The PCAOB has the authority to set audit standards for all audits of public companies

2-60. (Audit Standards for NonPublic Companies, LO 5, 9, 10) The PCAOB has the authority to set audit standards for all audits of public companies. The AICPA continues to set audit standards for nonpublic companies through its auditing standards board.

Required:
a. What are the pros and cons of having the same audit standards for both public and nonpublic entities?
b. In what ways might you expect auditing standards for audits of nonpublic companies to differ from the standards for public companies? Identify three (there are not necessarily three right or wrong answers-this is an opinion and discussion question only). Identify the rationale for your answers.
c. A CPA is performing an audit of a local municipality. Where should the auditor look to determine audit standards that must be followed?
d. What role should an audit committee play in determining which standards an audit firm will use in auditing their company? Explain.


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A government opts to set aside $10 million of general fund resources to finance a new city hall

1. A government opts to set aside $10 million of general fund resources to finance a new city hall. Construction is expected to begin in several years, when the city has been able to accumulate additional resources.

2. A government should distinguish underwriting and other issue costs from bond premiums and discounts and should

3. When a government issues bonds at premiums or discounts and records the proceeds in a capital projects fund, it should

4. A city holds U.S. Treasury notes as an investment in a capital projects fund. During the year the market value of the notes increases by $50,000. Of this amount, $14,000 can be attributed to a decline in prevailing interest rates and $36,000 to interest that has been earned but not yet received. As of year-end, the city should recognize as revenue

5. Which of the following accounts is least likely to be shown on the balance sheet of a debt service fund?

6. Special assessment debt should be reported on the balance sheet of a city if the debt is to be paid from assessments on property owners and

7. In its fund statements a government should recognize revenue from special assessments

8. In the year it imposes a special assessment, a government should recognize in its government-wide statements

9. Under existing federal statutes, arbitrage as it applies to state and local governments

10. Bond refunding are most likely to result in an economic gain when


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When would you advise a firm to use direct intervention to set transfer prices?

When would you advise a firm to use direct intervention to set transfer prices? What are the disadvantages of such a practice?


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What are the benefits of standard costs and how do businesses set those standards?

What are the benefits of standard costs and how do businesses set those standards?


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