1Under the Sarbanes-Oxley Act, the outside auditor must issue an internal control report.
2The Public Company Oversight Board oversees the work of auditors of public companies.
3Under the Sarbanes-Oxley Act, accounting firms are prohibited from both auditing a client and also providing certain consulting services for the same client.
4Under the Sarbanes-Oxley Act, violators may be sentenced to prison for securities fraud.
5Which of the following is a requirement of the Sarbanes-Oxley Act?
A) The outside auditor must issue an internal control report for each public company.
B) The Public Company Oversight Board must conduct audits of public companies.
C) Accounting firms may not both audit a public client and also provide certain consulting services for the same client.
D) The Public Company Oversight Board must create new accounting standards.
6Sarbanes-Oxley was passed in response to which of the following?
A) The stock market crash of 2002
B) The savings and loan bailout
C) The accounting scandals of WorldCom and Enron
D) The mounting government deficit
7Which is NOT a provision of Sarbanes-Oxley?
A) Accounting firms are allowed to provide both audit services and a full range of consulting services to their public company clients.
B) Those who commit securities fraud may be sentenced to 25 years in prison.
C) Public companies must issue an internal control report evaluated by an outside auditor.
D) Auditors of public companies are under the scrutiny of the Public Company Accounting Oversight Board.
1The control environment is one of the five components by which a company can achieve its internal control objectives.
2Risk assessment is the "tone at the top" of a business, starting with the owner and the top managers.
3External auditors monitor company controls to safeguard assets and ensure that employees are following company policies.
4Internal auditors evaluate company controls to ensure the accuracy of financial statements.
5Mandatory vacations and job rotation improve internal control.
6Separation of duties limits fraud and promotes the accuracy of the account records.
7The controller of a company is responsible for writing checks.
8The treasurer of a company is the chief accounting officer of that company.
9The chief accounting officer of a company is the:
A) controller.
B) treasurer.
C) external auditor.
D) internal auditor.
10The company officer who is responsible for writing checks is the:
A) controller.
B) treasurer.
C) external auditor.
D) internal auditor.