How is the CPA firm insulated from being pressured by management?

Question

Quizplus · Accepted Answer

The audit committee is independent from management and is responsible for overseeing the financial reporting process and external audit. They have the authority to approve hiring, firing, and fees paid to external auditors, which helps to insulate the CPA firm from being pressured by management. The chairman of the board and the IRS may also have oversight responsibilities, but the audit committee is the most direct and effective method of insulation. Option D is incorrect because insulation from management pressure is a fundamental requirement for a CPA firm functioning as an independent auditor.

How Is the CPA Firm Insulated from Being Pressured by Management