The Audit Firm Must Prepare to Minimize Exposure Against Litigation

question 45

Multiple Choice

The audit firm must prepare to minimize exposure against litigation and regulatory investigation.Which of the following represents the best method of performing this task?

• A)Engaging competent and trustworthy criminal defense attorneys.
• B)Lobbying the SEC to become allies with CPAs and related constituents.
• C)Instituting a sound system of quality control within the firm.
• D)Restructuring to a traditional partnership to share the risk with other professionals.

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Definitions:

Personal Borrowing

Personal borrowing involves an individual obtaining funds from a lender (such as a bank or financial institution) for personal use, which could range from purchasing a home to funding education.

Static Theory

Static theory describes a situation or model in economics that does not account for changes over time, analyzing a fixed point or period instead.

Capital Structure

The mix of various forms of external funds used to finance a company's operations, typically consisting of debt and equity.