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?

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter14: Completing A Quality Audit

Section: Chapter Questions

Problem 15CYBK

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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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