Discuss the advisory services that external auditors are no longer permitted to render to audit clients under SOX legislation
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.
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Indicate whether the statement is true or false