Final answer:
The correct option is C). Accounting firms auditing publicly traded companies under SOX may not provide advisory and consulting services to ensure their independence. Tax and financial planning services are not explicitly prohibited but must be pre-approved by the client company's audit committee.
Step-by-step explanation:
Under the Sarbanes-Oxley Act (SOX), accounting firms that audit publicly traded companies are prohibited from providing certain consulting services to ensure the independence and objectivity of the auditing process. The services that are restricted by SOX include:
- Legal services
- Financial information systems design and implementation
- Appraisal or valuation services, fairness opinions, or contribution-in-kind reports
- Actuarial services
- Internal audit outsourcing services
- Management functions or human resources
- Broker or dealer, investment adviser, or investment banking services
- Advisory and consulting services
Tax services and financial planning services are not explicitly prohibited by SOX, but firms are required to maintain independence, which means that such services must be pre-approved by the audit committee of the client company to ensure there is no conflict of interest. In answering the student's question, the consulting service that accounting firms that audit publicly traded corporations may not provide, according to SOX, is C) Advisory and consulting services.