Answer (C) is correct . The Sarbanes-Oxley Act requires that the audit committee of a public company hire and pay the external auditors. Such affiliation inhibits management from changing auditors to gain acceptance of a questionable accounting method. Also, a potential successor auditor must inquire of the predecessor auditor before accepting an engagement.
Answer (A) is incorrect because The SEC does not require an audit report in accordance with the FCPA.
Answer (B) is incorrect because Reporting the nature of disagreements with auditors has been a long-time SEC requirement.
Answer (D) is incorrect because The Sarbanes-Oxley Act does not restrict who may perform a company’s tax work. Other types of engagements, such as the outsourcing of the internal audit function and certain consulting services, are limited.
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