The Audit Committee Has Asked the Chief Audit Executive (CAE)

question 40

Multiple Choice

The audit committee has asked the chief audit executive (CAE) to assist in the selection of a new external audit firm. Which of the following is an appropriate action by the CAE?

• A) The CAE and two managers from the audit staff review the bids and select one firm to meet with the audit committee for the committee's approval.
• B) The CAE develops a formal set of criteria for the audit committee to use in selecting the external auditor.
• C) The CAE, chief financial officer, and controller review the bids, interview two firms, and recommend one of the two firms to the audit committee for its approval.
• D) The CAE declines to participate in the process because providing this assistance would result in compromising the internal audit activity's objectivity.

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Definitions:

Real-life Situations

Scenarios or circumstances encountered in everyday life, outside of controlled or artificial environments.

Role Model

An individual admired for their qualities or achievements and regarded as an example to be imitated.

Emulate

Attempting to match or surpass someone or something by imitation or to replicate their success as a model.

Decision

The act of making a choice among available alternatives, often considered within the context of problem-solving or therapy.