpstandardspestablishedpbypthepaccountingpfirmpandpthepprofession.
1-17 ThepSecuritiespandpExchangepCommissionp(SEC)pispanpagencypofpthepfederalpgovernmentpandpispresponsibl
epforpadministeringpapnumberpofpacts,pincludingpthepSecuritiespActpofp1933pandpthepSecuritiespExchangep Ac
tp ofp 1934.p Inp meetingp thispresponsibility,p thep SECpreviewsp financialp statementsp ofpcompaniespofferingpse
curitiespforpsaleptoptheppublic.pItpispparticularlypconcernedpwithprequiringpfullpdisclosurepofpfinancialpinforma
tionpandpwithppreventingpmisrepresentation.pThroughpthepPublicpCompanypAccountingpOversightpBoard,pth
epSECpnowpoverseesppublicpaccountingpfirmspthatpauditppublicpcompanies.pIncludedpinpthispoversightpproces
spincludespdevelopmentpofpauditing,pindependence,pandpqualitypcontrolpstandards;p inspectionp ofp performa
nce;p andpenforcementp ofp thepstandards.
ThepAICPApispthepnationalporganizationpofpcertifiedppublicpaccountants.pItphasplongpbeenpapleaderp
inpaccountingpandpauditingpresearch,pinppublicationpofpauthoritativepaccountingpandp auditingppronouncem
entsp andpstudies,pandpinppromotingp highp professionalp standardsp ofp practice.
1-18 Servicespofferedpbyppublicpaccountingpfirmspinpadditionptopauditingpincludepotherpformspofpattestation,ptaxp
work,pconsultingpservices,plitigationpsupportpservices,pfraudpinvestigationpservices,ppersonalpfinancialpplan
ningpandpaccountingpservices.pThisplastpcategorypincludesppreparationpofpfinancialpstatementspforpsmallerpc
ompaniespthatphaveplimitedpaccountingppersonnelpandpvariousptypespofpwrite-
uppwork.pPublicpaccountingpfirmspalsopperformpapvarietypofpotherpservices.p Consultingpservicespincludepai
dingpclientspinpthepdesignpofpaccountingpsystems,pconversionptopInformationpTechnologyp(IT)psystems,ppre
parationpofpbudgets,pplanningpbusinesspcombinationspwithpotherpcompanies,pexecutivepsearch,pandpnumero
uspotherpprojects.pPublicpaccountingpfirmspareprestrictedpasptopthepconsultingpservicespthatptheypmaypprovid
eptopauditpclientspthatpareppublicpcompanies.
