In Spite of His Assertions That He Carried-Out Fraud Alone,convicted

question 167

Multiple Choice

In spite of his assertions that he carried-out fraud alone,convicted investment advisor Bernard Madoff's independent auditor is now under investigation.The auditor is accused of not doing his job.Rather than verify Madoff's company records,the F.B.I claims that he "rubber-stamped" the records.Knowing what you have learned about the importance of auditing,which of the following statements do you understand to be most accurate?

• A)Investment firms should always hire private accountants.Public accountants do not have enough information about the firm to prepare audits.
• B)Independent auditors only prepare audits for not-for-profit firms.Madoff hired the wrong professional for the job.
• C)Independent auditors must follow strict rules,including new rules put in place by the Sarbanes-Oxley Act.
• D)The Sarbanes-Oxley Act does not institute rules of practice for independent auditors.Independent auditors follow strict rules created by the AICPA,American Institute of Certified Public Accountants.

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Definitions:

Alveolar Walls

The thin barriers separating the air in the alveoli (tiny air sacs) from the blood in the surrounding capillaries within the lungs, facilitating gas exchange during breathing.

Bronchi

The major air passages that branch from the trachea into the lungs, facilitating the transport of air.

Cystic Fibrosis

A genetic disorder that affects the respiratory and digestive systems, leading to clogged ducts and secreted fluids.

Inherited Disease

A disease or disorder that is passed genetically from parents to offspring.