Which of the Following Statements Regarding Auditors Is False

question 26

Multiple Choice

Which of the following statements regarding auditors is false?

• A) Most auditors have a longstanding relationship with their audit clients; this extended relationship and the auditors' desire to keep the lucrative auditing fees makes auditors less willing to challenge management.
• B) Most accounting firms have developed large and extremely profitable consulting divisions. Obviously, if an audit team refuses to accommodate a request by a client's management, that client will be less likely to choose the accounting firm's consulting division for its next consulting contract.
• C) Auditing firms are supposed to ensure that a company's financial statements accurately reflect the financial state of the firm.
• D) In the post Sarbanes-Oxley world, accounting firms are no longer allowed to offer both audit and non-audit services to the same firm.

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Definitions:

Whipsawing

A tactic used in collective bargaining where a union negotiates with multiple employers one at a time, using the gains from the first negotiation as leverage in the following ones.

Local Conditions

The specific circumstances, cultural, economic, and environmental factors that are unique to a particular area or community.

Rights Arbitration

A form of arbitration focusing on interpreting and applying terms of existing contracts or laws to resolve disputes over rights and obligations of parties.

Benchmarking

The process of comparing one's business processes and performance metrics to industry bests or best practices from other companies.