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# Federal regulations require that corporations use separate

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Manager
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Federal regulations require that corporations use separate [#permalink]

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19 Nov 2008, 11:45
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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?

* The firms should maintain their multi-national contacts.
* CEOs for the new companies should be chosen from inside each firm.
* Corporations must keep the same firm for their audit services, but should choose a new firm for non-audit needs.
* The new firms should maintain their internal audit procedures.
* The Big Four firms should divide so that the audit and non-audit sections are not broken up.
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19 Nov 2008, 11:49
tied between A and C..

I think if A was not true, it will weaken the CEO argument..so going with A

and E says quite the opposite, since the stem said..they have to pick 1 firm for audit and another firm for other-accounting services...

so If E is true then how can these companies comply with federal law?
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19 Nov 2008, 11:55
can you explain how A or C impact the question of variety?
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19 Nov 2008, 12:01
prasun84 wrote:
can you explain how A or C impact the question of variety?

well, Ok so think of this if these companies didnt maintain multinational presence, then CEOs will be forced to go with a few handful of companies..same problem they had earlier..

variety, if these companies break-up each specializing in a specific area, then CEOs can pick and chose which ones they want, instead of getting the "package deal"..
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19 Nov 2008, 12:06
interesting point..but then B would serve the cause better...
fresinha12 wrote:
prasun84 wrote:
variety, if these companies break-up each specializing in a specific area, then CEOs can pick and chose which ones they want, instead of getting the "package deal"..
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19 Nov 2008, 12:09
prasun84 wrote:
interesting point..but then B would serve the cause better...
fresinha12 wrote:
prasun84 wrote:
variety, if these companies break-up each specializing in a specific area, then CEOs can pick and chose which ones they want, instead of getting the "package deal"..

B is irrelevant..

I know the OA..but i disagree with it..infact according to the OA..its not possible since federal requires companies to pick 1 firm for auditing and another firm for other accounting services
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19 Nov 2008, 12:17
The big 4 corporations can break up in a manner that the composite audit and non-audit firms are still separate.....
say for ex, if 1 corp can break up into 2 divisions under audit and 2 divisions under non-profit each...
in that case, i still have segregated accounting divisions and yes....lot more choices....
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19 Nov 2008, 13:48
It is not saying that they are getting a "packaged" deal. It's contrary to that.

Federal regulations require that corporations use separate accounting firms for audit and non-audit services

The issue is that the big 4 is taking a huge presence, so company do not have many options to choose from.

For example, If I use Deloitte for audit, then I have to use PWC for non audit. After awhile, companies start running out of options.

The answers suck, but I'd go with C.

* Corporations must keep the same firm for their audit services, but should choose a new firm for non-audit needs.

If the firm needs to choose another firm for non audit needs and the big 4 is broken up, now I have more options, since there is now, lets say 15, operations to choose from.

fresinha12 wrote:
prasun84 wrote:
can you explain how A or C impact the question of variety?

well, Ok so think of this if these companies didnt maintain multinational presence, then CEOs will be forced to go with a few handful of companies..same problem they had earlier..

variety, if these companies break-up each specializing in a specific area, then CEOs can pick and chose which ones they want, instead of getting the "package deal"..
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19 Nov 2008, 14:26
It is not saying that they are getting a "packaged" deal. It's contrary to that.

Federal regulations require that corporations use separate accounting firms for audit and non-audit services

The issue is that the big 4 is taking a huge presence, so company do not have many options to choose from.

For example, If I use Deloitte for audit, then I have to use PWC for non audit. After awhile, companies start running out of options.

The answers suck, but I'd go with C.

* Corporations must keep the same firm for their audit services, but should choose a new firm for non-audit needs.

If the firm needs to choose another firm for non audit needs and the big 4 is broken up, now I have more options, since there is now, lets say 15, operations to choose from.

fresinha12 wrote:
prasun84 wrote:
can you explain how A or C impact the question of variety?

well, Ok so think of this if these companies didnt maintain multinational presence, then CEOs will be forced to go with a few handful of companies..same problem they had earlier..

variety, if these companies break-up each specializing in a specific area, then CEOs can pick and chose which ones they want, instead of getting the "package deal"..

I agree with BFH.
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19 Nov 2008, 16:25
Is there a typo in E? I read it like 10 times and its quite the opposite of what the CEO wants

if E were

The Big Four firms should divide so that the audit and non-audit sections are broken up

Then it helps CEO's case with more option

But taking it as it is, I had nothing close but C.
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Re: Federal regulations require that corporations use separate [#permalink]

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06 May 2015, 10:42
Re: Federal regulations require that corporations use separate   [#permalink] 06 May 2015, 10:42
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