1. The PCAOB has been authorized to establish auditing standards to be followed on audits of companies whose stock is publically traded. Only two of the five standard setters are allowed to be CPAs. (I) Write a sentence, or two, IN FAVOR of the policy of allowing only two members of the Board to be CPAs; (II) Write a sentence, or two, AGAINST the policy of allowing only two members of the Board to be CPAs;

Two CPAs allowed on the Board:

I. In favor, only two CPAs

II. Against, more than two CPAs

2. True - False Statements

A. The AICPAs Auditing Standards Board was created by the Sarbanes-Oxley Act [SOX].

B. The Sarbanes-Oxley Act strengthened auditor independence by requiring audit committees to appoint the auditors.

C. An audit committee of a public company is composed of outside directors. An example of an outside director is the CFO (Chief Financial Officer) of the company.

D. Section 404 of the Sarbanes Oxley law requires that both company management and the CPA firm auditing a Public company issue a report on the companys internal controls.

E. SOX states that there is to be a one-year cooling off period before a high-ranking member of the audit [i.e. CPA Firm audit partner assigned to the audit] can take a high-ranking position of the audited company [i.e. Chief Financial Officer]. Emily Anne was the audit partner on the XYZ Company audit for the year ended 31 December 2020. Emily Anne will not be able to accept a job as CFO of XYZ company and start work on 17 March 2021.