What does SOX represent?
Sarbanes Overseas Act of 2002
Serial Online Audit
Sarbanes Online Act of 2002
Sarbanes Oxley
Act of 2002
Which accounting firms are subject to PCAOB annual inspections?
With audits totaling to 50 or more
With audits of more
than 100 public companies
With audits of more than 10 public companies
With at least one audit of public company
What is the purpose of the SOX Act?
To protect
investors by improving the accuracy and reliability of corporate disclosures
To provide superior accounting disclosure system
for organizations
To penalize companies for generating lower returns
To maintain integrity in investment and trading
markets so that investors are protected
How did title IV of the Sarbanes-Oxley Act enhance the reporting requirements for financial transactions?
Net Profit margin disclosure
Institutional stock ownership must be disclosed
Off-balance-sheet
transactions must be disclosed
Debt/Equity ratio disclosure
Which agency enforces every aspect of SOX, including the various whistleblower-related provisions?
Department of Labor
Securities and
Exchange Commission
Federal Bureau of Investigation
Commodity Futures Trading Commission
Which problem was The Sarbanes-Oxley Act primarily focused on fixing?
Fraudulent
reporting of selected financial transactions
Fraudulent securitization of subprime mortgages
The unregulated growth of collateralized debt
obligations
The collapse of the subprime mortgage market
Which of the following activities is performed during the Scoping Phase of a SOX project?
Determining Key Controls
Develop Control Documentation
Management informs Stakeholders of the Project
timelines
Identify
significant accounts, business processes and locations
Auditors were not the only targets of Sarbanes-Oxley. The act also includes a broad range of provisions dealing with:
Corporate profits
Corporate
governance
Corporate bond issuance
Corporate stock issuance
Under section 404 of Sarbanes Oxley, a registered auditor's report must verify that a company:
has internal whistleblower protection procedures in
place
has internal
accounting controls in place
has internal shareholders grievance procedures in
place
has internal executive compensation committee in
place
Who exposes misconduct either internally or externally in an organization called?
Whistleblower
Safekeeper
Auditor
Rigger
The American Competitiveness and Corporate Accountability Act of 2002, is commonly known as:
The
Sarbanes-Oxley Act
The Dodd–Frank Wall Street Reform and Consumer
Protection Act
The Commodity Futures Trading Commission Act
The Federal Trade Commission Act
What is a Sarbanes-Oxley auditor required to review during a Section 404 audit?
External controls, policies, and procedures
Internal
controls, policies, and procedures
Board of Directors qualifications
Senior management compensation
Which is the official acronym for the Sarbanes-Oxley Act of 2002?
SO
SX
SOX
Sbox
Under Sarbanes-Oxley, the board of directors of most public companies must appoint which of the following committees?
Marketing
Compensation
Pension
Audit
How can we identify the existence of Internal Control Deficiency?
When duplicate postings are rejected by the system
When the confidentiality of data is ensured
When transactions relevant to the business are
authorized
When the
operation of a control does not detect misstatements
Employees who prevail in a SOX whistle-blowing action are entitled to which of the following?
Employment
reinstatement
Life-time employment
Free health benefits
Job promotion
Under SOX, E-mail is considered a business record and must be:
Read-only and cannot be audited
Encrypted and cannot be audited
Encrypted and
password protected
Read-only and delete-able
Which is the primary function of the IT departments of Sarbanes-Oxley?
Storage of
electronic financial records
Storage of electronic employment records
Storage of electronic litigation records
Storage of electronic tread secret records
A company that violates Sarbanes-Oxley Act compliance is subject to which of the following sanctions?
Forced bankruptcy
They cannot conduct business
Forced liquidation
Significant
fines
Which statement is true regarding a company that is out of compliance with the Sarbanes-Oxley Act?
It depends on the size and capitalization of the
company
It depends on the size and the industry the company
is in
It depends on
which section of the act they’re out of compliance with
How does the enforcement of the Sarbanes-Oxley Act help protect ordinary securities investors?
Requires notification of change in senior
management
Requires notification of change of stock and/or
bond prices
Requires
notification of insider trading transactions
Requires notification of new product or service
introduction
Which of the following is a specific requirement of the Sarbanes-Oxley Act?
Publicly traded corporations must create internal
and independent shareholder investment committees
Publicly traded corporations must create internal
and independent occupational safety committees
Publicly traded corporations must create internal
and independent sexual harassment committees
Publicly traded
corporations must create internal and independent audit committees.
The Sarbanes-Oxley Act of 2002 is a piece of legislation created for the purpose of protecting investors from accounting fraud, specifically:
Disclosures related to senior management conflicts
of interest
Disclosures related to number of shares outstanding
Disclosures
related to earnings and profitability
Disclosures related to senior management
compensation
Under the Sarbanes-Oxley Act, how long must commercial firms keep their business records (including electronic records and electronic messages)?
5 years
4 Years
3 Years
2 Years
Who is responsible for appointing the Chair and members of PCAOB?
Investor Advisory Group
Financial Accounting Standards Board
American Institute of Certified Public Accountants
Securities and
Exchange Commission
The Sarbanes-Oxley Act was enacted in response to the accounting scandals conducted by which of the following companies?
ExxonMobil, Chevron, & Cisco Systems
Epson, Hewlett-Packard, & Dow Chemical
Electrolux, Delta Airlines, & Halliburton
Enron, Tyco,
& WorldCom
Which of the following was established by Congress to oversee the audits of public companies?
American Institute of CPAs
Institute of Management Accountants
Center for Audit Quality
Public Company
Accounting Oversight Board
The Sarbanes-Oxley Act was passed by Congress to restore investor confidence in which aspects of a publically traded company’s operations?
Foreign exchange transactions
Financial
statements
Retirement plan implementation
Stock market listing
What was the Sarbanes Oxley Act also known as?
International Accounting Standards
International Financial Reporting Standards
Internal Controls and Integrated Framework Act
Public Company
Accounting Reform and Investor Protection Act
What companies need to comply with Sarbanes-Oxley?
All publicly-traded companies in the United States
and Canada
All publicly-traded companies in the United States
and Asia
All
publicly-traded companies in the United States
All publicly-traded companies in the United States
and Europe
What is the primary function of SAG (Standing Advisory Group)?
To advise formulation of International Financial
Reporting Standards
To advise PCAOB
on establishment of auditing and related professional practice standards
To maintain back up of all important documents for
all public companies listed on NYSE
Liaise between Companies and Shareholders in the
event of disputes
Who would be affected by Section 306 of the Sarbanes-Oxley Act, which prohibits purchasing or selling any equity security during a pension plan blackout period?
The rank-and-file employees of a public company
The sole perpetrator of a privately-held company
The director or
executive officer of a public company
The director or executive officer of a
privately-held company
Which of the following is NOT part of the 11 sections of the SOX Act?
Income Tax
Returns
Corporate Responsibility
Studies and Reports
Auditor Independence
Why is the Sarbanes-Oxley Act widely considered as the most important securities legislation since the original federal securities laws of the 1930s?
It re-established employee confidence in the
integrity of their corporate employer’s products and services.
It re-established governmental agencies' confidence
in the integrity of Chief Executive Officers in their ability manages their
corporations.
It re-established
investor confidence in the integrity of corporate disclosures and financial
reporting.
It re-established consumers' confidence in the
integrity of products and services offered for sell by corporations.
SOX's audit committee provision requires publicly traded corporations to establish procedures for:
bondholders filing internal whistleblower
complaints
nonemployees filing internal whistleblower
complaints
shareholders filing internal whistleblower
complaints
employees filing
internal whistleblower complaints
When does risk assessment lead to more robust testing of all relevant assertions for significant accounts?
Moderate Risk Cycles
Medium Risk Cycles
Low Risk Cycles
Higher Risk
Cycles
The Sarbanes-Oxley Act (SOX) mandated strict reforms to improve financial disclosures from corporations and prevent what type of fraud?
Consumer
Investing
Shareholder
Accounting
Which agency provides many of the details of SOX regulation?
The Auditing Standards Board
Financial Accounting Standards Board
U.S. Justice Department
U.S. Securities
and Exchange Commission
Which type of evidence cannot be used by Auditors to reduce the extent of their testing?
Evidence is
furnished by the person who performs that control
Evidence of Risk Management and Assessment
Assignment of Authority and Responsibility
Board approved policies that address control
practices
Which services can a Public Accounting Audit Firm perform for the same client?
Evaluating and
understanding the Internal Control System
Establish or maintain Internal Controls
Report to Board of Directors on behalf of
Management
Design client's financial management system
In general, Sarbanes-Oxley raised financial standards in which three main areas?
Initial public stock offerings, securities
analysis, and the performance of CFOs
Corporate
governance, financial oversight, and the performance of audit work.
Corporate governance, securities issuance, and the
performance of audit work.
Initial public stock offerings, securities
analysis, and the performance of CEOs
As per the SEC, who is qualified to certify each quarterly or annual report of the public companies per Section 302?
CEO and CFO
Lending Banks
Auditor
Creditors
Who would be affected by Section 307's standards for professional conduct?
Attorneys appearing and practicing before the
Interstate Commerce Commission
Attorneys appearing and practicing before the IRS
Attorneys
appearing and practicing before the SEC
Attorneys appearing and practicing before
individual State Attorneys General
Under Sarbanes-Oxley, what is the CEO's responsibility in regards to corporate taxes?
The CEO must pay the company’s state taxes
The CEO must pay the company’s federal taxes
The CEO must
sign the company’s tax return
The CEO must have the CFO sign the company’s tax
return
What is the main requirement of SOX Section 404(a)?
Management is
required to report on the effectiveness of the company's internal controls over
financial reporting
CEOs are required to produce Certification of
Periodic Financial Reports
Auditors are required to attest the effectiveness
of the company's internal controls over financial reporting
Management must implement civil and Criminal
Disclosure Controls
Which group is responsible for reviewing logs in financial systems?
Auditors who advised in financial system design
Users of the financial systems
Configurators of the financial systems
System
Administrator or Auditor with no interest in the system
Which of the following is to be avoided in documenting flowchart in business processes?
Meaningful information
Detailed process
description
Overview of the process
Breakdown into sub activities
The high cost of implementing the Sarbanes-Oxley Act has motivated some companies to do which of the following?
Setup offshore banking accounts
Out-source their financial operations overseas
Sell their products in foreign markets only
Delist their
shares from the major exchanges
Which of the Management representations is not part of Financial Statement Assertions?
Completeness
Existence
Valuation
Definition
Which of the following is a feature of Automated Control?
Edit Check
activated during data entry
Documentation of Controls
Frequency of operation of the control
Reperformance of the process
Under Sarbanes-Oxley’s corporate responsibility provision, the Chief Executive Officer and Chief Financial Officer must certify and approve:
the integrity of their company's financial reports
annually
the integrity of their company's financial reports
semi-annually
the integrity of their company's financial reports
monthly
the integrity of
their company's financial reports quarterly
For how many years do registered accounting firms have to maintain audit work papers?
Seven Years
Nine Years
Three Years
Five Years
Which of the following was established by the Sarbanes-Oxley Act?
Public Company
Accounting Oversight Board
Consumer Financial Protection Bureau
Federal Accounting Standards Advisory Board
Federal Financial Institutions Examination Council
Which of the following are not relevant for the success of Section 404 Projects?
Supported by Audit Committee
Overseen by Chief Risk Officer
Supported by
Banks and Lending Institutions
Overseen by Global Controller
Along with the IT department who else in a company is responsible for creating a Sarbanes-Oxley compliant system?
Outside auditing firm
Credit department
Accounting department
Senior
management
What are Internal Controls within business entities also known as?
Operational
Controls
Authoritative Controls
Strategic Controls
Financial Controls
Which of the following tools has been largely adopted as part of Sarbanes Oxley IT Compliance?
ISO 2000
ITIL
Six Sigma
COBIT
Which Sarbanes-Oxley Act section mandates that a corporation’s registered accounting firm must attest to the effectiveness of the internal control structure and procedures for financial reporting?
Section 302
Section 401
Section 409
Section 404
For how many years can a public accounting firm audit the same client?
No Limit
Every Alternate Year
Five years
Three Years
Which Act was passed to cut back on multiple regulatory requirements and coincided with the tenth anniversary of SOX?
Universal Accreditation Act
1099 Tax Payer Protection Act
National Defense Authorization Act
Jumpstart Our
Business Startups Act
How many SOX titles (sections) have been ammended?
Four
Twenty One
Six
Eight
Which section of the Sarbanes-Oxley Act requires corporations to publish information concerning the scope and adequacy of their internal control structure and their procedures for financial reporting?
Section 302
Section 404
Section 401
Section 409
Which of the following companies does NOT have to comply with the all of The Sarbanes Oxley Act's regulatory mandates?
ExxonMobil
Bank of America
General Electric
Koch Industries
Besides the management of a company, who else would be held responsible for non-compliance with the Sarbanes-Oxley's business record keeping provision?
The IT
department
The Public relations department
The Human resources department
The Accounting department
How many public accountants can there be on the PCAOB Board?
Two only
Three Only
At least Five
Any number
The Dodd-Frank financial reform bill permanently exempts small-companies from which key provision of section 404 of the Sarbanes-Oxley act?
Monthly financial reporting
Annual financial reporting
Monthly outside audits
Annual outside
audits
Which of the following is NOT a Form of Certification as per SEC?
Form 10-Q
Form 30-K
Form 20-F
Form 10-K
Which of the following is a Material Weakness leading to Audit Failure?
Detection of
fraud by external auditors and not internal auditors
Lack of timeliness in account reconciliations
Lack of physical inventory system
Design of system does not allow detection of
misstatements
Which organization is responsible for the Internal Control Framework as required by SOX?
The Financial Accounting Standards Board
The International Financial Reporting Standards
The Committee of
Sponsoring Organizations
The International Accounting Standards Board
The Sarbanes-Oxley Act applies to which non US companies?
Registered equity or debt securities with the CFTC
and the accounting firms that provide auditing services to them
Registered equity or debt securities with the
NASDAQ stock exchange and the accounting firms that provide auditing services
to them
Registered
equity or debt securities with the SEC and the accounting firms that provide
auditing services to them
Registered equity or debt securities with the NY
Stock Exchange and the accounting firms that provide auditing services to them
(None of these)
Who can be a chairperson of PCAOB?
A former SEC Counsel General
Any Auditor of Public Company
A CPA who has
not been a practicing for at least five years prior to being appointed to the
board
A CPA with at least 5 years experience in Auditing
Identify the sub process of a Receivables Business Process.
Valuation
Pricing
Depreciation
Requisition
Which organization created COBIT as a framework for IT Management and Governance?
AICPA
SEC
ISACA
PCAOB
The Sarbanes-Oxley criminalizes retaliation against whistleblowers that provide “truthful information” to a “law enforcement officer” about the “commission or possible commission of any Federal offense,”. Who does this provision apply to?
Every employer
nationwide
Non-publicly traded corporations only
Small businesses only
Publicly traded corporations only
Which section of the Sarbanes-Oxley Act requires senior management to certify the accuracy of data reported in their company’s financial statement?
Section 404
Section 401
Section 302
Section 409
Within Sarbanes-Oxley, who is tasked with registering auditors, and defining the specific procedures for compliance audits?
Internal Revenue Service
Commodity Futures Trading Commission
Public Company
Accounting Oversight Board
Federal Accounting Standards Advisory Board
In order to determine significant accounts, Management must consider the concept of Materiality. Which of the following is a Quantitative consideration of Materiality?
Nature of Account
Product Revenues
Susceptibility to loss
Composition of the Account
Under the Sarbanes-Oxley Act, if a public company makes a “required” accounting restatement due to “misconduct,” what could happen to that company’s CEO and CFO?
Forced to resign from the company
Forced to payback any monetary gains received
through accounting misstatements
Forced to
forfeit any bonuses or profits gained from selling company stock
Forced to give up pensions and company stock
ownership
