which of the following statements is not true regarding the sarbanes-oxley act (sox)? course hero

What is the Sarbanes-Oxley Act (SOX)?

14. Which of the following is not true regarding the Sarbanes-Oxley Act a. It requires firms to establish an internal control process for their financial reporting. b. It requires a firm's CEO and CFO to certify that the audited financial statements are accurate. It allows public accounting firms to offer non-audit consulting services to an ...

What is the Sarbanes-Oxley Act of 2002 Quizlet?

Jun 22, 2011 · 14 . Which of the following statements is not true regarding the Sarbanes - Oxley Act ( SOX ) of 2002 ? A ) The Act has resulted in increased penalties for financial fraud by top management . B ) The Act calls for decreased independence of outside auditors reviewing corporate financial statements .

What are the most important sections of SOX compliance?

Which of the following statements is NOT true regarding the Sarbanes-Oxley Act (“SOX”) of 2002? a. The Act calls for increased oversight responsibilities for boards of directors. b. The Act has resulted in increased penalties for financial fraud by top management. c.

How does the Sarbanes-Oxley Act affect public companies?

Jan 24, 2020 · The Sarbanes-Oxley Act (SOX) of 2002 is a legislation fashioned and passed to oversee the financial reporting system for financial professional. The purpose is to check the audit requirements in a bid to protect investors in improving the reliability and accuracy of financial statements in terms of corporate disclosures.

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According to the standards of the Public Company Accounting Oversight Board (PCAOB), the auditor of a company that issues securities must audit the company's internal control as well as its financial statements. Which of the following statements is …

Answer

b. The Act calls for decreased independence of outside auditors reviewing corporate financial statements.

New questions in Business

you have $20,000 you want to invest for the next 40years. You are offered an investment plan that will pay you 6 percent per year for the next 20 year …

What are the two types of business activities?

A business is usually involved in ONLY two types of activity—financing and investing.

What is the major external user of information?

Management of a business enterprise is the major external user of information.

What are the sections of the Sarbanes Oxley Act?

Three of its key provisions are commonly referred to by their section numbers: Section 302, Section 404, and Section 802. 1 .

What is the SOX Act?

Section 802 of the SOX Act of 2002 contains the three rules that affect recordkeeping. The first deals with destruction and falsification of records. The second strictly defines the retention period for storing records. The third rule outlines the specific business records that companies need to store, which includes electronic communications.

Why is Section 404 bad?

Some critics of the law have complained that the requirements in Section 404 can have a negative impact on publicly traded companies because it's often expensive to establish and maintain the necessary internal controls. Section 802 of the SOX Act of 2002 contains the three rules that affect recordkeeping.

What is the purpose of Section 404?

Section 404 of the SOX Act of 2002 requires that management and auditors establish internal controls and reporting methods to ensure the adequacy of those controls. Some critics of the law have complained that the requirements in Section 404 can have a negative impact on publicly traded companies because it's often expensive to establish and maintain the necessary internal controls.

What is the third rule of the SOX Act?

The third rule outlines the specific business records that companies need to store, which includes electronic communications. Besides the financial side of a business, such as audits, accuracy, and controls, the SOX Act of 2002 also outlines requirements for information technology (IT) departments regarding electronic records.

Can a corporate officer go to jail for certifying false financial statements?

Because of the Sarbanes-Oxley Act of 2002, corporate officers who knowingly certify false financial statements can go to prison. Section 302 of the SOX Act of 2002 mandates that senior corporate officers personally certify in writing that the company's financial statements "comply with SEC disclosure requirements and fairly present in all material ...

Why was the Sarbanes Oxley Act passed?

The Sarbanes-Oxley Act of 2002 was passed by Congress in response to widespread corporate fraud and failures.

How does the Sarbanes-Oxley Act affect corporate governance?

The Sarbanes-Oxley Act requires public companies to strengthen audit committees, perform internal controls tests, make directors and officers personally liable for the accuracy of financial statements, and strengthen disclosure. The Sarbanes-Oxley Act also establishes stricter ...

What is the costliest part of the Sarbanes-Oxley Act?

The costliest part of the Sarbanes-Oxley Act is Section 404, which requires public companies to perform extensive internal control tests and include an internal control report with their annual audits.

What is the Sarbanes Oxley Act?

The Sarbanes-Oxley Act of 2002, often simply called SOX or Sarbox, is U .S. law meant to protect investors from fraudulent accounting activities by corporations. Sarbanes-Oxley was enacted after several major accounting scandals in the early 2000’s perpetrated by companies such as Enron, Tyco, and WorldCom. So what is SOX? The law mandates strict reforms to improve financial disclosures from corporations and prevent accounting fraud. It also covers issues such as auditor independence, corporate governance, internal control assessment, and enhanced financial disclosure.

How does Sarbanes Oxley affect the financial side of a corporation?

Sarbanes-Oxley not only affects the financial side of corporations, but also IT departments charged with implementing and maintaining the internal controls referenced in Section 404. Companies must document, test, and maintain those controls as well as the procedures for financial reporting to ensure their effectiveness. The impact of section 404 is substantial in that a significant amount of resources are needed for SOX compliance.

How many titles are there in Sarbanes Oxley?

Sarbanes-Oxley is arranged into 11 titles. As far as SOX compliance is concerned, the most important sections within these are often considered to be 302, 404, 409, 802 and 906.

What is Section 404?

Section 404 – Management Assessment of Internal Controls – All annual financial reports must include an Internal Control Report stating that management is responsible for an “adequate” internal control structure, and an assessment by management of the effectiveness of the control structure. Any shortcomings in these SOX controls also must be reported. In addition, registered external auditors must attest to the accuracy of the company management’s assertion that internal accounting controls are in place, operational and effective.

How does Sarbanes Oxley affect public companies?

Sarbanes-Oxley affects all public companies in the United States by requiring them to follow the provisions of the 11 sections of the act. In addition to publicly-traded companies, along with their wholly-owned subsidiaries and foreign companies that are publicly traded and do business in the U.S., Sarbanes-Oxley also regulates accounting firms ...

What is the purpose of Sarbanes Oxley?

Sarbanes-Oxley includes protection for whistle-blowers, in an effort to encourage people to come forward to report suspected fraudulent activity within their own company. The strict punishments for officers, board members, and auditors for destroying company documents are criminal in nature and would apply to non-profit corporations as well as the publicly-traded companies targeted in the law, experts have said.

Why is an insecure system not considered a source of reliable financial information?

An insecure system would not be considered a source of reliable financial information because of the possibility of unauthorized transactions or manipulation of numbers.