Question

1. Which statement best describes the SEC rules relating to bookkeeping services?

1. Bookkeeping services are permitted, as long as the individuals performing these services are not the same individuals performing the audit.
2. Bookkeeping services are permitted if the fees from these services are insignificant relative to the audit fees.
3. Bookkeeping services are permitted if the client agrees in writing to accept responsibility for the adequacy of these services.
4. An accountant generally cannot provide bookkeeping services to an SEC audit client.

1. Under the SEC rules, a one-year "cooling-off" period applies to which scenario?

1. A tax manager working on a client's tax engagement is offered a managerial position at the client.
2. A client wants to hire its firm's lead audit partner to take over as CFO.
3. A technology consulting senior manager in the firm is seeking an executive role with the client.
4. A professional staff person on an audit applies for a position as senior accountant at the client.

Answer 1

Which statement best describes the SEC rules relating to bookkeeping services?

Ans:(D) An accountant generally cannot provide bookkeeping services to an SEC audit client

Explanation:

1) The Securities and Exchange Commission (SEC) is an independent federal goverment agency.

2) Its main purpose is to fair function of security markets and protect investors.

3) SEC has provided rule relating to book keeping

4) As per rule, a client ,who is an SEC registrant can not hire an accountant for book keeping service.

5) Option ( D) states the same hence, its a correct choice.

Under the SEC rules, a one-year "cooling-off" period applies to which scenario?

Ans: ( B) A client wants to hire its firm's lead audit partner to take over as CFO.

Explanation:

1) Cooling off period only applies audit team member.

2) Its applied to those member who are hired for financial role like , CFO, at client's place and registered member of SEC.

Hence ( B) is the correct choice.