In 2001, the SEC Changed the Rules Defining the Group

question 17

Multiple Choice

In 2001, the SEC changed the rules defining the group of people in an audit firm to whom the independence rules apply. The independence rules apply to:

• A) all partners and staff who work for the audit firm.
• B) partners who are not in the audit chain of command.
• C) managers and partners who provide any nonaudit services to the audit client.
• D) partners who are located in the same office as the lead partner on the audit engagement.

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Definitions:

Statistical Significance

A measure that indicates whether the results of a study are likely not due to chance.

Scatterplot

A type of graph used in statistics to display values for typically two variables for a set of data, where each dot represents one observation.

Negative Correlation

A correlation between two variables where the growth of one inversely affects the decline of the other.

Statistical Significance

A measure indicating that the likelihood of the observed results occurring by chance is very low, typically used in hypothesis testing to validate study findings.