1. The Audit Committee of a publicly traded company is comprised of three members. One of the members is a retired Chief Financial Officer of a global bank headquartered in New York. She has extensive experience in managerial finance. However, she is not a CPA and never has worked in accounting or auditing.

The other two members of the Audit Committee inherited shares of stock in the corporation from their parents and have no experience in corporate management or accounting. These two members each own 7% of the corporations stock.

Does this corporations Audit Committee comply with SOX?

2. A companys Audit Committee recently held a three-hour meeting with its internal auditors, its CFO, its Controller, and its external auditors. The meeting was held to investigate reports filed by two internal auditors about deficiencies in the companys internal controls and accounting department personnel policies. Both internal auditors were introduced to the meeting participants and were asked to participate in Question and Answer sessions about their concerns. Did the company do anything wrong?

3. The New York Stock Exchange requires all companies traded on it to utilize internal auditors. Commonly, companies do not directly hire their own internal auditors. Rather, internal auditors often are employed by an outside CPA firm, and client companies outsource their needs for internal auditors from these outside CPA firms.

a. Why dont companies hire their own internal auditors?

b. Although companies outsource their internal auditors from CPA firms, they never outsource them from their own external auditor. Why not?

4. When a publicly traded company acquired the operating assets of another company in a cash-for-assets deal, the overall purchase price had to be allocated among the assets. Due to time pressures, the companys CFO decided to retain the companys auditors to perform this asset allocation task. The companys auditors are highly reputable and have substantial experience valuing the kinds of assets that were involved in the acquisition. The auditors submitted a written bid, and they submitted the lowest fee of all bidders who participated. Do you applaud the CFOs efforts for getting all of this done on time and on budget?

5. A CPA just left her position as an audit manager at a prominent regional CPA firm to start her own accounting practice. She is interested in marketing herself to serve on companies Audit Committees. However, she has no interest in serving as a company director because members of Boards of Directors require strategic and marketing skills that she lacks. Are her marketing efforts to get appointed to serve on a companys Audit Committee likely to be successful? Duties of Managerial Employees