How are companies able to manage the documentation process effectively?
By hiring people outside the company to document procedures 0%
By having a special project team who oversees the documentation process and keeps the company on track 0%
By not doing it 0%
How can companies accelerate their documentation process?
Assigning one employee to the task 0%
Purchasing "canned" lists which help cover generalized processes 0%
Spread it out over a year 0%
Have a secretary do all the documentation 0%
How do independent auditors test the claims of management?
Interviews with the management team 0%
Interviews with personnel 0%
Having them take a lie detector test 0%
Testing transactions to see if they were performed in the same way as the company has documented them 0%
How does an auditor gain confidence about a company's operating effectiveness?
Read press releases 0%
Review the financial reports 0%
Interview company personnel 0%
On an average how long does it take to document a procedure?
10 minutes 0%
1 -2 days 0%
1 month 0%
1 year 0%
What are "financial disclosures"?
Information of how the firm could have made more money 0%
Information included after financial statements which discuss additional information related to the financial numbers 0%
Information about the taxes on the firm 0%
Information about the budget 0%
What are management's responsibilities with respect to a 404 audit?
It must design all processes 0%
It must be involved in all documentation 0%
It must try to avoid 404 audit at all costs 0%
Learn about the system of internal controls in place, evaluate their effectiveness, prepare a written report annually regarding their effectiveness 0%
What are mitigating factors in documentation?
Listing how risks can be increased 0%
Listing how risks are avoided 0%
Listing how revenues can be decreased 0%
Listing how revenues can be increased 0%
What are the minimum requirements under section 302 of SOX?
No sales of securities during a 1 year period 0%
Everyone must take a class on SOX 0%
Accounting personnel must have security clearance 0%
Written procedures, management supervision, process for review 0%
What are the requirements of section 404 of SOX?
Corporate officers must take an oath 0%
Record keeping, Compliance, Prevention & Detection 0%
Securities must be traded on a major exchange 0%
Companies can not delist from stock exchanges 0%
What ban has been placed on directors of a company during a pension fund blackout period?
They can not retire 0%
They can not operate the company 0%
They can not buy or sell the company stock 0%
They can not come to work 0%
What do COBIT standards indicate?
Best practices for Accounting processes 0%
Best practices for management processes 0%
How to document processes 0%
Best practices for IT processes and models to assist in improving them 0%
What does an auditor do?
Maintains the accounting records 0%
Performs the tax returns for a company 0%
Helps cover up potential issues 0%
Verifies the accuracy of the accounting records 0%
What does SOX state regarding personal loans from the company to executives?
They are forbidden 0%
They can make them freely 0%
They must pay them back within 10 years 0%
They can do them, but other employees should not be aware of it 0%
What does the board of directors do for a company?
Help prepare tax returns 0%
Oversee the operations and provide corporate direction 0%
Perform routine day to day finance activities 0%
Sell stocks of the company 0%
What has to be done in the documentation for Section 404?
The documentation must be done in a special program 0%
All company procedures must be written, along with both risk factors and mitigating risk factors in place 0%
The documentation has to be presented in at least 2 languages 0%
The documentation must name who is responsible for specific acts 0%
What have some firms looking to avoid the SOX regulations done?
Not hire auditors 0%
List their company on exchanges in other countries such as London 0%
File a complaint with the SEC 0%
Merge with other companies 0%
What is a commonly used acronym for Sarbanes Oxley Act?
SOA 0%
SOB 0%
SOX 0%
SAD 0%
What is a major criticism of documentation?
It wastes paper 0%
It is costly and time consuming 0%
It gives people a written procedure 0%
It makes the firm easier to audit 0%
What is a primary debatable issue regarding the act and its effect on United States based companies compared to other countries?
It makes them more ethical than before 0%
It makes the stock market more fluid 0%
It adds a burden to them, both cost and regulatory 0%
It doesn't stop fraud 0%
What is a question an auditor may ask himself regarding a client's balance sheet?
Has the company done its best to stay profitable? 0%
Has the company hired any new employees? 0%
Has the company sold any divisions? 0%
Has the company included all loans in the loans payable account? 0%
What is a SAS 70 report?
A final report the company puts out 0%
The auditors report 0%
An audited financial statement 0%
A report from an outside vendor, attesting to their compliance as well with SOX 0%
What is a whistleblower?
An employee who alerts authorities to potential illegal activity in a company 0%
A team leader in the firm 0%
The police 0%
What is another name for the Sarbanes Oxley Act?
Public Company Accounting Reform and Investor Protection Act 0%
The Tax Law Reform Act 0%
Self Regulation Act for Corporations 0%
Public Company Penalty Act 0%
What is COBIT akin to from the Accounting world?
SEC 0%
GAAP 0%
IRS 0%
Tax Law 0%
What is COBIT?
Control Objectives for Information and Related Technology 0%
Software used in documentation 0%
Name of the main audit firm 0%
Control of Best Internal Transactions 0%
What is corporate fraud?
When an employee is convicted of performing personal fraud 0%
When one company defrauds another 0%
Selling stock of the company 0%
When fraud is conducted by a corporation or people who can act on behalf of the corporation 0%
What is it meant to be accountable?
To do accounting work 0%
To be responsible for an action 0%
To hire others to do a job 0%
To file taxes on time 0%
What is meant by "404"?
It is the number of subsections in the act 0%
It is the "assessment of internal control" section of the act 0%
It is the executive sign off section of the act 0%
The portion of the act that names the fraudulent companies of the past 0%
What is meant by "compliance"?
Complying with the SEC 0%
Complying with the IRS 0%
Complying with local taxing authorities 0%
Complying with all aspects of the Sarbanes Oxley Act 0%
What is meant by "top down" testing?
Starting with low level procedures 0%
Starting with processes which have no risk 0%
Starting with the highest priority key controls for testing 0%
Starting with the financial statements 0%
What is meant by the "internet bubble"?
Companies which provide internet services 0%
Companies which provide services over the internet 0%
Stocks of internet based companies which are sound investments 0%
When stocks of internet based companies rise rapidly, then quickly fall in value 0%
What is one of the primary, overall objectives of SOX regulations?
Become competitive in the global market 0%
Create value in the stock market 0%
Make management more accountable 0%
Stop small companies from becoming larger 0%
What is one of the purposes of extensive documentation of accounting records and policies?
To create work for employees 0%
To make management accountable for the company's actions 0%
To make companies serious about their processes 0%
To give something for the auditors to look at 0%
What is one of the purposes of section 404 of the Sarbanes Oxley act?
Requires that management and auditors should officially certify that controls are in place 0%
Requires that firms become compliant by a specific date 0%
Requires specific forms of documentation 0%
Increase awareness company wide 0%
What is one way a company can become non compliant with SOX?
Document new procedures 0%
Have an audit firm review their processes 0%
Issue extravagant bonuses to directors 0%
Hire new employees 0%
What is testing for "design effectiveness"?
Testing if documentation is done completely and accurately 0%
When the auditor tests if internal controls are truly working 0%
Testing if financial statements meet GAAP requirements 0%
Testing if the documenters know how to create flow charts 0%
What is the annual requirement of a company under SOX?
None, it is a one time implementation 0%
They must maintain profitability 0%
They must fire 10% of their staff each year 0%
They must maintain and update documentation, and pass annual audits 0%
What is the auditors role in a section 404 audit?
Assume that the management tells them the truth 0%
Create the documentation themselves 0%
Assume the firm is committing a fraud 0%
Test transactions, verify management's assessments, evaluate testing done by others 0%
What is the best method for an auditor to gain an understanding of a company's procedures?
Walk throughs 0%
Talk to management 0%
Talk to secretaries 0%
Do the job themselves 0%
What is the best way to ensure that the documentation is complete?
Ask employees to do a good job 0%
Have an accountability partner who reviews the documenters work 0%
Hire an outside firm 0%
Assume everything is correct 0%
What is the disclosure requirement for company management regarding any transactions involving their personal holdings in the company?
They do not need to be disclosed 0%
They must be disclosed within 7 days 0%
The firm can chose to disclose or not to disclose 0%
They must be disclosed within 2 days 0%
What is the documentation requirement for off balance sheet transactions?
There is no requirement if not on a financial statement 0%
They must be written down but not disclosed 0%
As long as management knows of them no documentation is required 0%
Companies must disclose any transactions that may have a material effect on the company in the future 0%
What is the first step in implementing Sarbanes Oxley compliance?
Having executives sign off that the firm is compliant 0%
Having an audit completed 0%
Creating proper documentation of accounting and other departments processes 0%
Going public 0%
What is the general implementation process for SOX in order?
Sign off, Audit, Corrections, Documentation 0%
Audit, Sign off, Corrections, Documentation 0%
Documentation, Sign off, Audit, Corrections 0%
Documentation, Audit, Corrections, Sign off 0%
What is the level of crime when management knowingly signs off on compliance documents it knows to be incorrect and misleading?
Criminal 0%
Civil 0%
Global 0%
Domestic 0%
What is the main goal of the act regarding the public?
To increase stock prices 0%
To regain investor confidence in companies and their financial reporting 0%
To stop the market from crashing 0%
To encourage investors to invest over seas 0%
What is the most commonly used software for SOX flow chart documentation?
Visio 0%
Word 0%
Power Point 0%
Excel 0%
What is the new maximum prison term for executives who impede an official investigation?
5 years 0%
20 years 0%
100 years 0%
Life in prison 0%
What is the often criticized part of the act?
It created more corporate fraud 0%
It won't help at all 0%
The cost-benefit of implementing Sarbanes Oxley 0%
It encourages good ethics 0%
What is the PCAOB?
Private Company Act Oversight Board 0%
Public Company Accounting Oversight Board 0%
Private Control Accounting Oversight Board 0%
Public Corporation Act of Betrayal 0%
What is the penalty awarded to senior management for non compliance with SOX?
Simple corrective actions 0%
Large fines 0%
Small fines 0%
Prison sentences 0%
What is the requirement for procedures and listing all risk factors and mitigating factors?
There is no obligation to list either 0%
Risk factors must be listed but mitigating factors are not necessary 0%
Mitigating factors must be listed but not risk factors 0%
All procedures have risks and they must be listed along with the mitigating factor 0%
What is the requirement regarding code of ethics for companies under SOX?
Companies must have a code of ethics 0%
Code of ethics should be loosely followed 0%
Companies must have an elaborate code of ethics 0%
Companies must disclose if they have adopted a code of ethics 0%
What is the SEC?
Senior Executive Commission 0%
Securities and Exchange Commission 0%
Securities Executive Control 0%
Senior Executive Control 0%
What is the time requirement for auditors to save and retain all audit related records?
7 years 0%
10 years 0%
20 years 0%
Until the company goes bankrupt 0%
What makes for a "material weakness"?
When an officer does not know of a process 0%
More than a remote likelihood that a misstatement will not be prevented or detected 0%
When a firm introduces a new procedure 0%
When a firm hasn't documented its processes 0%
What makes for a "significant deficiency"?
More than a remote likelihood that a more than inconsequential misstatement will occur on the financial statements 0%
When a process is documented 0%
When a process has no risk factors 0%
When there is no chance of a material misstatement on the financial statements 0%
What method may an auditor use to gain confidence in the company's documentation regarding procedures?
Redo the paperwork himself 0%
Observe personnel performing the task 0%
Interview secretaries 0%
What method of documentation is required under SOX?
Drawings of processes 0%
Only flow charts are necessary 0%
Flowcharts along with reports of business processes 0%
Written documentation only 0%
What must a legal firm which learns of a corporate client's illegal activities do under SOX?
Nothing 0%
Help the company hide the illegal activity 0%
Tell the IRS of the wrong doing 0%
Alert the SEC to the wrong doing before withdrawing from the client 0%
What must annual reports contain in order to be compliant with section 404?
Profit and loss statement 0%
Management discussion and analysis 0%
An assessment of the effectiveness of the company's internal control structure 0%
Auditor attestation 0%
What purpose does performing walkthroughs serve?
Allow the auditor to meet people 0%
Allow the auditor to experience documented procedures himself 0%
Allow the auditor to do the job himself 0%
Allow the auditor time to access how capable management is 0%
What separation would be required between a company and its audit firm?
The audit firm can do taxes for the company 0%
The SOX audit firm can not do accounting services for the company 0%
The auditors must remain anonymous 0%
The corporate officers can not leave the company during an audit 0%
What service can an audit firm still provide to a corporate client when engaged as auditors?
Accounting services 0%
Tax services 0%
Consulting services 0%
Management services 0%
What was the magnitude of financial losses due to accounting fraud before the act?
Thousands 0%
Hundreds 0%
Millions 0%
Billions 0%
What was the main reason behind the act to be drafted?
Accounting scandals in the United States unraveled and created financial ruin for several companies 0%
It was scheduled to happen every 50 years 0%
Stock market crash 0%
Inflation problem 0%
What was the original compliance deadline date for companies?
December 31, 2010 0%
December 31, 2007 0%
December 31, 1998 0%
May 28, 2008 0%
What would an auditor look for and test on a financial statement?
That balances are accurate and reflect the transactions performed by the company 0%
That the company made money 0%
That the company is performing close to budget 0%
That key ratios are accurate 0%
Where did the name Sarbanes Oxley come from?
2 lawyers who helped draft the act 0%
Senator Paul Sarbanes and Representative Michael Oxley sponsored the act 0%
2 Companies who committed fraud which inspired the act 0%
Random choice 0%
Which agency was created because of the act?
Public Company Accounting Oversights Board 0%
The Internal Revenue Service 0%
The Securities and Exchange Commission 0%
The Institute for International Accounting 0%
Which departments are required to be involved in documentation for SOX?
Only executive offices 0%
Accounting only 0%
Human resources and accounting 0%
All departments which impact accounting and record keeping 0%
Which of the following high profile companies was one of the cornerstones of the financial fraud problems?
AT&T 0%
WorldCom 0%
Dell 0%
Microsoft 0%
Which of the following would be classified as an "issuer" under SOX?
A private company 0%
A sole proprietor 0%
An LLC 0%
A publicly traded company 0%
Which U.S. President signed the act into effect?
Barack Obama 0%
Abraham Lincoln 0%
George Bush 0%
Bill Clinton 0%
Who is held responsible at the corporate level once SOX has been signed off by the auditors?
Accounting staff 0%
Mid level managers 0%
Secretaries and record keepers 0%
Corporate officers 0%
Who issues the COBIT standards?
The Securities and Exchange Commission 0%
Internal Revenue Service 0%
The IT Governance Institute 0%
PCAOB 0%
Why are risk factors listed in documentation?
To show the company has done its due diligence 0%
To force the company to look at procedures and see potential for problems 0%
To help employees avoid errors in their work 0%
To help management see where employees are most safe 0%
Why are whistleblowers protected under law now?
Due to public outcry 0%
To help the economy 0%
Out of good faith 0%
Often times only company insiders will be the ones who know about illegal activities in a company, and the fear of retaliation must be removed through legal protection 0%
Why is it important to document all of the internal controls of the IT department?
To make them follow their own written rules 0%
To gain auditor confidence 0%
To mitigate tax obligations 0%
All the company data is handled by IT, and if it is not handled correctly it could lead to erroneous reporting 0%