A BDO audit client subject to SEC independence rules make financial reporting software. The audit client wants BDOto become a reseller of their software. The terms would be the same as those offered to any other reseller.The relationship would be immaterial to both BDO and the client. Is this permitted under SEC rules?Yes, because it is immaterial to both parties.No, because reseller arrangements are business relationships and the SEC does not permit the audit firm tohave a business relationship with an audit client.Yes, because BDO is not the only reseller and would be offered the same terms as any other reseller.

In order to guarantee that auditors remain impartial, SEC independence regulations govern the…

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The relationship would be immaterial to both BDO and the client. Is this permitted under SEC rules?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A BDO audit client subject to SEC independence rules make financial reporting software. The audit client wants BDO
to become a reseller of their software. The terms would be the same as those offered to any other reseller.
The relationship would be immaterial to both BDO and the client. Is this permitted under SEC rules?
Yes, because it is immaterial to both parties.
No, because reseller arrangements are business relationships and the SEC does not permit the audit firm to
have a business relationship with an audit client.
Yes, because BDO is not the only reseller and would be offered the same terms as any other reseller.

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