IS3350 CHAPTER 7

Question 1

A term used in the Sarbanes-Oxley Act. It refers to processes and procedures that a company uses to make sure that it makes timely disclosures to the UUS Securities and Exchange Commission. This is called ___?

Answer 1

DISCLOSURE CONTROLS

Question 2

Represents a shareholders’s portion of the company’s earnings and is called ___?

Answer 2

DIVIDEND

Question 3

A report that a public company must file with the US Securities and Exchange Commission. A company must file it within four days of experiencing a major event that affects shareholders and investors and is called ___?

Answer 3

FORM 8-K

Question 4

A report that a public company must file with the US Securities and Exchange Commission at the end of its fiscal year. It is a detailed and comprehensive report on the company’s financial condition and is called ___?

Answer 4

FORM 10-K

Question 5

A report that a public company must file with the US Securities and Exchange Commission at the end of each fiscal quarter. It is a report on the company’s financial condition at the end of its first three quarters in a fiscal year and is called _?

Answer 5

FORM 10-Q

Question 6

A term used in the Sarbanes-Oxley Act. It refers to the processes and procedures that a company uses to provide reasonable assurance that its financial reports are reliable and is called ___?

Answer 6

INTERNAL CONTROLS

Question 7

A company held by a small group of private investors is called ___?

Answer 7

PRIVATELY HELD COMPANY

Question 8

A company owned by a number of different investors. Investors own a percentage of the company through stock purchases. The stock of a company is traded on a stock exchange and is called a ___>

Answer 8

?PUBLIC COMPANY

Question 9

The general term used to describe financial instruments that are traded on a stock exchange. Stocks and bonds are an example. This is called ___?

Answer 9

SECURITIES

Question 10

1. What types of campaniles must follow all Sarbanes-Oxley Act provisions?
2. Public
3. Private
4. Nonprofit
5. Governmental
6. None of the above

Answer 10

Public

Question 11

2. A dividend is a shareholder’s earnings in a company.

TRUE OR FALSE

Answer 11

TRUE

Question 12

3. What is the main goal of the Sarbanes-Oxley Act?

Answer 12

Protect shareholders and investors from financial fraud.
&
SOX also was designed to restore investor faith in American stock markets.

Question 13

4. How many days after a major event must a company file Form 8-K?
5. Two
6. Three
7. Four
8. Five
9. None of the above

Answer 13

Four

Question 14

5. Which corporate scandals lead to the creation of the Sarbanes-Oxley Act?
6. Enron
7. WorldCom
8. Adelphia
9. Tyco
10. All the above

Answer 14

Enron
WorldCom
Adelphia
Tyco

All

Question 15

6. What are internal controls over financial reporting (ICFR)?

Answer 15

Internal controls are the processes and procedures that a company uses to provide reasonable assurance that its financial reports are reliable.

Question 16

7. How many members of the Public Company Accounting Oversight Board may be certified public accountants?
8. Five
9. Four
10. Three
11. Two
12. None of the above

Answer 16

Two

Question 17

8. Which standard replaced “Auditing Standard No. 2?”
9. “Auditing Standard No. 3”
10. “Auditing Standard No. 4”
11. “Auditing Standard No. 5”
12. “Auditing Standard No. 6”
13. None of the above

Answer 17

“Auditing Standard No. 5”

Question 18

9. Which framework has the US Securities and Exchange Commission official approved as suitable evaluation criteria for internal controls?
10. COBIT
11. COSO
12. GAIT
13. ISO/EIC
14. None of the above

Answer 18

COSO

Question 19

10. Which Sarbanes-Oxley Act provision causes the most concern for information technology professionals?
11. Section 302
12. Section 309
13. Section 404
14. Section 906
15. None of the above

Answer 19

Section 404

Question 20

11. A company/ chief information security office and chief financial officer must sign a section 302 certification.
    TRUE OR FALSE

Answer 20

FALSE

Question 21

12. How often must the US Securities and Exchange Commission review a public company’s Form 10-K and Form 10-Q
13. Twice a year
14. Every year
15. Every other year
16. Every three years
17. Every five years

Answer 21

Every three years

Question 22

13. What does an internal control over financial reporting (ICFR) do?

Answer 22

Provides management with reasonable assurance that:

1. Financial report, records, and data are accurately maintained.
2. Transactions are prepared according to GAAP rules and are properly recorded.
3. Unauthorized acquisition or use of data or assets that could affect financial statements will be prevented or detected in a timely manner.

Question 23

14. Under the Sarbanes-Oxley Act, how many years must public companies keep audit papers?
15. Five
16. Six
17. Seven
18. Eight
19. None of the above

Answer 23

Seven

Question 24

15. A public company must file a Form 10-K at the end of each quarter.
    TRUE OR FALSE

Answer 24

FALSE