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:

Acronym

An abbreviation formed from the initial letters of other words and pronounced as a word.

First Letters

Refers to the initial characters in a sequence of words or a piece of text, often considered in psychological tests or literature analysis.

Nonsense Syllable

A string of letters that does not form a meaningful word, often used in memory and learning experiments.

Working Memory

The segment of short-term memory tasked with the immediate conscious processing of perceptions and language.