HW 6 Controls, SOX Part 1
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Feb 20, 2024
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1. Read chapter 10 pages 296-300 (stop at Control Frameworks) in the Romney Steinbart text. 2. Read page 5 through page 22 in the “Student Guide to the Sarbanes-Oxley Act”
by Robert Prentice (hereafter referred to as the Student Guide) and then respond to the questions below. You may also need to refer to the actual language of the Act, which you can access at: http://www.sec.gov/about/laws/soa2002.pdf. You do not need to memorize section numbers (with two exceptions.) You need to understand the provisions of SOX. Following are examples of questions I will NOT ask on an exam: • “What is the title of SOX §203?” • “Which section of SOX requires rotation of audit partners?”
Title I §101 of SOX establishes the Public Company Accounting Oversight Board (PCAOB.) Describe the composition of the Board and any limitations as to who may be appointed to the Board.
The Board is made up of members appointed by the SEC, who must be independent of the public companies they audit and must work as a nonprofit. Employees on the board cannot also be an employee of any federal government branch.
Visit the PCAOB Web site. http://www.pcaobus.org/ and click on Oversight. The PCAOB inspection reports are available to the public. Find a recent inspection report for any firm you choose and briefly review the PCAOB’s findings. I researched audit inspection results for an audit done in 2023 on a company called Gaveglio and Associates. Yes, the PCAOB did find several audit deficiencies. One of these was the fact that there were several control deficiencies over investment securities within the company. The company did not have great management of the controls over the reasonableness of certain investment prices. Additionally, their controls for the variation in the prices for their investments were also not very present.
A final problem was that the firm had trouble evaluating their controls and frequently did not review the specific procedures performed to determine the effect of the qualified opinion or the trustworthiness of the prices of their investments.
The PCAOB also found control deficiencies in Part II of the report. The audit found that the controls do not provide assurance that employees and managers will comply with professional standards. The audit also did not show any evidence of improvements since the previous professional audit.
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Horseshoe Valley
Ontaria, L4M 4Y8
DAVIDSON
TREE
EXPERTS
Phone 705-321-8765
Fax 705-321-8862
March 10
Du
20-
F. Vailliant
RR I, Craighurst, ON LAM 4A7
NAME
ADDRESS
QUAN
6
pruning of
mature trees,
removing dead
wood
30-
180
2
cut down and
remove mature
trees
75-
150
HST
RECEVED AROVE IN GOOD ORDER
F. Valiant
TOTAL 330
CASH SALES SLIP
2651
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Essay Question: (LO# 2)
One of the Components of Internal Control is the control activities; which are the policies and
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