here is logic 101
Doesn't full board of directors already include audit committee of the board of directors?
Your firm has the enviable task of auditing the Azzon/Doble Oil and Gas Company, a rather large player in the oil and gas arena. You are asked to attend the meetings with the audit partner. Which of the following scenarios should be the proper result?
Incorrect A. The audit partner discusses matters of significance with management and provides recommended solutions and ramifications of alternative disclosure and accounting treatments. He also reports on all of these matters, and more, to the full board of directors.
B. The audit partner reports all significant and critical accounting methods to the full board of directors, and discloses the preferred method of handling accounting issues of the company to the full board at that time.
C. The audit partner reports all significant matters and discusses its concerns with management. Management promises to report your findings, and particularly your recommendations of ways to handle the matters, to the audit committee.
D. The audit partner discusses matters of significance with management and provides recommended solutions and ramifications of alternative disclosure and accounting treatments. He also reports on all of these matters, and more, to the audit committee of the board of directors. He also reports the same to the full board.
You answered A. The correct answer is D.
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