Chapter 3, Problem 4CS

After the passage of the Sarbanes-Oxley Act in 2002, many new responsibilities were put into place for organizations and their management. What are the four significant issues that were addressed by the act and its provisions as presented in this chapter? How does the act and its various requirements help deter fraudulent activity?

Assume that management is gathering evidence as part of its process for assessing the effectiveness of internal control over financial reporting. The company is a manufacturer of high-dollar specialized Control Tested machines used in the medical profession. The following table identifies important controls that management is testing regarding accounts related to revenue recognition, accounts receivable, and other sales related activities. The first column describes the control, and the second column describes the test results. Based on the test results, determine the conclusion that management should likely make about the deficiency. (Is it a control deficiency, a significant deficiency, or a material weakness?)

Please answer with reason for all why the option is correct and why the other options are incorrect       Which of the following matters would an auditor most likely ask client management to affirm in an audit representation letter?  Communications with those charged with governance concerning weaknesses in internal control Plans to acquire or merge with other entities in the subsequent year The reasonableness of significant assumptions used in making accounting estimates Management's acknowledgment of its responsibility for the detection of employee fraud