CPA CFE Study Guide 2026

Under IAS 19, the net defined benefit liability (or asset) is the present value of the defined benefit obligation less the fair value of plan assets. If plan assets exceed the obligation, a net asset is recognized (subject to an asset ceiling test).

CAS 570 requires the auditor to evaluate management's going concern assessment, determine if events or conditions cast significant doubt, evaluate the adequacy of disclosures, and consider the impact on the audit report. The auditor assesses but does not predict future outcomes.

Value chain analysis, developed by Michael Porter, breaks down a firm's activities into primary activities (inbound logistics, operations, outbound logistics, marketing and sales, service) and support activities (firm infrastructure, HRM, technology, procurement) to identify sources of competitive advantage.

The audit committee oversees the external audit to protect auditor independence, ensure audit quality, facilitate communication of significant audit findings to the board, and address any disagreements between auditors and management. This strengthens the overall governance framework.

The CPA profession exists to serve the public interest, and when this conflicts with a client's wishes, the CPA must not subordinate their professional judgment and must uphold the public interest.

The pecking order theory suggests that firms prefer internal financing first (least information asymmetry), then debt (moderate information asymmetry), and finally external equity (greatest information asymmetry and adverse selection). This minimizes the costs associated with information asymmetry.