Learning Objective 11-5
1) Which of the following is a new requirement imposed by the SOX Act?
A) The CFO must be part of the audit committee.
B) The external auditors have stronger rules regarding auditor independence.
C) Management is required to have a representative on the board of directors.
D) Public companies must have at least one representative of the external auditors as a member of its board of directors.
2) Who is responsible for a company's internal controls?
A) the CEO and CFO
B) the board of directors
C) the external auditors
D) the PCAOB
3) Who must attest to the accuracy of a company's report on its internal controls?
A) the CEO and CFO
B) the board of directors
C) the external auditors
D) the PCAOB
4) Who is ultimately responsible for the accuracy of a company's financial statements?
A) management
B) the board of directors
C) the external auditors
D) the PCAOB
5) Who must swear that they have reviewed a company's financial statements and that, based on their knowledge, the report does not contain any false statements and does not omit any significant facts?
A) the CEO and CFO
B) the board of directors
C) the external auditors
D) the PCAOB
6) What is whistle-blowing?
A) an announcement that the financial statements might be issued late this year
B) an employee disclosure of suspected fraud within a company
C) a warning from the SEC to management that a company's annual report is inadequate
D) an announcement that this year's earnings will not meet analysts' expectations
7) Which of the following is a new requirement imposed by the SOX Act?
A) Management must report on the effectiveness of its internal control system.
B) The external auditors are required to provide consulting services.
C) The external auditors are required to prepare and audit the financial statements.
D) Executive compensations are no longer allowed to be linked to earnings.
8) Who are elected by the shareholders to represent the interest of the shareholders?
A) management
B) the board of directors
C) the external auditors
D) the PCAOB
9) Who are elected by the shareholders to make decisions on major company policies, such as dividend payments?
A) management
B) the board of directors
C) the external auditors
D) the PCAOB
10) Who created the Sarbanes-Oxley Act (SOX)?
A) the SEC
B) the PCAOB
C) the United States Congress
D) the IRS