Describe the main requirements of the Sarbanes-Oxley Act of 2002
What will be an ideal response?
Answer:
1. Strict limits on the amount of non-audit fees (consulting or otherwise) that an accounting firm can earn from the same firm that it audits.
2. That audit partners rotate every five years to limit the likelihood that auditing relationships become too cozy over long periods of time.
3. Both the CEO and the CFO must personally attest to the accuracy of the financial statements presented to shareholders and to sign a statement to that effect.
4. That senior management and the boards of public companies to be comfortable enough with the process through which funds are allocated and controlled, and outcomes monitored throughout the firm, to be willing to attest to their effectiveness and validity.
5. SOX also stiffened the criminal penalties for providing false information to shareholders.
6. SOX called on the SEC to force companies to have audit committees that are dominated by outside directors and required that at least one outside director have a financial background.
7. CEOs and CFOs must return bonuses or profits from the sale of stock or the exercise of options during any period covered by statements that are later restated.
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Indicate whether the statement is true or false
The ________ established a free trade zone among the United States, Mexico, and Canada
A) Union of South American Nations B) European Union C) North American Free Trade Agreement D) Central American Free Trade Agreement E) Latin American Free Trade Association
Answer the following statements true (T) or false (F)
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If a check that was outstanding on last period's bank reconciliation was not among the cancelled checks returned by the bank this period, in preparing this period's reconciliation, the amount of this check should be:
A. Added to the book balance of cash as an outstanding check. B. Ignored in preparing the period's bank reconciliation as an outstanding check. C. Deducted from the book balance of cash as an outstanding check. D. Added to the bank balance of cash as an outstanding check. E. Deducted from the bank balance of cash as an outstanding check.