Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 6, Problem 2RQ
To determine
Discuss the responsibility of the management for the financial statements.
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Which of the following is NOT a major component of the Sarbanes-Oxley Act?
Executive responsibility for accurate financial reporting.
Accounting regulation.
Mandating external financial audits for all companies.
Formation of an audit committee.
Which of the following is not a provision of the Sarbanes-Oxley Act as to the responsibility of a company's top managers?
Question 3 options:
They must establish formal procedures to receive, retain, and address any information that may affect the company's accounting.
They must certify that they are primarily responsible for the company's internal controls over financial reporting.
They must certify that the company's financial statements are fairly presented.
They may deny responsibility for certain financial reporting matters if they are not knowledgeable about the proper accounting procedures for those transactions.
Which of the following statements is CORRECT?
O a. The CFO generally reports to the firm's chief accounting officer, who is normally the controller.
O b. By law in most companies, the chairman of the board must also be the CEO.
O c. The CFO is responsible for raising capital and for making sure that capital expenditures are
desirable, but he or she is not responsible for the validity of the financial statements, as the
controller and the auditors have that responsibility.
O d. The board of directors is the highest ranking body in a corporation, and the chairman of the
board is the highest ranking individual. The CEO generally works under the board and its
chairman, and the board generally has the authority to remove the CEO under certain
conditions. The CEO, however, cannot remove the board, but he or she can endeavor to have
the board voted out and a new board voted in should a conflict arise. It is possible for a person
to simultaneously serve as CEO and chairman of the board, though…
Chapter 6 Solutions
Auditing And Assurance Services
Ch. 6 - Prob. 1RQCh. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - Prob. 4RQCh. 6 - Prob. 5RQCh. 6 - Prob. 6RQCh. 6 - Prob. 7RQCh. 6 - What are the six elements of professional...Ch. 6 - What are the five elements of an effective...Ch. 6 - Describe two of the more common judgment traps and...
Ch. 6 - Identify the cycle to which each of the following...Ch. 6 - Why are sales, sales returns and allowances, bad...Ch. 6 - Prob. 13RQCh. 6 - Prob. 14RQCh. 6 - Prob. 15RQCh. 6 - Prob. 16RQCh. 6 - Prob. 17RQCh. 6 - Prob. 18RQCh. 6 - Prob. 19RQCh. 6 - Prob. 20RQCh. 6 - Prob. 21.1MCQCh. 6 - Prob. 21.2MCQCh. 6 - Prob. 21.3MCQCh. 6 - Prob. 22.1MCQCh. 6 - Prob. 22.2MCQCh. 6 - Prob. 22.3MCQCh. 6 - Prob. 23.1MCQCh. 6 - Prob. 23.2MCQCh. 6 - Prob. 23.3MCQCh. 6 - Prob. 24.1MCQCh. 6 - Prob. 24.2MCQCh. 6 - Prob. 24.3MCQCh. 6 - Prob. 25DQPCh. 6 - Prob. 26DQPCh. 6 - Prob. 27DQPCh. 6 - Prob. 28DQPCh. 6 - Prob. 29DQPCh. 6 - Prob. 30DQPCh. 6 - Prob. 31DQPCh. 6 - Prob. 32DQPCh. 6 - Prob. 33DQPCh. 6 - Prob. 34DQP
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Similar questions
- What is the role of the Sarbanes-Oxley Act and the Public Company Accounting Oversight Board?arrow_forwardWhat are the responsibilities of management described in Section 404 of the Sarbanes-Oxley Act? What are the responsibilities of the company’s auditor?arrow_forwardWhich of the following statements is correct? A.The external auditor is responsible for the preperation of a company's financial statements. B.Audit commitees are now compulsory for the top 500 companies C.An audit commitee may be responsible for reviewing policies on internal control procedures D.Corporate governance can provide assurances that management is accountable for the actionsarrow_forward
- That companies must follow the laws and regulations including company law, tax law and environmental protection regulations requires what category of internal control objectives? Financial reporting Effective operations. Compliance Government reportingarrow_forwardWhat is the SEC’s relationship to the Public Company Accounting Oversight Board?arrow_forwardWhat is the Machiavellian approach to decision making? What are some ethical considerations in the reporting of financial results? How do different ethical perspectives potentially impact accounting-based decisions? What is the role of government regulations in producing ethical financial reports?arrow_forward
- Why do you think the SEC requires companies to disclose fees paid to independent accountingfirms for audit and consulting services? What must be disclosed?arrow_forwardThe Sarbanes-Oxley Act A. requires the firm's CFO to personally vouch for the firm's accounting statements. B. All of the above. C. requires corporations to have more independent directors. D. prohibits auditing firms from providing other services to clients. E. requires corporations to have more independent directors and requires the firm's CFO to personally vouch for the firm's accounting statements.arrow_forward18. Which of the following is not an incentive for company managers to exercise their accounting discretion? Select one: a. Accounting-based debt covenants b. Contests for corporate control c. Management compensation contracts d. Report a company's performance faithfullyarrow_forward
- The annual report to the shareholders and the 10-K to the SEC should provide an accurate reflection of an entity’s operations and performance. How does the management team adequately and ethically balance presenting the financial information in a way that is accurate but also reflects favorably on company performance?arrow_forwardWhich of the following places more pressure on ethics officers to monitor financial and sales reporting? A B с D E Sarbanes-Oxley Act Federal Sentencing Guidelines for Employees Ethics Officer Responsibility Act Sherman Antitrust Act Enron Financial Responsibility Actarrow_forwardWhich is the party that plays the central role in the due diligence process of a corporate proposal? Securities Commission. O Reporting Accountant. O Directors of the Applicant or Issuer. Principal Adviser.arrow_forward
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