The concerns about how easy the new CPA exam is, expressed in the letter “ CBT: Too Easy? ” ( JofA , Sept.05, page 12), are valid but unnecessary. I took the last paper and pencil exam in November 2003. The exam was very difficult, and I was able to
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TOPICS / AUDIT & ASSURANCE
Audit
Risk Assessment Standards in Action
Eight standards rolled out in 2006 by the Auditing Standards Board are sparking a cultural shift for auditors. The standards—Statement on Auditing Standards nos. 104–111—are designed to enhance auditors’ responses to audit risk and materiality and encourage them to focus on areas with the greatest risk of
Opportunity Detected
EXECUTIVE SUMMARY The crux of the SEC’s interpretive guidance for management is a top-down, risk-based approach that puts risk first and foremost. Four key areas of opportunity can be used to reduce an organization’s overall SOX 404 compliance effort— risk assessment, entity-level controls, control selection and testing
A Man of Principles
Your interview with Robert Pozen (“Seeking Clarity,” Oct. 07, page 30) was intriguing. My first question is: Who on the JofA staff interviewed him, and why was the byline not disclosed? The most insightful question was, “How can more principles-based standards work in the U.S….?” His answer was, “No one
Highlights
The Center for Audit Quality issued a set of white papers to address issues practitioners may encounter as a result of the “liquidity crisis” spurred by deterioration in the markets for subprime mortgages and related securities. The CAQ Professional Practice Executive Committee said firms would benefit from the
Navigating the Crossroads of Control and Independence
EXECUTIVE SUMMARY Statement on Auditing Standards no. 112, Communicating Internal Control Related Matters Identified in an Audit , introduced terms, definitions and guidance for identifying and evaluating control deficiencies and communicating significant deficiencies and material weaknesses. It requires an auditor to communicate in writing to a client’s
Highlights
Japan and the International Accounting Standards Board (IASB) agreed to accelerate convergence between Japanese GAAP and International Financial Reporting Standards (IFRS). The two boards will seek to eliminate by 2008 major differences between Japanese GAAP and IFRS, with the remaining differences being removed on or before June 30,
Accounting for Uncertainty
EXECUTIVE SUMMARY FASB Interpretation no. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, sets the threshold for recognizing the benefits of tax return positions in financial statements as “more likely than not” (greater than 50%) to be sustained by a taxing authority. The effect is most
AICPA Urges Congress to Reconsider Preparer Standards
When Congress passed the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act of 2007, it contained one major tax policy change not reflected in the title. The law, which was enacted May 25, included a provision that raises the standards applicable to tax return
Eight Habits of Highly Effective Audit Committees
EXECUTIVE SUMMARY To ensure that your committee is up to its mission, you must first define the mission by drafting a strong charter that identifies audit committee functions, authority and responsibilities, along with the skills and experience its members must possess. Success is not automatic. Specify critical
Highlights
The Consulting Services Executive Committee of the AICPA issued in June a new professional standard on valuation services, Statement on Standards for Valuation Services no. 1, Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset. The standard provides guidelines to CPAs for developing estimates of
Highlights
The PCAOB adopted Auditing Standard no. 5, An Audit of Internal Control Over Financial Reporting That Is Integrated With An Audit of Financial Statements, to replace Auditing Standard no. 2. The new standard is designed to increase the likelihood that material weaknesses in internal control will be
Auditing
The AICPA’s Private Companies Practice Section created an online toolkit devoted to Statement on Auditing Standards no. 112, Communication of Internal Control Related Matters Identified in an Audit. SAS 112 is effective for audits of periods ending on or after Dec. 15, 2006. The toolkit includes talking points, sample client
A Risk-Based Approach to Journal Entry Testing
EXECUTIVE SUMMARY The top-side journal entry is most susceptible to fraud by management override. It’s possible to make adjustments in subledgers, but this requires collusion with other organizational departments, which is much harder to accomplish. The most frequent types of management fraud involve fictitious or premature
IFRS: Coming to America
EXECUTIVE SUMMARY International Financial Reporting Standards (IFRS) are destined to be the lingua franca of the international accounting world. Approximately 100 countries already require, allow or are in the process of converging their national accounting standards with IFRS. FASB and the IASB have agreed to converge
Auditing
The PCAOB for a second time delayed application of Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles, to situations where firms provide tax services to a client before they become the client’s auditor. The audit independence rule, which forbids firms from providing tax services during an “audit
Highlights
HIGHLIGHTS The SEC enhanced the Internet-based search capability of its EDGAR database of company filings. Users now can search the contents of disclosure documents with a full-text search tool. The newly searchable information includes registration statements, annual and quarterly reports and other filings by companies and
One Space or Two
ONE SPACE OR TWO? In “ When Did the World Change? ” ( JofA , Oct.06, page 13) the letter writer asked, “When did the world change from two spaces after a period to one? More important, why did it change?” With the transition from monospaced typefaces, such as on
Assessing and Responding to Risks in a Financial Statement Audit: Part II
EXECUTIVE SUMMARY The Auditing Standards Board issued eight standards with new guidance for auditors assessing risks and controls in financial statement audits. Auditors must consider risk and also determine a materiality level for the financial statements taken as a whole. Auditors are required to obtain a
Data Point: 245
The number of public companies that went private in 2004— up from 143 in 2001, according to the Government Accountability Office (GAO)—due largely to the cost of Sarbanes-Oxley compliance.
Features
FROM THIS MONTH'S ISSUE
Making the right choice when no one is watching
The true test of one’s character is the decision made when no one is looking over your shoulder. Learn how CPAs can uphold ethical standards and take actions that help limit liability risk.
From The Tax Adviser
April 30, 2026
Current developments in taxation of individuals: Part 2
April 30, 2026
