[Anonymous]

I am confused.

Please help !!!!

In BISK2012, there is the following question.

====================================================

Which of the following would be an important responsibility for a board of directors ?

a) Performing performance evaluations of lower level staff

b) Participating in daily, routine decision

c) “Rubber stamp” management’s judgements

d) Engaging the external auditor

Answer is d), explaining just as below.

“An important responsibility for a board of directors is engaging the external auditor.”

====================================================

However, to my understanding, “Appointment, compensation, and oversight of the external auditors is the responsibility of Audit Committee, not Board of Directors”.

Why is the answer d) ?

Someone, please let me know.

Thanks

[peetree]

audit committee is made up of members of the entity's board

FAR 02/21/13 - 95
REG 07/02/13 - 87
AUD 08/02/13 - 94
BEC 08/30/13 - 85
Ethics Exam - 90

Illinois candidate awaiting his license

Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

[Jennifer241]

a,b,and c are all things that management does, not the board. As Peetree said, the audit committee is made up of the board of directors.

AUD - Jan 9,13 Pass
REG - Aug 30,13 Pass
BEC - Oct 26,13 Pass
FAR - Dec 4,13 Pass

Licensed CPA in the state of Oregon

[Anonymous]

Thanks for your quick reply.

Uhmm….

So, bottom line is that Audit Committee is the operating committee of board of directors consisting of independent outside directors and audit committees is the one to engage with external auditors.

Therefore, in other words, “board of directors is the one to engage with audit committee.”

I understand this logic, but feel like a little bit tricky.

Anyway, thanks.

[peetree]

They're definitely trying to trick you but yeah, that's the logic behind it.

FAR 02/21/13 - 95
REG 07/02/13 - 87
AUD 08/02/13 - 94
BEC 08/30/13 - 85
Ethics Exam - 90

Illinois candidate awaiting his license

Used Becker Self Study | Ninja Audio | Becker Flash Cards | Ninja Notes | Wiley Test Bank

[Author]

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