The Sarbanes-Oxley Act of 2002 created the PCAOB and gave it the responsibility for setting auditing standards for public companies. However, it was silent on auditing standards for nonpublic companies.

Required

a. Briefly describe the rationale for allowing different auditing standards for au- dits of nonpublic companies.

b. Identify one auditing standard that might be different for audits of nonpublic companies and develop the rationale for the difference.

c. Evaluate the following proposition. Your instructor will indicate whether you should take the pro or the con side of the following assertion: There should be one set of auditing standards for audits of all entities-whether they are pub- lic or private.