Which of the Following Are True Regarding Communication Requirements an Auditor

question 555

Multiple Choice

Which of the following are true regarding communication requirements an auditor must follow when providing tax services to an audit client who is an issuer under the Sarbanes-Oxley Act of 2002?

• A) The auditor must communicate to the audit committee, in writing, regarding the proposed tax services and related fees. II. The auditor must communicate to the audit committee, in writing, when the proposed tax services involve contingent fee arrangements. III. The auditor must discuss with the audit committee the potential effects of the proposed tax services on the firm's independence.
• B) I and II only.
• C) I, II, and III.
• D) I and III only.
• E) II and III only.

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Definitions:

Profit

The financial gain obtained when the revenues generated from business activities exceed the expenses, costs, and taxes involved in sustaining the activities.

Loss

An economic condition where expenses exceed revenues, indicating negative financial performance.

Profit-Maximizing

A strategy or process by which a firm determines the price and output level that returns the greatest profit.

Loss-Minimizing

A strategy or point where a firm attempts to reduce its losses to the lowest possible level when it cannot achieve profitability.