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:

Expert Power

Expert Power is the ability to influence others' attitudes or behaviors based on the perception of one's knowledge, expertise, or experience in a specific area.

Information Power

The influence or control over others that is gained through access to or possession of information.

Marketing Power

The ability of a company or brand to influence the buying behavior of consumers, shaping perceptions and driving demand for its products or services.

Cohesiveness

The degree to which members of a group or team are attracted to each other and motivated to stay in the group, contributing to its unity and success.