Prior to SOX,external Auditors Were Required to Be Familiar with the Client

question 121

Essay

Prior to SOX,external auditors were required to be familiar with the client organization's internal controls,but not test them.Explain.

---

Definitions:

Net Investment

The total amount invested in a project or asset after deducting depreciation or other capital allowances.

MACRS Depreciation

Stands for Modified Accelerated Cost Recovery System, which is a method of depreciation in the U.S. that allows for the accelerated write-off of property under certain conditions.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.

Depreciation Schedule

A table that shows the decline in value of an asset over time, which impacts financial and tax reporting.