The Sarbanes Oxley Act will increase the responsibility of the management over financial reporting and also compliance with internal controls of the company. There key sections of the Act require the management to carry out the following responsibilities:
1. Vouch for accuracy financial statements
2. All material facts relating to the off balance sheet items must be appropriately disclosed.
3. Have proper internal controls and report on their effectiveness
4. Provide protection to whistle blowers
5. Not influence the auditors and the audit process
PCAOB Auditing Standard no 2201 requires the company's auditor to report on the functioning of the internal controls of the company and report deficiencies if any there in.
Changes that will be required once the company goes public:
1. Develop an internal control policy and implement it across the organization.
2. Employ extra personnel to comply with the internal control requirements for maker checker concept, custody of physical assets et al.
3. Use technology to effectively implement the internal controls.
4. Changes in the roles and responsibilities of the employees
Option #1: Public vs. Private Company Controls Standards CEO Billy Jean has heard that due to the Sarbanes-Oxley Act, c...
CEO Billy Jean has heard that due to the Sarbanes–Oxley Act, costs have increased significantly when operating a public company. Jean is especially apprehensive with reports that he can anticipate double the audit fees due to the internal control provisions of the Act and PCAOB Auditing Standard No. 2201. Jean has asked you to explain how the Sarbanes–Oxley requirements may affect the audit. Required: Organize and share your thoughts if the company decides to go public. How would complying with...
LO 5-5 5.64 Impact of Sarbanes-Oxley Act. Your long-time client, Central Office Supply, has been rapidly expanding, and the board of directors is considering taking the company public. CEO Terry Puckett has heard that costs of operating a public company have increased significantly as a result of the Sarbanes-Oxley Act. Puckett is particularly concerned with reports that audit fees have doubled because of internal control provisions of the act and PCAOB Auditing Standard No. 2201. Puckett has asked you to...
1. The Sarbanes-Oxley Act requires: A. all public companies to issue an internal control report. B. all public companies to define adequate internal controls. C. the auditor of public companies to design effective ICFR. D. provides for all three of the above. 2. When planning an audit, the auditor's assessed level of control risk is: A. determined by using actuarial tables. B. calculated by using the audit risk model. C. an economic issue, trading off the costs of testing controls...
1. Explain the what is meant by internal controls. 2. Explain the process the audit team uses to assess control risk; understand its impact on the risk of material misstatement; and ultimately know how it affects the nature, timing, and extent of further audit procedures to be performed on the audit. 3. Describe additional responsibilities for management and auditors of public companies required by Sarbanes-Oxley and PCAOB auditing standard #2201. I need the answer in like 200 o 250 words....
BE4-1 Match each of the following provisions of the Sarbanes-Oxley Act (SOX) with its description. Major Provisions of the Sarbanes-Oxley Act a. Executives must personally c 1. Oversight board 2. Corporate executive accountability b. Audit firm cannot provide a c. PCAOB establishes standard 3. Auditor rotation 4. Nonaudit services 5. Internal control d. Lead audit partners are requi e. Management must document
Passage of the Sarbanes-Oxley Act led to the establishment of the: A Public Company Accounting Oversight Board. B Auditing Standards Board. C Public Accountancy Review Board. D Securities and Exchange Commission. Ordinarily, a public company audit report must be addressed to: Board of Directors Shareholders A. Yes Yes B. Yes No C. No Yes D. No No A Option A B Option B C Option C D Option D
7·The Sarbanes-Oxley Act a. created the Private Company Accounting Board. b. allows accountants to audit and to perform any type of consulting work for a public company. c. stipulates that violators of the act may serve 20 years in prison for securities fraud d. requires that an outside auditor must evaluate a public company's internal control.
Question 6 of 1010.0 Points Which costs have not increased for public companies related to implementation of Sarbanes-Oxley? A. Accounting staff salaries B. CEO salaries C. Audit costs Question 7 of 10 Which of the following is not one of the four specific responsibilities that PCAOB Auditing Standard No. 2 levies on company management? A. Accept responsibility for the effectiveness of the company’s internal control over financial reporting. B. Evaluate the effectiveness of the company’s internal control over financial reporting...
Part I (60 Points) Theory 1. The purpose of the Sarbanes-Oxley Act is to restore public confidence and trust in the financial reporting of companies. A True. B. False. IMPORTANT 2. Internal control consists of policies and procedures used by a company to A. Safeguard its assets. B. Process information accurately. C. Compliance with laws and regulations. D. All of the above. 3. At ASU Bookstore, a sales employee assists customers with finding the items the customer wishes to purchase,...
Question 1 of 1010.0 Points PCAOB stands for: A. Public Company Accounting Options Board B. Private Company Accounting Oversight Board C. Private Company Accounting Options Board D. Public Company Accounting Oversight Board Question 2 of 1010.0 Points Which Section in Sarbanes-Oxley addresses internal control structure? A. 404 B. 504 C. 302 D. 405 Question 3 of 1010.0 Points A public company’s disclosure internal control disclosure requirements in its annual report according to Sarbanes-Oxley Section 404 include which of the following:...