Which provisions of the Sarbanes-Oxley Act have the most impact on corporate governance and boards?
What will be an ideal response?
The following provisions have the most significant impact on corporate governance and boards:
Section 201: Services outside the scope of auditors (prohibits various forms of professional services that are determined to be consulting rather than auditing).
Section 301: Public company audit committees (requires independence), mandating majority of independents on any board (and all on audit committee) and total absence of current or prior business relationships.
Section 307: Rules of professional responsibility for attorneys (requires lawyers to report concerns of wrongdoing if not addressed).
Section 404: Management assessment of internal controls (requires that management file an internal control report with its annual report each year in order to delineate how management has established and maintained effective internal controls over financial reporting).
Section 406: Codes of ethics for senior financial officers (required).
Section 407: Disclosure of audit committee financial expert (requires that they actually have an expert).
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Which of the following statements is true of negligent failure to warn?
A) The manufacturers must provide warnings about obvious dangers. B) The manufacturers have to include warnings only for the original purchaser of the product, but not the user. C) The manufacturers need not include warnings about dangers from unforeseeable misuses of the product. D) The manufacturers of prescription drugs need not provide warnings to physicians of any chance of serious adverse reactions.
Breakfast cereal maker General Mills periodically gives lump-sum payments to employees. The amount depends on job performance, with more productive employees receiving a larger sum than less productive employees. This motivational tool is
A. a violation of the concept of comparable worth. B. illegal under the Equal Pay Act. C. profit-sharing. D. acceptable under the employment-at-will clause of the Equal Pay Act. E. an incentive payment.
The purchase of products like soft drinks, cleaning products, and gasoline generally exemplify routine response behavior.
Answer the following statement true (T) or false (F)