Review Question CH2.docVIP

SEQ CHAPTER \h \r 1Chapter 2The CPA Profession2-1 (Objective 2-1) State the four major types of services CPAs perform, and explain each.The four major services that CPAs provide are:Assurance services Assurance services are independent professional services that improve the quality of information for decision makers. Assurance services include attestation services, which are any services in which the CPA firm issues a report that expresses a conclusion about the reliability of an assertion that is the responsibility of another party. The four categories of attestation services are audits of historical financial statements, attestation on the effectiveness of internal control over financial reporting, reviews of historical financial statements, and other attestation services.Accounting and bookkeeping services Accounting services involve preparing the clients financial statements from the clients records. Bookkeeping services include the preparation of the clients journals and ledgers as well as financial statements.Tax services Tax services include preparation of corporate, individual, and estate returns as well as tax planning assistance.Management consulting services These services range from suggestions to improve the clients accounting system to computer installations.2-2 (Objectives 2-1, 2-8) What major characteristics of the organization and conduct of CPA firms permit them to fulfill their social function competently and independently?The major characteristics of CPA firms that permit them to fulfill their social function competently and independently are:Organizational form A CPA firm exists as a separate entity to avoid an employer-employee relationship with its clients. The CPA firm employs a professional staff of sufficient size to prevent one client from constituting a significant portion of total income and thereby endangering the firms independence.Conduct A CPA firm employs a professional staff of sufficient size to provide a broad range of exp