Regarding an Organization's Decision to Retain an External Audit Firm

question 104

Multiple Choice

Regarding an organization's decision to retain an external audit firm, the chief audit executive (CAE) should:

• A) Work with the organization's chief financial officer to evaluate the external auditor's performance and together make the decision.
• B) Not be involved in this decision process as it would compromise the CAE's objectivity.
• C) Evaluate the external auditor's performance and retain the external auditor if quality and cost criteria are met.
• D) Assist the audit committee by facilitating the development of an appropriate evaluation process.

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Definitions:

Mediation

A form of alternative dispute resolution where a neutral third party, the mediator, helps disputing parties find a mutually acceptable solution to their conflict.

Neutral Case Evaluation

A dispute resolution process where an impartial expert assesses the strengths and weaknesses of each side's case, often to facilitate a settlement.

Ownership

The legal right to possess, use, and dispose of something; holding the title to an asset or property.

Legal System

A comprehensive system of rules and principles, organized by governmental and societal institutions, to administer justice and regulate conduct.