M9-Ethical Requirements of the SEC and PCAOB Flashcards
The Public Company Accounting Oversight Board was established by the Sarbanes-Oxley Act of 2002. (true or false)
true
Under the SEC’s rules, the lead and concurring partner must rotate off the engagement after five years and other audit partners must rotate after seven years. (true or false)
true
Note that the IFAC Code of Ethics requires that the lead and engagement quality review partners on public company audits rotate after no more than seven years.
Non-audit services that do not exceed 5% of total revenues from an audit client do not require audit committee pre approval as long as the services are brought to the audit committee’s attention and approved before the completion of the audit. (true or false)
true
Permitted tax services include tax compliance, tax planning, and tax advice. The PCAOB prohibits tax services related to confidential or aggressive tax transactions and tax services to corporate officers of audit clients or immediate family members of corporate officers. (true or false)
true
Registered public accounting firms are required to maintain audit work papers and supporting documentation for a period of seven years. (true or false)
true
To impose a disincentive to fraud, an audit team member may not accept employment as a chief executive, chief financial or chief accounting officer, or controller of an audit client that files reports with the Securities and Exchange Commission for one year. (true or false)
true
Most services that audit firms previously provided to publicly traded clients have been prohibited by the Sarbanes-Oxley Act of 2002, except for approved tax services. (true or false)
true
The Sarbanes-Oxley Act requires the PCAOB to perform an annual inspection of each registered public accounting firm that regularly provides audit reports for more than 100 issuers. (true or false)
true
Section 404 of the Sarbanes Oxley Act of 2002 requires each annual report of an issuer to include management’s assessment of the effectiveness of internal control over financial reporting. (true or false)
true
The PCAOB consists of exactly 2 CPAS and 3 non-CPAS. (true or false)
true
Experience on an audit committee or disclosure committee of a board of directors would not enable one to acquire the attributes of a financial expert. Such experience must be acquired through involvement as a principal financial officer, principal accounting officer, controller, public accountant, auditor, or one who actively supervises or assess the performance of one of these financial jobs. (true or false)
true
