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The Sarbanes-Oxley Act of 2002 a) Requires the Public Company Accounting Oversight Board (PCAOB) be composed...

The Sarbanes-Oxley Act of 2002

a) Requires the Public Company Accounting Oversight Board (PCAOB) be composed of seven members.

b) Requires the Public Company Accounting Oversight Board (PCAOB) have CPAs for a majority of its members.

c) Changes rules on auditor independence, adopting a more flexible, principles-based approach rather than one based on prohibitions of certain types of non-audit services to audit clients

d) Mandates integrated audits for public companies   

                                                          


Which of the following statements would be least likely to be included in an audit engagement letter?

a) The fees for our services will be at our regular per diem rates plus out-of-pocket expenses.

b) We will provide you with a list of schedules and information needed by our staff during the audit.

C We will not disclose any advice provided under the terms of this engagement letter to third parties unless instructed to do so.

d) Our audit will be conducted with the objective of our expressing an opinion on the financial statements

According to the COSO Integrated Framework, reviews of business performance are an example of which of the five components of internal control?

  1. Risk assessment
  2. Control environment
  3. Monitoring
  4. Control activities
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Homework Answers

Answer #1

1) Solution: It mandated integrated audits for public companies

Explanation: SOX Act mandated integrated audits for public companies

2) Solution: We will not disclose any advice provided under the terms of this engagement letter to third parties unless instructed to do so

Explanation: An audit engagement letter will display the objective and scope of the engagement, thus will lead to an expression of an opinion. It will usually be inclusive of information about fees and assistance the auditor will be needed from the client. An indication that advice shall not be shared with third parties will not be appropriate for an audit.

3) Solution: Control Activities

Explanation: Control Activities are indicator of performance indicator

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