Independence issues that would preclude an audit firm from proposing on a potential audit client:
A) are only applicable on public company audit engagements.
B) are not affected by the Sarbanes-Oxley Act.
C) cannot be determined until the audit planning process is complete.
D) may result from current business relationships of the audit firm's former employees.

Question

Quizplus · Accepted Answer

Independence issues may arise from the current business relationships of the audit firm's former employees, as these individuals may have confidential information or business relationships with the potential audit client that could compromise the auditors' independence. These issues are not limited to public company engagements and are affected by the Sarbanes-Oxley Act. Independence issues must be considered and evaluated prior to proposing on a potential audit client.

Independence Issues That Would Preclude an Audit Firm from Proposing