SOX (Sarbanes Oxley) 2002
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CPA Auditing and Attestation (AUD) › SOX (Sarbanes Oxley) 2002
An audit committee members of an issuer is required under SOX 2002 to maintain which of the following attributes:
Diligence
Proficiency
Integrity
Independence
Explanation
SOX 2002 states that members of the audit committee are to be members of the board of directors but otherwise independent. To be independent, the members may not accept compensation or be an affiliated person.
Which of the following criteria is necessary to be an audit committee financial expert, specified in SOX 2002?
Education and experience as a certified financial planner
A limited understanding of GAAS
Experience in the preparation of tax returns
Experience with internal accounting controls
Explanation
The issuer's audit committee's financial expert must have experience with internal controls. The may be through past experience or education.
The Sarbanes-Oxley Act of 2002 seeks to improve investor confidence by allowing for greater transparency for all of the following issues except:
Adequacy of internal controls
Competency of audit committees
Means and methods for balancing risk and growth
Compliance of senior officers with a code of ethics
Explanation
ERM concepts specifically address investor issues surrounding risk and growth however SOX 2002 focuses on less strategic operations and more on financial reporting issues including ethics.
According to the Sarbanes-Oxley Act of 2002, a chief executive officer who misrepresents the company's finances may be penalized by being:
Imprisoned but not fines
Removed from corporate office and fined
Fined but not imprisoned
Fined and imprisoned
Explanation
An individual who knowingly executes securities fraud will be both fined or imprisoned not more than 20 years or both.
According to SOX 2002, anyone who knowingly alters, destroys, covers up, or makes false entry in a document with the intent to obstruct an investigation within any agency of the United States may be fined and/or imprisoned for up to:
15 years
5 years
20 years
10 years
Explanation
The penalty for altering documents is punished up to 20 years.
The SOX 2002 code of ethics for senior officers includes and promotes:
Honest and ethical conduct including handling of conflicts of interest
Full, fair, accurate, and timely disclosures in periodic financial reports
Compliance with laws, rules, and regulations
Competitive pay for staff
Explanation
SOX 2002 does not involve or necessitate fair pay for members of a company. It promotes the ethical and legal promotion of business.