Sarbanes-Oxley Act

Question 1

Establishment of the PCAOB

Answer 1

eliminated a significant portion of the accounting profession’s system of self-regulation.

Question 2

According to the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 7,

Answer 2

the reviewing partner must possess the same level of knowledge and competence that would qualify him or her to serve as the audit partner on the engagement under review

Question 3

Material Weakness definition

Answer 3

A significant deficiency (or a combination of significant deficiencies) in internal control that results in more than a remote likelihood that a material misstatement in the annual or interim financial statements will not be prevented or detected

Question 4

Control deficiency definition

Answer 4

A situation where the design or operation of an internal control does not allow employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.

Question 5

Examples of control deficiency

Answer 5

An internal control system that simply is not operating as intended.

An internal control system that is not being monitored properly.