Exercise 4-2 (Static) Answer true-or-false questions about the Sarbanes-Oxley Act (LO4-1) Below are several statements about the Sarbanes-Oxley Act (SOX). Required: Select whether the answer to each of the statements is true or false. Statements 1. SOX represents legislation passed in response to several accounting scandals in the early 2000s. 2. The requirements outlined in SOX apply only to those companies expected to have weak internal controls or to have manipulated financial statements in the past. 3. Section 404 of SOX requires both company management and auditors to document and assess the effectiveness of a company's internal control processes that could affect financial reporting. 4. Severe financial penalties and the possibility of imprisonment are consequences of fraudulent misstatement. 5. With the establishment of SOX, management now has primary responsibility for hiring an external audit firm. 6. The lead auditor in charge of auditing a particular company must rotate off that company only when occupational fraud is suspected.

Exercise 4-2 (Static) Answer true-or-false questions about the Sarbanes-Oxley Act (LO4-1) Below are several statements about the Sarbanes-Oxley Act (SOX). Required: Select whether the answer to each of the statements is true or false. Statements 1. SOX represents legislation passed in response to several accounting scandals in the early 2000s. 2. The requirements outlined in SOX apply only to those companies expected to have weak internal controls or to have manipulated financial statements in the past. 3. Section 404 of SOX requires both company management and auditors to document and assess the effectiveness of a company's internal control processes that could affect financial reporting. 4. Severe financial penalties and the possibility of imprisonment are consequences of fraudulent misstatement. 5. With the establishment of SOX, management now has primary responsibility for hiring an external audit firm. 6. The lead auditor in charge of auditing a particular company must rotate off that company only when occupational fraud is suspected.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required information Chapter 04 Problem 4-31 LO 4-6, 4-9 [The following information applies to the questions displayed below.] Management fraud (e.g., fraudulent financial reporting) is a relatively rare event. However, when it does occur, the frauds (e.g., Enron and WorldCom) can have a significant effect on shareholders, employees, and other parties. The PCAOB's AS 2401, Consideration of Fraud in a Financial Statement Audit, provides the relevant guidance for auditors. Chapter 04 Problem 4-31 Part b LO 4-6, 4-9 b. Select the three conditions that are generally present when fraud occurs: Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Management or other employees have an incentive or are under pressure that provides a reason to commit fraud. Circumstances exist that provide an opportunity for a fraud to be carried…
LO 1-3 1.63 Management Assertions. Your audit manager has asked you to explain the PCAOB assertions by using an account on the balance sheet at your audit client. For the accounts receivable account, please define each of the PCAOB assertions, using the accounts receivable account as a way to illustrate each assertion. You are encouraged to reference Exhibit 1.4 to help you answer this question.
stifying M5-2 Identifying Internal Controls over Financial Reportingen/gp/ Fox Erasing has a system of internal control with the following procedures. Match the procedure to the corresponding internal control principle. Indoo raso Procedure 1-- ME 2 Identifina SAUNTOSON an 1. The treasurer signs checks. Internal Control Principle A. Establish responsibility 2B. Segregate duties volume C. Restrict access 2. The treasurer is not allowed to make bank deposits. dags orly savion 3. The company's checks are prenumbered. D. Document procedures 4. Unused checks are stored in the vault.ancien en proides B. Independently verify olar997 daga 5. A bank reconciliation is prepared each month. geland Fraud, Inter CHAPTER 5 antal Drinciples Anlied by a Morchandicar L
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Ma2. According to American Institute of Certified Public Accountants (AICPA) auditing standards,2 the primary responsibility for prevention and detection of fraud rests with those charged with governance and management. There are a number of strategies3 to help management and public officials navigate the challenges associated with prevention and detection of fraud. Explain some other fraud prevention methods in which it can be avoided?
S1: Failure to comply with the CPD program under RA 10912 will automatically revoke the license of the CPA. S2: Hyperinflation will affect the measurement process in accounting. S3: When Philippine Airlines filed for bankruptcy, it affected its going concern assumption. S4: The Generally Accepted Accounting Principles should constantly evolve as financial transactions become more complex. A. All statements are correct. B. All statements are incorrect. C. Only two statements are correct. D. Only one statement is correct. E. Only one statement is incorrect.
Based on cases 2.5 Dollar General Stores Inc. Michael C. Knapp - Contemporary Auditing_Real Issues and Cases (2010, South - Western College Pub) (1) Under what circumstances, if any, are " earnings management" techniques acceptable under IFRS? Under what circumstances, if any, are such techniques Ethical? Explain.
Section 404(a) of the Sarbanes–Oxley Act requires management toissue a report on internal control over financial reporting. Identify the specific Section404(a) reporting requirements for management.
Required information Chapter 04 Problem 4-31 LO 4-6, 4-9 [The following information applies to the questions displayed below.] Management fraud (e.g., fraudulent financial reporting) is a relatively rare event. However, when it does occur, the frauds (e.g., Enron and World Com) can have a significant effect on shareholders, employees, and other parties. The PCAOB's AS 2401, Consideration of Fraud in a Financial Statement Audit, provides the relevant guidance for auditors. Chapter 04 Problem 4-31 Part b LO 4-6, 4-9 b. Select the three conditions that are generally present when fraud occurs: Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Management or other employees have an incentive or are under pressure that provides a reason to commit fraud. Circumstances exist that provide an opportunity for a fraud to be carried…
The concept of adequate disclosure continues to be one of the most important issues facing accountants. Disclosures are also necessary to the public for their protection against fraud when securities or stocks are offered to the public for sale. Disclosure requirements for the financial statements are covered in: a. IAS 36 b. IAS 7 c. IAS 1 d. IAS 3
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