Insight Suggestion for Issue related to the Quality of GPFS

Question:- Mr. Dewey, a Senior Partner of the CPA firm Dewey, Cheatem, Howe, after noting that many positivist-accounting theorists and right-wing economists recommend that general purpose financial statements (GPFS) be deregulated and let market forces control the quality of GPFS, has suggested that the role (and revenues) of independent external audit firms will be dramatically enhanced. Required: Give insight on this issue in a 1 and half page Memo that is addressed to Mr. TuDewie and resolves his concerns. Answer:- In light of current situation as mentioned in the process is considered as too much significant in terms of the future of the partnership firm. The senior partner of this CPA firm is named as Mr. Dewey and he can be addressed on the basis of the appropriate understanding considering the present issue. By the way of applying the international standards, the private sectors and the firms like CPA are constantly trying to increase the level of competence. However, the government from most of the parts have not addressed the need to put the incentives in the forward position to ensure that the level of competence is actually applied in the practice (Denyer and Baird, 2006). According to the results obtained for the ROSC and by observing the recent accounting scandals in the countries with developed economies expressed that the factors of competence and legal requirements are adequate to bring the effectiveness, but the necessity of commitment is required to deploy such competence. In thi s case, the positivists, economists and accounting theorists have mentioned the influence of the market forces in order to maintain and control and determine the quality of the GPFS. The recommendation came from the instance that the positive market force can certainly provide the favouring incentives to comply with the high quality of standards (Jajodia and Strous, 2004). But it is also experienced that these forces in both the countries of developing and developed economies suggest that countervailing the operations of the disincentives to discourage the compliances. Therefore, the face should need to address that the whole emphasis should be placed on the disincentives of robust enforcement regimes and monitoring to achieve a fully balanced combination of incentives and capacity. In addition to the mentioned concern, Mr. Dewey should need to explore the quality control policies in the entire auditing practice led by the firm in order to ensure that the policies and procedures are implemented in both the audit firm and individual audit. In this case, some of the regulators are there who are concerned with respect to their own special requirements. Based on that, their activities contribute to the quality of the general purpose financial statements (GPFS) (Mitra, 2008). Thus, the availability of in front the public is restricted. This is the primary reason based on which the different economists and accounting theorists suggested to deregulate the GPFS from the firms auditing practices. In conclusion, the resolving of this particular concern can be delivered to Mr. Dewey as he should maintain the effective accounting and auditing regulation in order to underpin the institutionalised incentives. But the concern can be suggested as there is the absence of guidelines in the international accounting control and standards to develop and exercise the effective practices of those regulations (Weirich, et al., 2010). Therefore, the firm is needed to follow the appropriate regulatory framework that interfaces with the other regulatory institutions and instrument, such as the banking security regulation. It will certainly provide the effective contributions to the enforcement and monitoring of international standards. Also, it is suggested that the accounting department of the firm should need to quality control system that will be designed to provide the reasonable assurance that all the auditors and external auditors comply legal and regulatory requirement, the Code of Ethi cs specified for CPAs and the basic standards of auditing (Jajodia and Strous, 2004). In this case, the reports issued by the accounting and auditing firm and the effective involvement of the partners are considered appropriate for this specific circumstance. Yes No:Response Formed References Denyer, S. and Baird, R. (2006).Guide to microbiological control in pharmaceuticals and medical devices. Boca Raton, Fla.: CRC Press. Jajodia, S. and Strous, L. (2004).Integrity and internal control in information systems VI. Boston: Kluwer Academic. Mitra, A. (2008).Fundamentals of quality control and improvement. Hoboken, N.J.: Wiley. Weirich, T., Pearson, T. and Churyk, N. (2010).Accounting auditing research. Hoboken, NJ: Wiley.