2 Accounting Cycles & Corporate Governance Flashcards
What is the proper segregation of duties?
- authorization of the transaction
- recording of the transaction
- custody of assets related to the transaction
What are included in the articles of incorporation?
- corporation’s name
- number of authorized shares of stock
- street address of corporations initial registered office
- name of the registered agent at that office
- name and address of each incorporator
- Optional: purpose and powers of the corporation, internal management, and any subject required or allowed to be addressed in the bylaws
What are the most important acts performed by the shareholders at the annual meeting?
- amending the articles of incorporation
- voting on any matters requiring a general vote
- electing or removing directors
Fiduciary duty of directors and officers are?
- to act in the corporation’s best interest
- be loyal
- use due diligence in discharging responsibilities
- be informed about information relevant to the corporation
- disclose conflicts of interest
Besides officers and directors, who else has a fiduciary duty to the corporation?
controlling or majority shareholders
What does SOC stand for?
System and Organization Controls
What is a SOC 1 type 1 report?
A SOC 1 type 1 report expresses an opinion on the fair presentation of management’s description of the service organizatin’s system and whether the controls are suitably designed at a specified date. These are used by the user auditor.
What is a SOC 1 type 2 report?
A SOC 1 type 2 report expresses not only the type 1 opinions but also an opinion on whether the controls were operating effectively.
What are SOC 2 reports?
SOC 2 differs from SOC 1 in that the report relates to the controls at the service organization over security, availability, processing integrity, confidentiality or privacy. SOC 2 reports are intended to be used by the parties stated in the report.
What are SOC 3 reports?
SOC 3 differs from SOC 1 in that the report relates to the controls at the service organization over security, availability, processing integrity, confidentiality or privacy. SOC 3 reports are intended to be used by anyone.
What can an internal auditor not be responsible for?
They cannot be responsible for selecting and executing internal controls.
When a CEO unknowingly certifies a filing that does not meet the requirements of the Sarbanes-Oxley Act, what is the possible result?
They could face fines of up to $1M or up to 10 years in prison
