SOX: Title III - Corporate Responsibility

Question 1

Public Companies (Issuers)

Answer 1

must have an audit committee

Question 2

Audit Committee

Answer 2

comprises of board members who are independent

Question 3

To be independent an audit committee member

Answer 3

CANNOT be a paid consultant or advisor

Question 4

External auditor

Answer 4

reports to the audit committee

Question 5

CEO and CFO are required to sign off on published reports that the report

Answer 5

1) was reviewed by each party
2) has no untrue statements/material omissions
3) F/S that present fairly in all material respects the financial condition

Question 6

CEO and CFO required to represent

Answer 6

1) they are responsible for I/C
2) controls are designed to ensure all material information has been made available to the auditors
3) controls are evaluated for effectiveness

Question 7

CEO and CFO must represent

Answer 7

if there were any significant changes to I/C

Question 8

If the CEO and CFO falsify information bout the financial statements

Answer 8

Potential penalties include

1) repaying the issuer any bonus that are equity based or
2) repaying any gains that were realized on the sale of stock