Deck 2

Question 1

What is Section 404 of SOX about

Answer 1

manangement must recognize its responsibility for effective internal controls over financial reporting. It must also provide an assessment within the annual report about effectiveness of those internal controls

Question 2

What is section 802 of SOX about

Answer 2

Can’t destroy or mutilate documents when there is an ongoing investigation

Question 3

What is section 906 of SOX about

Answer 3

Requires the CEO and the CFO to certify the accuracy and truthfulness of financial reports. If the are later found inaccurate the CEO and CFO can get more than 9 years in prison.

Question 4

what is section 302 of SOX about

Answer 4

States that the CEO and CFO reviewed financial reports before signing off on them.

Question 5

Name 4 divisions of SEC and responsibilities

Answer 5

Div of Corporate Finance - all quarterly and annual filings of public companies
Division of Enforcement - enforces securities laws
Office of Chief Accountant - works with PCAOB on auditing standards and accounting rules

Question 6

What are the 3 objectives of internal control

Answer 6

1 reliability of financial reporting
2 effectiveness of operations
3 compliance with laws and regulations

Question 7

what are the 5 components of internal control CRIME

Answer 7

Control environment
Risk Assessment
Information and Communication
Monitoring
Existing Control Activities

Question 8

what are 8 components of ERM

Answer 8

Internal environment
Objective Setting
Event Identification
Risk Assessment
Risk Response
Control Activities
Info and Communication
Monitoring

Question 9

What are the limitations of ERM

Answer 9

Based off of Human judgement about future events
Can never be perfect because of cost benefit
Subject to management override