Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 4, Problem 8RQ
To determine
State some of the reasons for which there have been mandatory rotation of audit firms and explain the manner in which an investor of a public company can ascertain the term period served by the company auditor.
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You are an Audit Manager for a CPA firm that is assigned to audit the ABC company. Near the middle of the audit, you are offered a job with the company you are auditing. As the Chief Financial Officer. What are the implications of this offer assuming ABC is a nonpublic corporation? What are the implications of this offer if ABC is a public company?
Which of the following statements is true of auditing?
Group of answer choices
External audits tend to be more expensive than internal audits.
External audits are handled by employees of the organization.
Publicly held corporations are required by law to have internal audits regularly.
All organizations are required to have a permanent internal auditing staff.
Organizations contract with certified public accountants for external audits.
Discuss how each of the following could affect independence of mind and independence in appearance, and evaluate the social consequence of prohibiting auditors from doing each one:
Owning stock in a client company.
Having bookkeeping services for an audit client performed by the same person who does the audit.
Having a spouse who is the chief financial officer of a client company.
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Chapter 4 Solutions
Auditing And Assurance Services
Ch. 4 - Prob. 1RQCh. 4 - Describe an ethical dilemma. How does a person...Ch. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQ
Ch. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 13RQCh. 4 - Prob. 14RQCh. 4 - Prob. 15RQCh. 4 - Prob. 16RQCh. 4 - Prob. 17RQCh. 4 - Prob. 18.1MCQCh. 4 - Prob. 18.2MCQCh. 4 - Prob. 18.3MCQCh. 4 - Prob. 19.1MCQCh. 4 - Prob. 19.2MCQCh. 4 - Prob. 19.3MCQCh. 4 - Prob. 20.1MCQCh. 4 - Prob. 20.2MCQCh. 4 - Prob. 20.3MCQCh. 4 - Prob. 21DQPCh. 4 - Prob. 22DQPCh. 4 - Prob. 23DQPCh. 4 - Prob. 24DQPCh. 4 - Prob. 25DQPCh. 4 - Prob. 26DQPCh. 4 - Prob. 27DQPCh. 4 - Prob. 28DQPCh. 4 - Prob. 30CCh. 4 - Prob. 31CCh. 4 - Prob. 32C
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Similar questions
- What additional constraints and obligations do auditors face when doing nonaudit services for public companies?arrow_forwardWhy would a company hire internal auditors if they already have an external auditor?arrow_forwardWhat additional constraints and obligations do auditors face when offering nonaudit services to public companies?arrow_forward
- Impact of Changing Rules. Many companies outsource their internal audit function to CPA firms.Required:a. What benefits might be gained from having a CPA firm provide its internal audit services?b. What benefits might be gained from having an in-house internal audit department?c. What concerns might arise from having a CPA firm provide its internal audit services?arrow_forwardHow have the Sarbanes–Oxley Act's requirements impacted a public company's ability to choose its auditors?arrow_forwardWhat other restrictions and requirements apply to auditors whenproviding nonaudit services to public companies?arrow_forward
- Many companies request that their auditors provide them with other services, such as tax or consultancy, as well as the external audit. Discuss the arguments for and against auditors providing non-audit services.arrow_forwardWhy do you think rules exist that restrict auditors from investing in companies that are audited by their firms?arrow_forwardMost companies are required to have an audit and appoint an auditor. (a) Explain how an auditor can be appointed.(b) Discuss what are the auditor's rights and duties in a company.arrow_forward
- Imagine you work for an auditing firm. Your most recent task is to determine whether your firm should bid to perform a public company’s auditing services. Determine the fundamental kind of information you need to make an informed decision about whether to bid on the audit.arrow_forwardThe external auditor of a company has certain requirements due to Sarbanes-Oxley. Which of the following best describes these requirements? A. The auditor is required to only report weaknesses in the internal control design of the company he or she is auditing. B. The auditor must issue an internal control report on the evaluation of internal controls overseen by the Public Company Accounting Oversight Board C. The auditor in charge can serve for a period of only two years. D. The Public Company Accounting Oversight Board reviews reports submitted by the auditors when no evaluations have been performed.arrow_forward
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