Under the AICPA Independence Rules, the Auditor

question 74

Multiple Choice

Under the AICPA independence rules, the auditor

• A) is prohibited from performing a company's audit and installing and designing the client's new information system.
• B) does not need to document the understanding and willingness of the client to perform all management functions associated with the nonaudit service.
• C) is prohibited from doing any bookkeeping services for the client if performing the audit.
• D) must follow the more restrictive SEC independence rules when dealing with a public company.

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Definitions:

Stock Dividends

A distribution of additional shares of a company's stock to its shareholders instead of cash.

Par Value

The nominal or face value of a stock or bond as stated by the issuer, often used in the legal capital of a company.

Paid-in Capital

The amount of capital provided by shareholders in exchange for stock, representing the funds raised by issuing shares above the par value.

Treasury Stock

Stocks that have been distributed and subsequently bought back by the issuing corporation, diminishing the number of shares available for trading on the public market.