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Federal regulations require that corporations use separate [#permalink]
02 Aug 2009, 11:19
0% (00:00) correct
100% (02:07) wrong based on 11 sessions
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.
P1 - Federal regulations requires companies to use separate accounting firms
P2 - There are only 4 large accounting firms to choose from for multi national companies
P3 - CEO's suggest to break the 4 large accounting firms so that companies have more options.
What will most help to achieve success in CEO's plan
to break up the 4 large accounting firms into number of smaller firms and the smaller firms should have both audit and non-audit services.
Apparently most corporations are using 1 out of the 4 accounting firms. The stem is saying that federal regulations require corporations to use different accounting firms.
The stem is very confusing because when we read the stem we get the idea that federal regaulations require corporations to use separate firms for audit and non-audit services which is not the case. I fell in the same trap and did not understand the question until I saw OA.