Under SEC ethical standards of the profession, which of the following business relationships would generally NOT impair an auditor's independence?

a.

Performing internal audit services.

b.

Underwriting the client's equity securities.

c.

Offering legal counsel.

d.

Providing explanations for conclusions reached.

The AICPA's Professional Ethics Executive Committee (PEEC) notes that certain management responsibilities create a management participation threat that is so significant that no safeguards can reduce it to an acceptable level. Such management responsibilities include all of the following EXCEPT:

a.

Providing advice on payroll systems and procedures.

b.

Setting policies or strategic direction for the client.

c.

Performing ongoing evaluations of internal controls as part of the client's monitoring activities.

d.

Accepting responsibility for the actions of the client's employees.

According to Section 202 of Title II of the Sarbanes-Oxley Act, which of the following is true about the audit committee's requirements for all auditing and non-auditing services performed by a registered firm?

a.

The audit committee may preapprove such services but is not required to do so.

b.

The audit committee must preapprove such services.

c.

The audit committee should review such services.

d.

The audit committee must perform such services.

According to the AICPA Code of Professional Conduct, independence is considered impaired in all of the following situations EXCEPT?

a.

A partner owns 8 percent of a client.

b.

A professional employee of the firm is simultaneously associated with the client.

c.

A partner's immediate family member owns 3 percent of a client.

d.

A former employee of the client influences the audit engagement covering the time of their employment.