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Unformatted text preview: Multiple Choice Questions: 2-25. d. 2-26. d. this is part of the professions problem, but not a cause of the failure. 2-27. a. 2-28. d. 2-29. a. 2-30. d. 2-31. d. 2-32. d. 2-33. f. 2-34. c. 2-35 a. 2-41. a. Some ways that the impact of the Sarbanes-Oxley Act affects the external audit profession: The creation of the PCAOB puts a watchful eye on the accounting industry. Reporting on internal controls is required by the external auditor, adding to their workload but also strengthening their value to organizations and giving them more assurance when giving an audit opinion. Auditors can now feel more comfortable taking issues to the audit committee Audit partners must rotate off every five years. This will create a difficult transition at every client every five years. With the cooling off period, audit partners or managers cannot take jobs with clients as easily. b. The Sarbanes-Oxley Act encourages effective internal audit functions for all public companies. The internal audit profession has been active in assisting companies in complying with the internal control provisions of the Act. c. This could be argued either way. On one side, the legislation clearly creates a watchdog of the accounting industry, which decreases the power and prestige as the profession is no longer self-regulated. On the other hand, the Act and recent business press has brought a lot of attention to the accounting industry, which has educated the world about the role of accountants in the economy, and possibly increased their power and prestige. Now, there is a general feeling that the public accounting profession has reestablished itself as a watchdog for investors and see the audit committee as their primary client. Overall, the consensus seems to be that the profession has regained a great deal of its prestige. 2-46....
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This note was uploaded on 09/20/2011 for the course ACCT 4420 taught by Professor Franz during the Spring '11 term at Toledo.
- Spring '11