Part of the Profession
What animal are auditors are often nicknamed because of their role of guarding investor trust?
Watchdogs
What type of firm buys private companies or takes public companies private, aiming to resell them for profit?
Private Equity Firms
Who do Private Equity Firms serve first?
Their investors / own entity.
True or False?
Once a person works in the same field for more than 20 years, their job is automatically considered to be part a profession?
False
Name 3 of the professions that Frank Abagnale Jr. impersonated.
Teacher, airline pilot, doctor, and lawyer
Why is a regular accountant not considered a part of the profession?
They primarily serve their own company, NOT the public.
What phrase refers to the difference between what the public expects auditors to do (detect all fraud) and what they actually do?
Expectations gap
If a CPA working for an accounting firm and also owns shares in a PE, then how does the CPA's primary responsibility change?
It doesn't change. Their primary responsibility is still to the public.
True or False?
Decreasing licensing requirements has no effect on public risk.
False! it increases public risk
What three firms were found guilty for widespread internal exam cheating?
EY, Deloitte, and PWC
What is the difference between obtaining a higher education and training?
Training is developed by the company. A profession requires specific schooling in that field.
What narrow category focuses on the authorization of complex, regulated fields like accounting, law, and medicine?
Professional licensing
DAILY DOUBLE!!!!!!!!
When PE focuses on short-term profits while CPAs must serve the public, what conflict emerges?
A conflict of interest
True or False?
Not every job is a profession, but someone who works in any industry can be professional
True
What happened to Frank Abagnale Jr. when he was eventually caught?
He was recruited to the FBI to catch other fraudsters
What are some examples of barriers to entry?
Exams that specifically allow you to qualify as a member of that profession (examples: CPA, LSAT, MCAT)
What broad category covers authorization of any government-mandated credential for a job?
Occupational licensing
whats the difference between independence "in fact" and "in appearance"?
Independence in fact: the CPAs actual impartiality.
Independence in appearance: how they are being perceived by others.
True or False?
Experience is not an element to the alternative pathways to the CPA exam.
False, is it still a requirement
The PCAOB fined a total of $8.5M to the what country's affiliates of 3 major accounting firms for widespread internal exam cheating?
The Netherlands
List the criteria for a profession (4).
Higher education, barrier to entry, follows a code of ethics, responsibility is to the public.
What professional association develops and enforces the Code of Professional Conduct for CPAs?
AICPA
This organization oversees auditors of public companies and has raised concerns about private equity’s role.
PCAOB
True or False?
Deloitte reorganized into “Trust Solutions” and “Consulting Solutions” in 2021 to emphasize public responsibility.
False, It was PWC.
DAILY DOUBLE!!!!!!!!
What were the first two states to pass legislation for alternative pathways to the CPA exam?
Ohio and Virginia