Final Exam-ACG6936-What are the current requirements on auditor independence

ACG6936 – Fall 2016Accounting Research(rev. 11/28/2016) Final Exam Student Name:Date: Instructions:1. Points: 1502. Due Date/Time: Dec.5, 2016; 6:00pm via email to wenshanlin@mail….f.edu3. No late responses will be accepted. Type your responses right beneath the questions asfollows. This is an individual exam.4. Properly cite sources to support your responses. Stay clear of plagiarism. For citations in yourresponses, paraphrase (i.e., use your own words) and minimize direct quotes (especially longquotes).5. Include a list of references (including URLs for websites) for sources cited in your response.6. Follow the style of The Accounting Review for citations in the main text and list of referencescited.7. Be sure to run spell/grammar check, proof read, edit and revise your responses before turningit. Any error will result in loss of credit.8. There is no strict page limit. Respond to the questions fully but in a concise manner. 1/4 Question I: Auditor Independence and Audit QualityA. What are the current requirements on auditor independence as adopted by SOX Act of 2002,SEC, PCAOB, and/or the AICPA (i.e., part of the authoritative sources) applicable to auditsof publicly-held clients? B. Rules on non-audit services to publicly-held audit clients:1. What are the non-audit services that audit firms are prohibited, or restricted, to provide topublic audit clients (must cite authoritative sources such as legislations, SEC regulations,auditing standards, etc.; journal research publications by themselves are not authoritativesources)?2. Discuss conceptual arguments for and against such prohibitions and restrictions (mustcite authoritative, journal publication, or other appropriate sources wherever applicable)?a. FOR:b. AGAINST: a. 3. Cite and briefly discuss some specific research findings that do and do not support suchprohibitions and restrictions:Support: b. Not Support:C. Rules on rotation of individual audit partners for audits of public clients:1. What are the current rules on rotation of audit partner for public audit clients (must citeauthoritative sources such as legislations, SEC regulations, auditing standards, etc.;journal research publications by themselves are not authoritative sources)?2. Discuss conceptual arguments for and against audit partner rotation (must citeauthoritative, journal publication, or other appropriate sources wherever applicable)?a. FOR:b. AGAINST:3. Cite and briefly discuss some specific research findings that do and do not support auditpartner rotation:a. Support:b. Not Support:D. Rules on rotation of audit firm for audits of public clients1. What are the current requirements on rotation of audit firm for public audit clients (must2/4 cite authoritative sources such as legislations, SEC regulations, auditing standards, etc.;journal research publications by themselves are not authoritative sources)?2. Discuss conceptual arguments for and against audit firm rotation (must cite authoritative,journal publication, or other appropriate sources wherever applicable):a. FOR:b. AGAINST:3. Cite and briefly discuss some specific research findings that do and do not support auditfirm rotation:a. Support:b. Not Support:E. Describe TWO other factors related to audit quality (other than audit partner rotation, auditfirm rotation, or other auditor independence factors) and explain why each of these factorsmay be important to audit quality. Then, cite and discuss briefly specific research findings thatsupport and/or do not support each factor’s importance.1. Factor 1:a. Importance:b. Research Findings:2. Factor 2:a. Importance:b. Research Findings 3/4 Question II: Audit Committee (AC) EffectivenessA. What are the typical responsibilities of an audit committee for publicly-held corporations?B. What are the current regulatory requirements that aim to improve AC effectiveness forpublicly-held corporations (must cite authoritative sources such as legislations, SECregulations, auditing standards, etc.; journal research publications by themselves are notauthoritative sources)? C. One of the requirements for AC effectiveness is independence of AC members.1. Describe the current AC independence requirements and discuss why these requirementsmay help improve AC effectiveness(must cite authoritative, journal publication, or otherappropriate sources wherever applicable).2. Cite and discuss briefly research findings that do and do not support the importance ofindependence to AC effectiveness:a. Support:b. Not Support: D. Another requirement for AC effectiveness is AC Financial Expertise:1. Describe the “financial expertise” requirement and explain why this requirement may helpimprove AC effectiveness (must cite authoritative, journal publication, or otherappropriate sources wherever applicable).2. Cite and discuss briefly specific research findings that do and do not support theimportance of financial expertise to AC effectivenessa. Support:b. Not Support:E. Describe TWO other factors related to AC effectiveness (other than independence andfinancial expertise) and explain why each factor may be importance to AC effectiveness. Then,cite and discuss specific research findings that support and/or do not support each factor’simportance.1. Factor 1:a. Importance:b. Research Findings:2. Factor 2:a. Importance:b. Research Findings: 4/4