Which of the following is true about the Sarbanes-Oxley Act?
A. It was passed to ensure that internal controls are properly documented and tested by public companies.
B. It applies to both public and smaller companies.
C. It requires all companies to report their internal control policies to the US Securities and Exchange Commission.
D. It does not require additional costs or resources to have adequate controls.
Trending nowThis is a popular solution!
Chapter 8 Solutions
Principles of Accounting Volume 1
Additional Business Textbook Solutions
Principles of Management
Construction Accounting And Financial Management (4th Edition)
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Cost Accounting (15th Edition)
Financial Accounting (12th Edition) (What's New in Accounting)
Horngren's Accounting (12th Edition)
- The Sarbanes-Oxley Act (SOX) mandates that all publicly traded US corporations must: Select one: a. Maintain an adequate system of internal controls b. Top management must ensure the reliability of the controls c. Outside independent auditors must attest to the adequacy of the controls d. All of the above.arrow_forwardExplain one way the external auditor's responsibilities regarding a public company's system of internal controls have changed since SAS 78 became effective in the late 1990s. Were these changes necessary? Do you believe the changes have been effective at reducing risk for the company and the users of the financial statements? Explain your rationale.arrow_forwardThe main purposes of internal controls include all of the following except Multiple Choice prevention of error, theft, and fraud. promotion of efficiency. ensuring compliance with laws and regulations. increase the operating expenses of publicly traded companies.arrow_forward
- Which of the following is true of internal control? A. Internal control procedures tend to diminish the importance of operational efficiency. B. A company's outside auditor is responsible for the company's internal control system. C. Internal controls are only necessary for public companies. D. One of the major purposes of internal control is to ensure that the assets are safeguarded.arrow_forwardWhat other restrictions and requirements apply to auditors whenproviding nonaudit services to public companies?arrow_forwardIndicate which of the following claims is true and which is untrue. Internal control processes' principal purpose is to protect the firm against theft by government entities.arrow_forward
- SOX legislation calls for sound internal control practices over financial reporting and requires SEC-registered corporations to maintain systems of internal control that meet SOX standards. An integral part of internal control is the appropriate use of preventive controls. Which of the following is not an essential element of preventive control?a. separation of responsibilities for the recording, custodial, and authorization functionsb. sound personnel practicesc. documentation of policies and proceduresd. implementation of state-of-the-art software and hardwaree. physical protection of assetsarrow_forwardWhat additional constraints and obligations do auditors face when doing nonaudit services for public companies?arrow_forwardWhat additional constraints and obligations do auditors face when offering nonaudit services to public companies?arrow_forward
- 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.arrow_forwardWhich one of the following is not an objective of a system of internal controls? Select one: 1. Overstate liabilities in order to be conservative 2. Enhance the accuracy and reliability of accounting records 3. Safeguard company assets 4. Reduce the risks of errorsarrow_forwardThat companies must follow the laws and regulations including company law, tax law and environmental protection regulations requires what category of internal control objectives? Financial reporting Effective operations. Compliance Government reportingarrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeAuditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
- Business/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage