Board authorize outside auditors for non audit work

CFA Level II
#21

so, what is the answer to the first question on 1) For independent board members to pick outside auditors ?? Yes, no?

#22

Yes / Yes Audit committee should be indie directors only, with authority to approve non-audit work from auditors.

#23

Yes, Yes

#24

Shite, I picked Yes to hiring the auditors, but NO to approving them for non-audit work. Why would/should they be allowed to approve something outside of their realm>?

#25

zimzim78 Wrote: ------------------------------------------------------- > Shite, I picked Yes to hiring the auditors, but NO > to approving them for non-audit work. > > Why would/should they be allowed to approve > something outside of their realm>? same here bro…Corporate Finance was very tricky

#26

Got that one wrong too. I inclined to say yes, but then changed my mind to No.

#27

zimzim78 Wrote: ------------------------------------------------------- > Shite, I picked Yes to hiring the auditors, but NO > to approving them for non-audit work. > > Why would/should they be allowed to approve > something outside of their realm>? I totally agree. How can they approve non-audit work??? Furthoremore, what even defines “non-audit work”? This question is absurd.

#28

Well if 75% of the people didnt pick Yes/Yes I am hoping it will be dropped. CFAI gave a cheap shot on this…

#29

this was a level 1 question when i took it last year… i can’t believe i got it wrong twice.

#30

Thats what I did with the Inflation adjusted P/E. L2 last year had it on there and I got it wrong there too. forgot i should have been using the real rate not the regular rate. I’m such an idiot!

#31

I picked no. Reason: Suppose, if board approves for all the non-audit work then there will be board meetings every day to approve for payroll, consulting, tax, book keeping, accounts preparation, etc, etc,. It is non-sensical to me. I picked Yes and No. I could be wrong.

#32

I picked yes and no based on logic can’t relate to any materials in the curiculum

#33

The answer was YES YES I checked the book

#34

I think what they were saying is that for audit matters, they can select outside audit firms, but for non-audit matters of the firm, they can approve/disapprove…does that sound fair enough? What is board for anyway? Audit is an independent function, but for other things, board has the right to check.

#35

you know what i am thinking is that the audit committee only should be able to approve for outside audit work as else you are running th erisk of the board giving them tons of contracts for favorable reviews… make sense? -1

#36

below are from official website about corporate Governance-- “The Committee need not pre-approve the non-audit services if the aggregate amount of the non-audit services constitutes not more than 5% of the total revenues the Corporation paid to the independent accounting firm during the fiscal year in which the services were provided. The Committee may delegate to one member the authority to pre-approve non-audit services. In that event, all pre-approved non-audit services must be disclosed to the full Committee at the next regularly scheduled meeting of the Committee.” So again, they tested us something out of the los…