Discuss the advisory services that external auditors are no longer permitted to render to audit clients under SOX legislation.
What will be an ideal response?
The Act addresses auditor independence by creating more separation between a firm's attestation and non-auditing activities. This is intended to specify categories of services that a public accounting firm cannot perform for its client. These include the following nine functions:
? Bookkeeping or other services related to the accounting records or financial statements;
? Financial information systems design and implementation;
? Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;
? Actuarial services;
? Internal audit outsourcing services;
? Management functions or human resources;
? Broker or dealer, investment adviser, or investment banking services;
? Legal services and expert services unrelated to the audit; and
? Any other service that the PCAOB determines is impermissible.
While the Sarbanes-Oxley Act prohibits auditors from providing the above services to their audit clients, they are not prohibited from performing such services for non-audit clients or privately held companies.
PTS: 1
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