Question

(3) Testing for long-lived asset m an... THE IMPACT OF SARBANES-OXLEY " According to this case, the Lakeside Company is considering a public offering of stock to finance its growth. What steps would the Lakeside Company have to take before issuing stock to the public? In particular, how would the provisions of the Sarbanes-Oxley Act impact this decision? How does the possible public sale of stocks impact the Lakeside Company financial reporting requirements? Explain how the acceptance of a public company would impact a CPA firm. In particular, how would Roger's decision about offering stock to the public impact Abernethy and Chapman's decision of whether or not to accept Lakeside as a client? 1000HW 919 1910 O TO D O Thuone A 8 1010512 DUE TOEN DIE JOUBO DUO no 100 upon Dora B o o 7 DUBT Dont 1021069 1099

Answer 1

In view of the Sarbaney's Oxley Act and SEC guidelines issued for the Financial reporting, management is responsible for preparing internal control over both operational and financial controls.

As per SEC guidelines, public company who has offered shares to the public is required to file Form 10-K to the SEC and an annual report to all the stakeholders. For a public company, SOX testing requires testing of internal controls and procedures followed at the time of operations, under the COBIT framework.

Yes, for a CPA firm as well, SOX compliance affects them as now they won't be able to provide other than auditing services to them like book-keeping, implementation of systems, advisory services or valuation services.