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Federal regulations require that corporations use separate

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Re: CR -- Accounting Firms [#permalink] New post 07 Oct 2010, 11:26
E.. :D

had already seen this question either in the forums or through mgmat.
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Re: CR -- Accounting Firms [#permalink] New post 07 Oct 2010, 19:30
IMO E.
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Re: CR -- Accounting Firms [#permalink] New post 07 Oct 2010, 23:38
NewSc2 wrote:
mundasingh123 wrote:
your explanation does not fit well with the option.What your explanation says has already been suggested by the group.The question stem asks for an assumption.
This is an assumption question.
If the audit section is broken down into 3 different sections A1,A2,A3.
How does it matter to the client if it hires A1,A2, or A3 to do the auditing


This is not an assumption question. This is more of a "strengthen the conclusion" question.

Hi , all the options use "must"."should" implying that the decision will be a success provided the options are implemented and an assumption is all about ensuring that the things being assumed are implemented for the conclusion to hold true.Please comment
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Re: CR -- Accounting Firms [#permalink] New post 30 Nov 2010, 19:36
This answer is clearly and absolutely wrong, based on its own explanation:

"If each Big Four firm breaks into two – one performing audit services, and one performing non-audit services – then the field will have gained the variety sought by CEOs."

But the answer states exactly the opposite - that the accounting firms WON'T be breaking up into separate audit and non-audit firms. The explanation explains why the answer is WRONG!
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Re: CR -- Accounting Firms [#permalink] New post 30 Nov 2010, 20:30
Definitely a tough one. Still unsure on the answer too.

TehJay wrote:
This answer is clearly and absolutely wrong, based on its own explanation:

"If each Big Four firm breaks into two – one performing audit services, and one performing non-audit services – then the field will have gained the variety sought by CEOs."

But the answer states exactly the opposite - that the accounting firms WON'T be breaking up into separate audit and non-audit firms. The explanation explains why the answer is WRONG!
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Re: CR -- Accounting Firms [#permalink] New post 10 Sep 2011, 00:32
VeritasPrepKarishma wrote:
zoinnk wrote:
Federal regulations require that corporations use separate accounting firms for audit and non-audit services. This presents difficulties for many multi-national companies because there are only four large international accounting firms based in the United States. An outspoken group of CEOs has suggested breaking up the “Big Four” firms into smaller operations, so that corporations will have more options for their accounting needs.

Which of the following stipulations would be most helpful in assuring the success of the CEOs’ plan to provide more variety in accounting services by breaking up the Big Four firms?

(A) The firms should maintain their multi-national contacts.
(B) CEOs for the new companies should be chosen from inside each firm.
(C) Corporations must keep the same firm for their audit services, but should choose a new firm for non-audit needs.
(D) The new firms should maintain their internal audit procedures.
(E) The Big Four firms should divide so that the audit and non-audit sections are not broken up.


Read the question stem: Which of the following stipulations would be most helpful in assuring the success of the CEOs’ plan?
A Plan/Strategy question. We need to support/strengthen/assure the success of the plan.
What is the plan? - To provide more variety in accounting services, break up the Big Four firms.
We are looking for more variety.
I think most of you are fine with A, B and D not being the answer.
C says that the corporation should keep the same firm for audit but choose a new firm for non-audit. It has no relevance to the plan. The plan is to create variety. How the corporations will choose to use that variety is absolutely up to them.

Now, why is E the answer?
The Big Four firms should divide so that the audit and non-audit sections are not broken up.
This says that if one firm A, breaks up into two firms B and C, both B and C should have audit and non-audit sections. You should not split the audit and non audit sections. Now, if this happens, the corporations get even more variety.
Today corporations have 4 options for audit functions and 3 (after one firm is chosen) for non- audit functions.
Lets say if each of the 4 firms breaks into 2 firms, with audit going to one firm and non audit going to the other firm then options for audit services - 4, options for non audit services - 4
But if each of the 4 firms breaks into 2 such that each firm has both audit n non audit functions, then options for audit functions - 8, options for non audit functions - 7 (after a firm is chosen for audit).
Hence (E) assures the success of the plan of creating variety.


Thank you for your explanation. I was confused with the word "broken up" in choice E. Now it is clear for me.
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Re: CR -- Accounting Firms [#permalink] New post 10 Sep 2011, 05:09
Looks Clear E.
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Re: CR -- Accounting Firms [#permalink] New post 10 Sep 2011, 05:11
VeritasPrepKarishma wrote:
zoinnk wrote:
Federal regulations require that corporations use separate accounting firms for audit and non-audit services. This presents difficulties for many multi-national companies because there are only four large international accounting firms based in the United States. An outspoken group of CEOs has suggested breaking up the “Big Four” firms into smaller operations, so that corporations will have more options for their accounting needs.

Which of the following stipulations would be most helpful in assuring the success of the CEOs’ plan to provide more variety in accounting services by breaking up the Big Four firms?

(A) The firms should maintain their multi-national contacts.
(B) CEOs for the new companies should be chosen from inside each firm.
(C) Corporations must keep the same firm for their audit services, but should choose a new firm for non-audit needs.
(D) The new firms should maintain their internal audit procedures.
(E) The Big Four firms should divide so that the audit and non-audit sections are not broken up.


Read the question stem: Which of the following stipulations would be most helpful in assuring the success of the CEOs’ plan?
A Plan/Strategy question. We need to support/strengthen/assure the success of the plan.
What is the plan? - To provide more variety in accounting services, break up the Big Four firms.
We are looking for more variety.
I think most of you are fine with A, B and D not being the answer.
C says that the corporation should keep the same firm for audit but choose a new firm for non-audit. It has no relevance to the plan. The plan is to create variety. How the corporations will choose to use that variety is absolutely up to them.

Now, why is E the answer?
The Big Four firms should divide so that the audit and non-audit sections are not broken up.
This says that if one firm A, breaks up into two firms B and C, both B and C should have audit and non-audit sections. You should not split the audit and non audit sections. Now, if this happens, the corporations get even more variety.
Today corporations have 4 options for audit functions and 3 (after one firm is chosen) for non- audit functions.
Lets say if each of the 4 firms breaks into 2 firms, with audit going to one firm and non audit going to the other firm then options for audit services - 4, options for non audit services - 4
But if each of the 4 firms breaks into 2 such that each firm has both audit n non audit functions, then options for audit functions - 8, options for non audit functions - 7 (after a firm is chosen for audit).
Hence (E) assures the success of the plan of creating variety.
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Re: CR -- Accounting Firms [#permalink] New post 10 Sep 2011, 05:41
zoinnk wrote:
Federal regulations require that corporations use separate accounting firms for audit and non-audit services. This presents difficulties for many multi-national companies because there are only four large international accounting firms based in the United States. An outspoken group of CEOs has suggested breaking up the “Big Four” firms into smaller operations, so that corporations will have more options for their accounting needs.

Which of the following stipulations would be most helpful in assuring the success of the CEOs’ plan to provide more variety in accounting services by breaking up the Big Four firms?

(A) The firms should maintain their multi-national contacts.
(B) CEOs for the new companies should be chosen from inside each firm.
(C) Corporations must keep the same firm for their audit services, but should choose a new firm for non-audit needs.
(D) The new firms should maintain their internal audit procedures.
(E) The Big Four firms should divide so that the audit and non-audit sections are not broken up.


E. This explains the CEO's intention is to satisfy federal regulation which is to have separate audit and non-audit firms. Division within the audit or non-audit does not satisfy this purpose whereas dividing a firm into audit and non-audit do.
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Re: CR -- Accounting Firms [#permalink] New post 10 Sep 2011, 06:21
IMO
[Reveal] Spoiler:
E
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Re: CR -- Accounting Firms [#permalink] New post 11 Oct 2011, 02:12
E assures Variety.
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Re: CR -- Accounting Firms [#permalink] New post 14 Oct 2011, 15:32
I had C as the answer. I read it as the Big 4 will split up but not be broken up. Didn't seem to make sense to me.
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Re: CR -- Accounting Firms [#permalink] New post 18 Oct 2011, 16:13
RSG wrote:
The CEO is suggesting a plan to address the problem of options not available for accounting needs and not the services such as audit and non-audit.

Option C – they may retain the same firm and hire new firm for non-audit services, but this does not address the problem of availability of options

Option E - The Big Four firms should divide so that the audit and non-audit sections are not broken up – this does address the problem, more options are available irrespective of the services they render and thus helps assuring the success of the CEOs’ plan

Option E


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Re: Federal regulations require that corporations use separate [#permalink] New post 16 Nov 2011, 21:55
E.

Above reasons pretty much cover it.
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Re: Federal regulations require that corporations use separate [#permalink] New post 21 Nov 2011, 01:36
E makes sense
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Re: Federal regulations require that corporations use separate [#permalink] New post 21 Nov 2011, 11:54
I think this is a strenghthen a conculsion question, and I go with E
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Re: Federal regulations require that corporations use separate [#permalink] New post 27 Dec 2011, 21:55
Confusing question. C and E are confusing. E makes more sense though. E should be the correct answer. Thanks for the explanations guys.
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Re: Federal regulations require that corporations use separate [#permalink] New post 28 Dec 2011, 16:44
Its E
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Re: Federal regulations require that corporations use separate [#permalink] New post 31 Dec 2011, 20:53
Between C and E I chose C as I thought that business opportunities would be available for both the old and the new firms hence the plan would be successful,but the explanations are good.
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Re: Federal regulations require that corporations use separate [#permalink] New post 03 Jan 2012, 03:09
for me E is the only one that makes sense, others are all irrelevant.
Re: Federal regulations require that corporations use separate   [#permalink] 03 Jan 2012, 03:09
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