Other Regulatory Frameworks and Provisions

Question 1

Why were audit committees given more power?

Answer 1

to take away power from the CEO and CFO

• Get to hire and fire audit firms
• One person in the committee must be a financial expert
• Audit committees must have a whistle blower program

Question 2

What do CEOS and CFOS have to certify?

Answer 2

They have reviewed quarterly and annual reports

No half-truths

Knowledge that financial information is fairly presented

They must certify IC

Have to certify IC and evaluated IC

Cannot mislead your outside auditors (crime)

Question 3

What is a clawback?

Answer 3

If an issuer must restate F/S, the CEO and CFO shall reimburse the company for bonuses received due to the misstatement and for profits they realized from sale of company stock

Question 4

T/F: The SOX requires issuers to disclose all off-balance sheet transactions that might have a material impact on the F/S

Answer 4

TRUE– This is because of Enron

Question 5

What are the rules of pro forma financial statements?

Answer 5

if you use pro forma you have to show the GAAP F/S and the pro forma side by side

Question 6

Does SOX 404 require an audit of IC?

Answer 6

True!

Question 7

What is the CFO code of ethics?

Answer 7

Public companies must disclose whether or not they have adopted a code of ethics for senior financial officers and, if not, the reasons why.

Question 8

What are the qualifications of a financial expert?

Answer 8

An understanding of GAAP

Ability to assess the general application of these principles

• Experience preparing, auditing, or analyzing F/S
• An understanding of IC
• Get education and experience as a principle financial officer
• Supervise such a person
• Other relevant experience