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All About Your SOX
Let's Talk About Auditors
Let's Talk About Auditees
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100
The year that Sarbanes-Oxley Act (SOX) was enacted.
What is 2002?
100
SOX requires that engagement partners and consulting partners rotate at least every ___ years
What is 5?
100
Sox Section 302 emphasizes _____ and ______ certifications on financial statements.
What is CEO and CFO?
100
The minimum number of financial experts designated to the audit committee.
What is one? SOX Section 407 requires issuers to disclose whether or not the audit committee is comprised of at least one member who is a financial expert, as termed by the SEC.
100
Economic and social incentives can affect audit judgement.
What is moral seduction?
200
SOX is enacted and establishes this group.
What is the Public Company Accounting Oversight Board (PCAOB)?
200
The SOX Section that requires internal controls to be audited.
What is SOX Section 404?
200
The SOX section that states that management is responsible for establishing and maintaining adequate internal controls for financial reporting.
What is SOX Section 404?
200
The ones who audit the auditors.
What is the Public Company Accounting Oversight Board (PCAOB)? Inspections are annually with registered public accounting firms that audit more than 100 companies. Inspections are once every 3 years with registered public accounting firms that audit less than 100 companies.
200
AICPA attempts to meld American audit standards with those set by the IASB.
What is the Clarity Project?
300
The three highly publicized scandals that led to the passage of SOX.
What is Enron, WorldCom, and Tyco?
300
SOX Section 203 pertains to ____ ______ _______.
What is Audit Partner Rotation?
300
The reason nonaudit services are prohibited from public accounting firms.
What is Independence Issue?
300
The ones who hire the auditors for the company.
Who is the Audit Committee?
300
The approach in which a regulator takes little action until constituents express complaints.
What is the fire alarm approach?
400
The full names of the two sponsors of the SOX act.
What is U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley.
400
To increase competition, the Department of Justice and the Federal Trade Commission deregulated the accounting profession by removing the codes on these items (name at least 2).
What is competitive bidding, contingent fees, commission fees, and uninvited advertising?
400
The SOX section that makes it unlawful for a CEO, CFO, controller, CAO, or any person serving in an equivalent position to be employed by a public accounting firm within a one year period preceding the initiation of an audit.
What is SOX Section 206 - Conflicts of Interest in Auditor/Client Employment?
400
At least 4 SOX Sections of reform pertaining to the Audit Committees.
What is SOX Section 204, 301, 305, and 407? Section 204 - Auditor reports to audit committees Section 301 - Explanation of public company audit committees Section 305 - Officer and director bars and penalties (not abiding by sections pertaining to audit committee) Section 407 - Disclosure of audit committee financial expert
400
The year the Committee on Accounting Procedure (CAP) was created.
When is 1939?
500
SOX aims to do these three things.
What is enhance corporate responsibility, enhance financial disclosures, and combat corporate and accounting fraud?
500
At least 4 nonaudit services prohibited by SOX Section 201 and at least 1 nonaudit service that must be pre-approved.
What is... Prohibited: Bookkeeping, Financial Information Systems Design and Implementation, Appraisal or valuation services, Actuarial Services, Internal Audit outsourcing services, Management functions or HR, Investment adviser (service provider), and Legal services unrelated to audit. Preapproved: Tax Services and some consulting (gray area).
500
Two effects that one-year limitation of SOX Section 206 wants to produce.
What is... 1. Limiting client knowledge of current audit strategy 2. Increasing professional skepticism by decreasing auditors vulnerability to client.
500
This defines the "Strategic Issue Cycle"
What is the cycle that describes the level of aggression lobbying groups use to promote regulation? Lobbying groups will simmer down when there is a public scandal, then increase their aggression when the scandal has died down to reverse reforms made when they were quiet.
500
The Statements on Auditing Standards (SASs) that infamously omitted the risk of management fraud.
What is SAS No. 39 and SAS No. 47?