Horngren's Financial & Managerial Accounting, The Financial Chapters, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (6th Edition)
6th Edition
ISBN: 9780134642864
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Question
Chapter 7, Problem 2QC
To determine
Sarbanes-Oxley Act (SOX): SOX is the act passed by the government to address the corporate scandals. This act regulates and assesses the internal
To find: The items that are not part of the definition of internal control.
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The Sarbanes-Oxley Act
a. created the Private Company Accounting Board.
b. allows accountants to audit and to perform any type of consulting work for a public company.
c. stipulates that violators of the act may serve 20 years in prison for securities fraud.
d. requires that an outside auditor must evaluate a public company’s internal controls.
The Sarbanes-Oxley Act
Created the Private Company Accounting Board.
Allows accountants to audit and to perform any type of consulting work for a public company.
Stipulates that violators of the act may serve 20 years in prison for securities fraud.
Requires that an outside auditor must evaluate a public company’s internal controls.
Which of the following statements is true of the
Sarbanes−Oxley
Act?
A.
All private and foreign companies must issue an internal control report evaluated by an outside auditor.
B.
Accounting firms are allowed to provide both auditing services and a full range of consulting services to their public company clients.
C.
Those who commit securities fraud must be sentenced to 10 years in prison.
D.
The Public Company Accounting Oversight Board oversees the work of auditors of public companies.
Chapter 7 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (6th Edition)
Ch. 7 - Prob. 1QCCh. 7 - Prob. 2QCCh. 7 - Prob. 3QCCh. 7 - Prob. 4QCCh. 7 - Prob. 5QCCh. 7 - Prob. 6QCCh. 7 - Prob. 7QCCh. 7 - Prob. 9QCCh. 7 - Prob. 10QCCh. 7 - Prob. 11QC
Ch. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - What are the five components of internal control?...Ch. 7 - Prob. 4RQCh. 7 - What is separation of duties?Ch. 7 - Prob. 6RQCh. 7 - Prob. 7RQCh. 7 - Prob. 8RQCh. 7 - How do businesses control cash receipts by mail?Ch. 7 - Prob. 10RQCh. 7 - Prob. 11RQCh. 7 - Prob. 12RQCh. 7 - Prob. 14RQCh. 7 - Prob. 15RQCh. 7 - Prob. 16RQCh. 7 - Prob. 17RQCh. 7 - Prob. 18RQCh. 7 - Defining internal control Internal controls are...Ch. 7 - Prob. 7.2SECh. 7 - Prob. 7.3SECh. 7 - Prob. 7.4SECh. 7 - Prob. 7.5SECh. 7 - Prob. 7.7SECh. 7 - Prob. 7.8SECh. 7 - Prob. 7.9SECh. 7 - Prob. 7.10SECh. 7 - Prob. 7.11SECh. 7 - Prob. 7.12ECh. 7 - Prob. 7.13ECh. 7 - Prob. 7.14ECh. 7 - Evaluating internal control over cash payments...Ch. 7 - Understanding internal control, components,...Ch. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.20ECh. 7 - Prob. 7.21ECh. 7 - Prob. 7.23APCh. 7 - Prob. 7.24APCh. 7 - Prob. 7.25APCh. 7 - Prob. 7.26APCh. 7 - Prob. 7.27APCh. 7 - Prob. 7.28APCh. 7 - Prob. 7.29BPCh. 7 - Prob. 7.30BPCh. 7 - Prob. 7.31BPCh. 7 - Prob. 7.32BPCh. 7 - Prob. 7.33BPCh. 7 - Prob. 7.34BPCh. 7 - Prob. 7.2DCCh. 7 - Levon Helm was a kind of one-man mortgage broker....Ch. 7 - Prob. 7.1CA
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Similar questions
- Indicate whether each of the following statements is true or false. Bribery in the world of business typically happens when an organization or representative of an organization gives financial benefits to an official to gain favor or manipulate a business decision. The Foreign Corrupt Practices Act was implemented in the aftermath of disclosures that businesses were violating the IMA Code of Ethics. Managers are required to follow specific rules issued by the iMA for internal financial reporting. Ethics is more than obeying laws. The Sarbanes-Oxley Act addressed public company accounting reform.arrow_forwardThe external auditor of a company has certain requirements due to Sarbanes-Oxley. Which of the following best describes these requirements? A. The auditor is required to only report weaknesses in the internal control design of the company he or she is auditing. B. The auditor must issue an internal control report on the evaluation of internal controls overseen by the Public Company Accounting Oversight Board C. The auditor in charge can serve for a period of only two years. D. The Public Company Accounting Oversight Board reviews reports submitted by the auditors when no evaluations have been performed.arrow_forwardThe Public Company Accounting Oversight Board (PCAOB) was created as part of a series of accounting reforms in the Sarbanes-Oxley Act of 2002. The PCAOB is a Government-created entity with expansive powers to govern an entire industry. Every accounting firm that audits public companies under the securities laws must register with the PCAOB, pay it an annual fee, and comply with its rules and oversight. The PCAOB may inspect registered firms, initiate formal investigations, and issue severe sanctions in its disciplinary proceedings. While the Securities and Exchange Commission (SEC) appoints PCAOB members and has oversight of the PCAOB, it cannot remove PCAOB members at will, but only “for good cause shown,” “in accordance with” specified procedures. The SEC Commissioners, in turn, cannot themselves be removed by the President except for “inefficiency, neglect of duty, or malfeasance in office.” Parties with standing have challenged the constitutionality of the Sarbanes-Oxley Act’s…arrow_forward
- J, B & J, Certified Public Accountants, has audited the Highcredit Corporation for the past five years. Recently, the Securities and Exchange Commission (SEC) has commenced an investigation of Highcredit for possible violations of Federal securities law. The SEC has subpoenaed all of J, B & J’s working papers pertinent to the audit of Highcredit. Highcredit insists that J, B & J not turn over the documents to the SEC. What action should J, B & J take? Why?arrow_forwardWhich of the following is not part of Sarbanes–Oxley?a. An increased duty on the part of auditors to identify financial statement fraud.b. A requirement that the CEO and CFO certify the financial statements.c. Increased penalties for destruction of records in federal investigations.d. Increased penalties for mail fraud and criminal violations of the Securities Exchange Actof 1934arrow_forwardThe Sarbanes–Oxley Acta. requires the SEC to establish a federaloversight board for the accounting industry.b. requires CEOs to certify periodic financialstatements.c. subjects auditors, accountants, andemployees to imprisonment for destroyingfinancial documents.d. prohibits many types of consulting servicesby accounting firms.e. All of the above are true.arrow_forward
- What does the Sarbanes-Oxley Act of 2002 require the CEO and CFO to do? Multiple Choice All of these are requirements of the Sarbanes-Oxley Act of 2002. Take responsibility for signing financial statements. Stipulate that the financial statements do not omit material information. Disclose that they have evaluated the company's internal controls. Disclose that they have notified the company's auditors and the audit committee of the board of any fraud that involves management.arrow_forwardAudit committees have an essential role to play in ensuring the integrity and transparency of corporate reporting. The external auditor will normally report to the audit committee on all the following matters except: Select one: a.Detected frauds. b.Future staff requirements of the audit firm. c.Potential breach of Corporation Act 2001. d.The management responsibility in presenting annual financial reports.arrow_forwardWhich of the following is NOT an implication of Section 302 of SOX?a. Auditors must determine whether changes in internal control have materially affected, or are likely to materially affect, internal control over financial reporting.b. Auditors must interview management regarding significant changes in the design or operation of internal control that occurred since the last audit.c. Corporate management (including the CEO) must certify monthly and annually their organization’s internal controls over financial reporting.d. Management must disclose any material changes in the company’s internal controls that have occurred during the most recent fiscal quarter.arrow_forward
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