Question

The Sarbanes-Oxley Act, passed in 2002, does NOT require companies _____.

to report whether they have adapted a code of ethics

to adhere strictly to accounting rules

to choose more outside board of directors

to improve and maintain investor confidence

to choose more inside board of directors

Answer 1

Answer: to choose more inside board of directors

Explanation:

Sarbanes-Oxley act requires the firm to include more independent directors on the board and make disclosures on internal controls, ethic codes and composition of their audit committees on annual reports. The increase in outside members helps to oversee the managerial decisions more effectively. Sarbanes-Oxley act restricts membership of the firm’s audit committee to outsiders. When the inside members control the board, the board would have less control over the managerial decisions. Hence Sarbanes-Oxley act does not require companies to choose more inside board of directors. Other statements given also constitute the requirements of Sarbanes-Oxley act.