Which of the Following Is a Limitation of SEC Requirements

question 34

Multiple Choice

Which of the following is a limitation of SEC requirements for audit committee membership?

• A) The expanded responsibilities make service on the committee less desirable to competent directors.
• B) External auditors are unwilling to report to an independent audit committee.
• C) The audit committee compromises the external auditor's independence.
• D) Only the United Kingdom and the United States require audit committees, putting corporations in these countries at a disadvantage.

---

Definitions:

End-of-period Spreadsheet

A comprehensive worksheet that summarizes all accounts and balances at the end of an accounting period to facilitate the preparation of financial statements.

Net Income

The total profit of a company after all expenses, including taxes and operational costs, have been subtracted from total revenue.

End-of-period Spreadsheet

A document or report prepared at the end of an accounting period that summarizes all accounts and their balances to ensure accuracy and completeness.

Working Capital

The variance between a firm's current assets and its current liabilities, showcasing the company's operational efficiency and short-term financial stability.