Study Unit 1 - Mandatory Guidance

Question 1

SOx practices regarding the Audit committee (AC)

Answer 1

1. AC members must be independent members of the BOD. (i.e. not CEO) 2. One of the AC members must be a financial expert. 3. AC responsible for appointing, compensating, and overseeing the work of the independent auditor. 4. Auditor must report directly to the AC. 1. AC members must be independent members of the BOD. (i.e. not CEO) 2. One of the AC members must be a financial expert. 3. AC responsible for appointing, compensating, and overseeing the work of the independent auditor. 4. Auditor must report directly to the AC.1. AC members must be independent members of the BOD. (i.e. not CEO) 2. One of the AC members must be a financial expert. 3. AC responsible for appointing, compensating, and overseeing the work of the independent auditor. 4. Auditor must report directly to the AC. 1. AC members must be independent members of the BOD. (i.e. not CEO)
2. One of the AC members must be a financial expert.
3. AC responsible for appointing, compensating, and overseeing the work of the independent auditor.
4. Auditor must report directly to the AC.
5. AC members must be independent members of the BOD. (i.e. not CEO)
6. One of the AC members must be a financial expert.
7. AC responsible for appointing, compensating, and overseeing the work of the independent auditor.
8. Auditor must report directly to the AC.

Question 2

2 FCPA provisions

Answer 2

1. Maintain Internal Accounting Control
2. No corrupt payments to Foreign Officials.

Question 3

RICO stands for

Answer 3

Racketeer Influenced & Corrupt Organizations Act. (goal to eliminate organized crime)

Question 4

Control Frameworks Include

Answer 4

1. COSO Framework
2. CoCo - Criteria of Control
3. Turnbull Report
4. COBIT - Control Objectives for IT
5. eSAC - Electronic Systems Assurance & Control

Question 5

Code of Ethics Purpose

Answer 5

1. Promote ethical behavior
2. Communicate Org’s values to members & outsiders.
3. Establish Standards (for performance measuring)

Question 6

4 Components of Code of Ethics

Answer 6

1. Integrity
2. Objectivity
3. Confidentiality
4. Competency

Question 7

Under Integrity, Auditors must

Answer 7

1. Perform work with honesty, diligence & responsibility
2. Observe the law
3. Not knowingly be party to illegal activities
4. Align with the Org’s ethical objectives.

Question 8

Under Objectivity, Auditors must

Answer 8

1. Avoid conflicts of interest
2. Avoid gifts that may impair judgment
3. Disclose all facts in reporting

Question 9

Under Confidentiality, Auditors must

Answer 9

1. Be prudent with the use & protection of information.
2. Not use information for personal gain.

Question 10

Under Competency, Auditors will

Answer 10

1. Only engage in services for which they have the necessary skill.
2. Perform IA activities aligned with the Standards.
3. Continually improve proficiency.