Chapter 1, Problem 47RSCQ

To determine

Concept introduction: An audit is an independent examination conducted to ensure that the financial statements are true and fair. Auditing standards are certain defined rules and regulation that provide guidance to the auditors for conducting the audit efficiently and effectively. The auditing standards are followed to fulfill the objective of audit.

Sarbanes-Oxley Act or SOX was introduced in 2002 by the U.S. government after several accounting scams. The Act defines the responsibilities of the board of director of a public company and adds criminal liabilities for wrongful acts of the management and board of directors.

To indicate: Independence as the cornerstone of the auditing profession and its relation with the Sarbanes-Oxley Act.