Sarbanes Oxley Act of 2002 Flashcards
Who is responsible for certifying quarterly reports with the SEC fairly present the financial condition and result of operations?
CEO or the CFO
(NOT THE AUDIT COMMITTEE)
Which organizational structure BEST promotes internal control?
internal audit staff should report directly to the corporate director of internal audit, who in turn reports to the audit committee
Per title 3, who is required to make special certification statement regarding the establishment of internal control systems on Form 10-K?
The principal executive officers (typically the CEO and CFO) of a public company.
Within the meaning of the law, which of the following corporate officers would be considered independent:
Board Member
Independent Auditor
Board Member - YES
Ind. Auditor - NO
Which employees of an issuer are REQUIRED to certify the company’s financial reports filed with the SEC?
CEO and CFO
Conflict-of-interest provisions of SOX act of 2002 generally prohibit the directors of exec officers of an issuer from which activity?
Receiving a personal loan from the issuer NOT in the ordinary course of business.
Note: Exceptions exist for loans made in the ordinary course of business.
If a corporation enters into a contract and the director has a conflict of interest, the contract in voidable unless:
The director makes a full disclosure to the disinterested directors OR shareholders, who can approve the transaction.
OR
The deal has to be fair to the corporation (for example, below market price)
Conflict-of-interest provisions of SOX act of 2002 generally prohibit the directors of exec officers of an issuer from which activity?
Receiving a personal loan from the issuer NOT in the ordinary course of business.
Note: Exceptions exist for loans made in the ordinary course of business.
According to COSO, what does a written code of conduct help management do?
It’s existence promotes (among other things) honest/ethical conduct, teamwork, compliance, and appropriate disclosure.
The SOX act of 2002 requires that one or more members is a financial expert and that the financial report discloses:
The existence of financial expert(s) on the audit committee or the reason WHY the audit committee does NOT have a financial expert.
What are the specific qualifications to be a financial expert under SOX act of 2022?
NONE
The act give some guidance but NOT specific qualifications.
Under the provisions of SOX 2002, who decides if someone qualifies as a “financial expert”.
The Board of Directors
According to SOX 2022, the officers are he accountable to a code of ethics. Codification of ethical standards include provisions for :
Hint: 3 things
- Honest and Ethical Conduct
- Full, fair, accurate, and timely disclosure of periodic financial stmts.
- Compliance with laws, rules, and regulations.
Under SOX 2002, the management report on internal control should include:
Hint: 3 things
- A stmt of management’s responsibilities for establishing and maintaining adequate internal controls.
- a statement that the auditor has attested and reported on mgmt’s evaluation of internal controls.
- A conclusion about the effectiveness of the company’s internal controls.
Under SOX 2002, the criteria specified to be an audit committee financial expert is?
Experience with internal accounting controls.
