What is Prohibited nonaudit services?
In short
Securities and Exchange Commission and Public Company Accounting Oversight Board rules bar a public company's auditor from providing certain services to the client, including bookkeeping, financial information systems design, valuations, actuarial services, internal audit outsourcing, management functions and legal services.
Key takeaways
- Permitted services, including most tax services, must be pre-approved by the audit committee.
- Contingent-fee tax services and marketing aggressive tax shelters to audit clients are prohibited.
- The rules aim to keep the auditor from auditing its own work or acting as management.
Where it's tested
AUD: Professional Ethics & Independence — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A contingent fee arrangement is PROHIBITED when a CPA: