(Strategic alliances) According to a Wall StreetJournal article (Wei, “Account¬ ing Alliances Gain Popularity,” February 11, 2004, p. B4A), many large pub¬ lic accounting firms are establishing alliances with smaller firms. Such alliances allow the smaller entities to use the larger firms’ research, training, and client-service capabilities. Such alliances are seen to be needed, given the Sarbanes-Oxley Act rules that limit the types of nonaudit services that firms can provide to audit clients.

a. Review the Sarbanes-Oxley Act of 2002 and write a brief synopsis of the provisions related to nonaudit services.

b. How does the contemporary use of joint ventures and other cooperative arrangements with other firms add complexity to the accounting function for a business managing its costs?

c. Why must managers and accountants not only look inside but also out¬ side the firm to manage costs?

d. Why might a large CPA firm in such an alliance want to establish a job order system that would reflect the services used by smaller firms within the alliance? Would such a system necessarily involve the use of finan¬ cial information?LO1.