Notable Scandals
The architect of the largest known Ponzi scheme in history, he was sentenced to 150 years of prison in 2008.
Who is Bernie Madoff
Andy Dufresne is an accountant and wrongfully convicted prisoner in this film released in 1994. It stars Tim Robbins and Morgan Freeman.
What is The Shawshank Redemption
AICPA. BEC
The measurement of the benefit lost by using resources for one purpose and not another is
A. Sunk cost.
B. Opportunity cost.
C. Incremental cost.
D. Differential cost.
(100 Free CPA Sample Questions | Wiley Inc., n.d)
What is (B) opportunity cost?
This mobster from the "Windy City" was arrested in 1931 on tax evasion charges.
Who is Al Capone?
(PRESENTATION)
Name one entity/group that an auditor is accountable to based regarding their work.
Clients, Shareholders, Regulatory Agencies, Upper-Level Management, FSAB, AICPA.
In 2022, this defunct crypto exchange was accused by the Department of Justice of hiding its debt by creating fake balance sheets in a federal indictment against the founder, Sam Bankman-Fried
What is FTX
(Reiff, 2024)
Itzhak Stern, played by actor Ben Kingsley, is an accountant in this 1993 Steven Spielberg directed film, who helps a German businessman save over a thousand Jewish lives from death by the Nazis
What is Schindler's List
Which of the following is the annual report filed by public companies to the SEC:
(A) 10-Q
(B) 8-K
(C) S-1
(D) 10-K
(Sample Exam Questions | Becker Professional Education, n.d)
(D) Form 10-K
(PRESENTATION)
What is the position within the accounting field that deals with filing and preparing taxes owed to the government.
Tax Accountant
(PRESENTATION)
What certification is required for an auditor to externally audit financial statements for public companies?
What is a CPA (Certified Public Accountant) License
This sanitation service company, commonly known by the moniker "WM", was sued by the SEC in 2002 for artificially creating over 1.7 billion dollars in profit on its financial statements.
What is Waste Management Inc.
This character in the TV series Breaking Bad is the wife of main character and former high school chemistry teacher, Walter White. She uses her prior accounting experience and a car wash to hide the source of funds from Walter's illicit activities.
Who is Skyler White.
(AUD)
Which of the following circumstances would likely cause an auditor to assess that there is a high risk of material misstatement due to fraud?
A. Employee access to systems and records is controlled by passwords.
B. Transactions are recorded daily.
C. Inventory is of significant magnitude.
D. Management assumes the responsibility to make period-end adjustments that significantly affect final results.
(Past CPA Exam Questions | AICPA)
(D) Management assumes the responsibility to make period-end adjustments that significantly affect final results.
This company, owned by Intuit Inc., was sued by the Federal Trade Commission for deceptive advertising for its "Free-File" tax preparation software in 2022.
What is TurboTax?
(PRESENTATION)
Give one characterization of ethical performance for auditors. (*Hint* "Transparency" is one of them)
Integrity, Confidentiality, Accountability
This investment bank established in 1844 employed an accounting maneuver called "Repo 105" where it was able to conceal over 50 billion dollars of liabilities on its balance sheet before it collapsed in 2008.
It was the fourth largest US bank at the time of its collapse.
What is Lehman Brothers Inc.
Louis Tully, a socially awkward accountant played by actor Rick Moranis, is possessed by paranormal entity "Vinz Clortho" in this 1984 comedy film based in New York City.
*Hint* The main protagonists in this movie drive a 1959 retrofitted Cadillac named "Ecto-1"
What is Ghostbusters (1984).
(FAR)
ABC Co. incurred the following expenses during the current period:
Routine on-going efforts to improve an existing product - $50,000
Trouble-shooting in connection with breakdowns during commercial production - $75,000
Routine testing of products during commercial production for quality control purposes - $100,000
What is the total amount of research and development expenses incurred by ABC Co. during the current period?
A. $0
B. $75,000
C. $125,000
D. $175,000
(Elliott, 2024)
(AICPA Past Exam Questions | AICPA n.d)
(A) $0
IRS Special Enrollment Examination (SEE) for Enrolled Agents
(Business Section)
What is the maximum number of shareholders a corporation may have to be eligible to elect to be treated as an S corporation?
A. 25
B. 50
C. 75
D. 100
(Sample Special Enrollment Examination Questions and Official Answers | Internal Revenue Service, n.d.)
(D)
References: IRC §1361(b)(1)(A); IRS, Instructions for Form 2553
(PRESENTATION)
Give one variable that may affect the future demand of auditors in the job market.
What is:
Less Students are Sitting for the CPA Exam
Difficulty of CPA Exam
Est. 75 percent of CPAs will retire in the next 15 years
In 2002 this public accounting firm was found guilty of obstruction of justice for shredding documents related to auditing Enron, which had declared bankruptcy in 2001 mainly due to accounting fraud.
Arthur Andersen
2 Fun Facts: (1) There is a plaque in Rauch Business Center with their name. (2) Accenture plc used to be the consulting arm of Arthur Andersen but split in 1989. (Accenture plc, Accenture Response to Media Inquiry, n.d.)
The character, Mitch McDeere, graduates from Western Kentucky University with a degree in accounting and passes the CPA exam on his first try. After law school, he is recruited by a prestigious law firm, Bendini, Lambert and Locke, which hides a dark secret about the true nature of its work.
What is the name of this best-selling novel by John Grisham which has also been adapted into a film starring Tom Cruise in 1993.
The Firm
(PRESENTATION)
What is the average pass rate for all sections of the CPA Exam?
(A) 55%
(B) 45%
(C) 75%
(D) 30%
(B) 45%
Fun Fact: The pass rate for the Bar Exam is lower. ('21 60% Average Pass Rate)
(UWorld Legal, 2023)
(PRESENTATION)
What certification is required to represent taxpayers before the IRS.
Enrolled Agent (EA) Certification
(Enrolled Agents: Frequently Asked Questions | Internal Revenue Service, n.d.)
(PRESENTATION)
In 2022, these "Big 4" accounting firms combined held a 99.7% market share in the S&P 500 total audit fee market.
(Audit Fee Trends of S&P 500, n.d.)
Ernst & Young (EY), Deloitte, PricewaterhouseCoopers (PwC), Klynveld Peat Marwick Goerdeler (KPMG)