Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

Which provision is NOT part of the Sarbanes-Oxley Act of 2002?

1. Audit documentation retention for five years

2. Tax services must be preapproved by the audit committee

3. Rotation of lead and reviewing partners after five years

4. Prohibiting internal audit outsourcing by auditors of issuers

The correct answer is: Audit documentation retention for five years

The Sarbanes-Oxley Act of 2002 was enacted in response to financial scandals to enhance corporate governance and strengthen the standards for financial reporting and auditing. Among its key provisions, it includes requirements for the retention of audit documentation, rules to prevent conflicts of interest, and mandates for the rotation of partners on audit engagements. The correct provision that is not part of the Sarbanes-Oxley Act is related to the retention of audit documentation. While Sarbanes-Oxley does require audit firms to retain audit documentation, the specific timeframe mandated by the Act for retention is seven years, not five. This requirement is intended to ensure that records are available for any potential future scrutiny or investigations. In contrast, the other provisions listed are indeed part of Sarbanes-Oxley. The requirement for tax services to be preapproved by the audit committee is aimed at limiting the potential for conflicts of interest when auditors provide both auditing and non-auditing services to the same client. The revolution of lead and reviewing partners after a maximum of five years is designed to further ensure auditor independence and objectivity. Prohibiting internal audit outsourcing by auditors of issuers is also intended to prevent any potential conflicts that could jeopardize an auditor's independence