How is a CPA firm insulated from being pressured by management?
A) The audit committee approves hiring, firing, and paying fees to external auditors.
B) The chairman of the board approves the external auditor's fees as well as the engagement letter.
C) The IRS approves the external auditor's fees as well as the engagement letter.
D) The CPA firm is not insulated from management.

Question

Quizplus · Accepted Answer

The audit committee, which is made up of independent members of the board of directors, is responsible for approving the hiring, firing, and paying fees to external auditors. This helps to ensure that the external auditor is not subject to pressure from management and maintains their independence.

How Is a CPA Firm Insulated from Being Pressured by Management