Rise of SOX
The three companies that had scandals that led to SOX were ____, ____, and ____
Enron, WorldCom, and Tyco International
Influencing the conduct of an audit is only illegal if the resulting misstatements would be ____
Material
The section of SOX that dictates criminal punishment is ____
SOX Section 906
What is the Securities and Exchange Commission (SEC)?
An independent agency of the United States government that holds primary responsibility in enforcing and proposing rules around financial reporting and publicly traded stocks
Who would whistleblowers file complaints with?
Secretary of Labor
How many years of prison did the CEO of WorldCom get?
25 years
The CEO and CFO must sign and certify reports to ensure that they present ____ and ____ information
Complete and accurate
The maximum fine for accounting fraud is ____
$5 million
What is GAAP?
GAAP stands for Generally Accepted Accounting Principles - it is the standard set of accounting rules adopted by the SEC, so publicly traded firms in the US must follow GAAP rules for financial reporting
What is the cap for special damages under SOX?
There is none
How many years of prison did the CFO of WorldCom get?
5 years
What two aspects of business are the CEO and CFO responsible for under Section 302?
Financial reports and internal control structure
FREE SPACE
FREE SPACE
What does materiality mean in financial reporting?
The principle that anything that has the possibility of affecting the decisions of decision-makers should be disclosed in publicly available financial statements
What is the statute of limitations on claims?
90 days after the violation occurred
Who was the former CEO of Tyco International?
Dennis Kozlowski
Who is prohibited from fraudulently influencing the auditors engaged in the audit of a company's financial statements?
Officers, directors, and any employee acting directly under the direction of an officer
The maximum sentence for accounting fraud is ____
20 years
What are internal controls?
The mechanisms, rules and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud
What was the recovery amount in the whistleblower case mentioned?
$11 million
Who was the former CEO of WorldCom?
Bernie Ebbers
Name two of the five internal controls items which must be disclosed or included in each financial report
The results of evaluation on the effectiveness of internal controls, deficiency of internal controls, possible fraud among employees who have a significant role in the maintenance of internal controls, significant changes to internal controls, and factors that could affect internal controls
Who has the ultimate responsibility to ensure the accuracy of the financial statements?
Management - the CEO and CFO
Who is responsible for establishing and maintaining an adequate internal control structure for a publicly traded firm?
The management of the firm
Name two things one can recover
Lost wages and benefits, reinstatement, special damages, and emotional distress