An Audit Client Hires a Member of the Audit Engagement

question 26

Multiple Choice

An audit client hires a member of the audit engagement team to be its new controller.Sarbanes-Oxley rules require that:

• A) The new controller sever all relations with the CPA firm, including any retirement funds.
• B) The new controller not take part in any discussions regarding the retention of the audit form.
• C) The client find a new audit firm.
• D) The client disclose the controller's relationship in the notes to the financial statements.

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Definitions:

Authority Structure

The framework within an organization that dictates the hierarchical distribution of power and decision-making responsibilities.

Company Loyalty

The dedication and commitment of an employee to their employer, often demonstrated through long-term service and support for the company's goals.

Hand-deliver

The personal delivery of a document or parcel directly to the recipient by the sender.

St. John's

A city in Newfoundland and Labrador, Canada, known for its rich history, vibrant cultural life, and as the easternmost city in North America.