The audit firm must prepare to minimize exposure against litigation and regulatory investigation.Which of the following represents the best method of performing this task?
A)Engaging competent and trustworthy criminal defense attorneys.
B)Lobbying the SEC to become allies with CPAs and related constituents.
C)Instituting a sound system of quality control within the firm.
D)Restructuring to a traditional partnership to share the risk with other professionals.

Question

Quizplus · Accepted Answer

Instituting a sound system of quality control within the firm is the best method to prepare for minimizing exposure against litigation and regulatory investigation. This will ensure that the audit firm follows appropriate standards and procedures, and can demonstrate its compliance with these standards in case of an investigation or litigation. Engaging competent and trustworthy criminal defense attorneys may be necessary in specific cases, but it is not a general method to prepare for minimizing exposure. Lobbying the SEC to become allies with CPAs and related constituents may not be feasible or effective. Restructuring to a traditional partnership to share the risk with other professionals is not a reliable way to prepare for minimizing exposure, as partners in a traditional partnership can still face personal liability.

The Audit Firm Must Prepare to Minimize Exposure Against Litigation