Question

2.48 Which of the following combinations of standards and types of audits are most closely related to the activities of the Public Company Accounting Oversight Board?

a. develop Auditing Standards for the audits of nonpublic entities
b. develop Auditing Standards for the audits of public entities
c. develop Statements on Auditing Standards for the audits of nonpublic entities
d. develop Statements on Auditing Standards for the audits of public entities

Answer 1

The PCAOB develops Auditing Standards for public entities. The correct answer to the student's question is option b, which is tied most directly to the PCAOB's activities.

Step-by-step explanation:

The Public Company Accounting Oversight Board (PCAOB) is closely related to the development of Auditing Standards for the audits of public entities. Therefore, the correct answer to the question is:

b. develop Auditing Standards for the audits of public entities. The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB does not develop Statements on Auditing Standards; this is typically the role of the American Institute of Certified Public Accountants (AICPA) for nonpublic entities.