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Week 2 Solutions

Week 2 Solutions - Week 2 In-Class Homework/Chat Solutions...

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Week 2 In-Class Homework/Chat Solutions – ACC435A In-Class Team Cases 3-44 SOLUTION: Sarbanes-Oxley Act of 2002 (a) The Sarbanes-Oxley Act of 2002 and related SEC regulations prohibit the auditors of public companies from performing: (1) Bookkeeping or other services related to the accounting records of financial statements of the audit client. (2) Financial information systems design and implementation. (3) Appraisal or valuation services, fairness opinions, or contribution-in-kind reports. (4) Actuarial services. (5) Internal audit outsourcing services. (6) Management functions or human resources services. (7) Broker or dealer, investment adviser, or investment banking services. (8) Legal services. (9) Expert services unrelated to the audit. (b) There are a number of arguments that have been set forth for restricting nonattest services for audit clients, including: (1) It is not possible for the auditors to objectively evaluate their own nonattest work as it relates to the audit. Thus independence related to the audit is impaired. (2) The additional fees derived from nonattest services serves as an additional threat to auditor independence. (b) The arguments that have been set forth for not restricting nonattest services include: (1) Auditors have been providing nonattest services for audit clients for years in an objective manner.
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