Indicate whether each of the following statements regarding internal controls is true or false. ________ a) The Sarbanes-Oxley Act of 2002 (SOX) requires public companies to evaluate their internal controls and publish those findings with their SEC filings.________ b) The Sarbanes-Oxley Act (SOX) applies to all companies, while the Enterprise Risk Management (ERM) framework is used by public companies only.________ c) Enterprise Risk Management (ERM) is an expansion of the earlier framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO).________ d) The COSO framework includes five interrelated components: segregation of duties, quality employees, prenumbered documents, physical controls, and performance evaluations.________ e) Congress passed the

Question

Sarbanes-Oxley Act in 2002 (SOX) in response to high profile accounting scandals, such as Enron and WorldCom.

What will be an ideal response?

Answer 1

a) T b) F c) T d) F (e) T

a) This is true. SOX requires public companies to evaluate internal controls.
b) This is false. SOX applies to public companies, while the ERM framework is used by public and private companies alike.
c) This is true. In 2004, COSO updated the framework to help entities design and implement effective enterprisewide approaches to risk management. The updated document is titled Enterprise Risk Management (ERM)-An Integrated Framework.
d) This is false. The five components of the COSO framework include control environment, risk assessment, control activities, information and communication, and monitoring.
e) This is true. Enron and WorldCom accounting scandals had such devastating effects that they led Congress to pass SOX.