SOX 2002 (Corp Gov- 16-20%)

Question 1

SOX Act of 2002

B1-5

Answer 1

• Corporate Responsibility
• Enhanced financial disclosures
• Fraud

Question 2

SOX Title III- Corp Responsibility

What is covered in Corporate Responsibility section?

B1-5

Answer 2

1. Audit Committee
2. Corporate Responsibility for Financial Reports
3. No Improper Influence on Audits
4. Forfeiture of Bonuses and Profits

Question 3

SOX Title III - Corp Responsibility

What does the Audit Committee do?

B1-5

Answer 3

Responsible for appointment, compensation, and oversight of audit firm’s work.

• -auditor reports to audit committee
• -audit committee resolves disputes

Question 4

SOX Title III - Corp Responsibility

What is Corp’s Responsibility for Financial Reports?

B1-6

Answer 4

CEO and CFO must sign annual and quarterly reports asserting that:

• -fin statements fairly present material condition of corp
• -they assume responsibility for internal controls
• -they disclosed any fraud and significant deficiencies in IC

Question 5

SOX Title III - Corp Responsibility

Improper influence on conduct of audits:

B1-6

Answer 5

are not allowed

Question 6

SOX Title III - Corp Responsibility

Who pays for restatements?

B1-6

Answer 6

CEO/CFO reimburses corp for restatement

• -bonuses or incentive/equity-based compensation
• -gains on sale of securities during that year

Question 7

SOX Title IV- Enhanced Financial Disclosures

What is required to be disclosed in the reports?

B1-7

Answer 7

1-All material correcting adjustments
2-All material off-balance sheet transactions
   --operating leases
   --contingent obligations (lawsuits)
   --related parties
3-conformance of pro forma F/S
4-Use of special purpose entity (SPEs)