Description
As professional auditors, you need to possess an understanding of the PCAOB auditing standards and the knowledge to help you deliver solutions to your clients. Read this week’s required articles: “The Impact of PCAOB Auditing Standard No. 5 on Audit Fees and Audit Quality” and “The Influence of Auditor and Client Section 404 Processes on Remediation of Internal Control Deficiencies at All Levels of Severity”, as well as Auditing Standard No. 5 (Links to an external site.).
After reading the materials, answer the following:
Do professional standards allow a company’s auditors also to provide tax services and retain their independence?
How have provisions of the Sarbanes-Oxley Act limited a public company’s choice of auditors?
What are some of the advantages and disadvantages of permitting auditors to provide non-audit services (such as tax services) to clients?
What is the impact of a smaller number of major international accounting firms on public companies?
Explanation & Answer
View attached explanation and answer. Let me know if you have any questions.
View attached explanation and answer. Let me know if you have any questions.
1
Auditing Standards
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Tutor
Date of Submission
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Do professional standards also allow a company's auditors to provide after-tax services and
retain their independence?
The Public Company Accounting Oversight Board was created under the Sarbanes Oxley Act of
2002 to ensure audit reports' accuracy, reliability, and independence. The Auditing Standard No
5 provides provisions and directions when an auditor is actively involved in managing the
effectiveness of internal control systems (Huasheng & Jin, 2019). Effective internal control
systems provide a basis for reasonable assurance regarding reporting and preparation of an
entity's financial statements. In a case where there is a material weakness in the internal control
systems, the auditor cannot provide reasonable assurance on the status of the financial statement.
The Sarbanes-Oxley Act of 2002 promotes auditor independence and imposes boundaries on the
roles that audit firms can or cannot perform (Public Company Accounting Oversight Board,
2016). The professional standards do not allow the company's auditors to provide after-tax
services as this would result in a conflict of ...
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