The SEC Requires Companies to Disclose Fees Paid to Independent

question 28

Multiple Choice

The SEC requires companies to disclose fees paid to independent public accounting firms for audit and consulting services in the belief that:

• A)Such disclosures will end the practice of auditors performing nonaudit services for audit clients.
• B)Financial analysts will attribute far less credibility to financial statements audited by public accounting firms that earn substantial nonaudit fees from audit clients.
• C)Audit firm consulting on client's accounting information processing systems essentially impairs audit independence.
• D)Client directors and financial statement users should consider all aspects related to auditors' independence,and information about fees is important.

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Definitions:

Stimuli Response

The reaction of an organism to changes in its internal or external environment.

Associative Learning

A learning process by which a new response becomes associated with a specific stimulus.

ISO 14000

Offers a set of certification standards for responsible environmental policies.

ISO 9000

A set of international standards designed to help organizations ensure they meet customer and other stakeholder needs within statutory and regulatory requirements related to a product or service.