Which of the following statements is CORRECT? O a. The CFO generally reports to the firm's chief accounting officer, who is normally the controll O b. By law in most companies, the chairman of the board must also be the CEO. O c. The CFO is responsible for raising capital and for making sure that capital expenditures are desirable, but he or she is not responsible for the validity of the financial statements, as the controller and the auditors have that responsibility. O d. The board of directors is the highest ranking body in a corporation, and the chairman of the board is the highest ranking individual. The CEO generally works under the board and its chairman, and the board generally has the authority to remove the CEO under certain conditions. The CEO, however, cannot remove the board, but he or she can endeavor to hav the board voted out and a new board voted in should a conflict arise. It is possible for a per

Which of the following statements is CORRECT? O a. The CFO generally reports to the firm's chief accounting officer, who is normally the controll O b. By law in most companies, the chairman of the board must also be the CEO. O c. The CFO is responsible for raising capital and for making sure that capital expenditures are desirable, but he or she is not responsible for the validity of the financial statements, as the controller and the auditors have that responsibility. O d. The board of directors is the highest ranking body in a corporation, and the chairman of the board is the highest ranking individual. The CEO generally works under the board and its chairman, and the board generally has the authority to remove the CEO under certain conditions. The CEO, however, cannot remove the board, but he or she can endeavor to hav the board voted out and a new board voted in should a conflict arise. It is possible for a per

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter2: The Auditor’s Responsibilities Regarding Fraud And Mechanisms To Address Fraud: Regulation And Corporate Governance

Section: Chapter Questions

Problem 25RQSC

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The Sarbanes-Oxley Act A. requires the firm's CFO to personally vouch for the firm's accounting statements. B. All of the above. C. requires corporations to have more independent directors. D. prohibits auditing firms from providing other services to clients. E. requires corporations to have more independent directors and requires the firm's CFO to personally vouch for the firm's accounting statements.
Auditors often earn considerable fees from a company for examining (auditing) its financial statements. In addition, it’s not uncommon for auditors to earn additional fees from the company by providing consulting, tax, and other advisory services.Required:1. Which party has primary responsibility—auditors or company executives—for properly applying accounting standards when communicating with investors and creditors through financial statements?2. Are auditors considered employees of the company?
Which of the following is not a provision of the Sarbanes-Oxley Act as to the responsibility of a company's top managers? Question 3 options: They must establish formal procedures to receive, retain, and address any information that may affect the company's accounting. They must certify that they are primarily responsible for the company's internal controls over financial reporting. They must certify that the company's financial statements are fairly presented. They may deny responsibility for certain financial reporting matters if they are not knowledgeable about the proper accounting procedures for those transactions.
What was the purpose of the Sarbanes-Oxley (SOX) requirement of having at least one financial expert on the audit committee? O If a firm does not have a financial expert on the audit committee, they must disclose why. The audit committee's job is to monitor and oversee management's financial reporting process and integri of the financial statements. Because the financial statements contain many highly complex estimates and issues, financial expertise is often necessary to fully understand the financial statements. O This was not a requirement of Sox. The audit committee's job is to monitor and oversee management's financial reporting process and integrity of the financial statements. Having financial expertise is often necessary to fully understand management's operational decisions.
Match each of the following provisions of the Sarbanes-Oxley Act (SOX) with its description. Major Provisions of the Sarbanes-Oxley Act Descriptions 1. Oversight board 2. Corporate executive accountability 3. Auditor rotation 4. Nonaudit services 5. Internal control a. Executives must personally certify the company’s financial statements. b. Audit firm cannot provide a variety of other services to its client, such as investment advising. c. PCAOB establishes standards related to the preparation of audited financial reports. d. Lead audit partners are required to change every five years. e. Management must document the effectiveness of procedures that could affect financial reporting.
Which of the following statements is correct? A.The external auditor is responsible for the preperation of a company's financial statements. B.Audit commitees are now compulsory for the top 500 companies C.An audit commitee may be responsible for reviewing policies on internal control procedures D.Corporate governance can provide assurances that management is accountable for the actions
Which of the following best describes the main goal of any audit or due diligence project? A. Make sure the financial processes, and operational details of a corporation are proper B. Get the company successfully through an SEC investigation C. Find all the things that are wrong in a corporation's financials D. None of these ans
6) Some rules of conduct apply to accountants in public practice and not to those employed in industry. a. true b. false 7) Audits are conducted by accountants internal to the organization so that the users of the financial information can have confidence in the accuracy of the financial reporting. a) True b) False
The Sarbanes–Oxley Acta. requires the SEC to establish a federaloversight board for the accounting industry.b. requires CEOs to certify periodic financialstatements.c. subjects auditors, accountants, andemployees to imprisonment for destroyingfinancial documents.d. prohibits many types of consulting servicesby accounting firms.e. All of the above are true.
The CAE for Sargon Products reports administratively to the CFO and functionally to the audit committee. The scope of the internal audit function assurance services includes financial, operational, and compliance engagements. Is the internal auditors’ objectivity regarding accounting-related matters impaired in each of the situations described below? Briefly explain your answer. a. The internal auditors are frequently asked to make accounting entries for complex transactions that the company’s accountants do not have the expertise to handle. b. A staff accountant reconciles the company’s monthly bank statements. An internal auditor reviews the bank reconciliations to make sure they are completed properly.
True or False Independent Auditor is responsible for preparing the financial statements, establishing and maintaining adequate internal control over financial reporting (ICFR), and evaluating the effectiveness of ICFR. * Under Sarbanes–Oxley Section 301 public company audit committees are directly responsible for the appointment, compensation, and oversight of the work of any registered public accounting firm employed by their company. * Auditors are required by the Security and Exchange Commission to report to the audit committee of the publicly-traded company all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management officials. * CFO and the audit committee depend heavily on one another * Included in the Environment disclosures are the risks and opportunities due to climate change, procurement practices with respect to local suppliers, and anti-corruption *
Fraudulent financial reporting is most likely to be committed by whom? Select one: a. company management b. outside members of the company's board of directors c. employees of the company d. the company's auditors