M3 Sarbanes-Oxley Act of 2002

Question 1

MCQ-05162
Which of the following statements is correct regarding the requirements of the SarbanesOxley Act of 2002 for an issuer’s board of directors?

Answer 1

The board of directors must have an AUDIT COMMITTEE entirely composed of
members who are independent from management influence

Question 2

MCQ-14818
According to the Sarbanes-Oxley Act of 2002, the audit committee of an issuer is
responsible for each of the following activities, except:

Answer 2

Evaluating and reporting on the effectiveness of the company’s internal control
over financial reporting.

Question 3

MCQ-08749
According to the Sarbanes-Oxley Act of 2002, when an issuer’s board of directors selects
members to be on the company’s audit committee, the board of directors must select
individuals who:

Answer 3

Are MEMBERS of the company’s BOARD OF DIRECTORS.

Question 4

MCQ-06739
The Sarbanes-Oxley Act of 2002 was enacted in response to corporate scandals that
largely centered on the quality of corporate financial disclosure and highlighted the
inadequate oversight of management, auditors and the Board of Directors. The SarbanesOxley Act addresses the problems related to inadequate board oversight by requiring public
companies to have an:

Answer 4

AUDIT committee

Question 5

MCQ-06484
The Sarbanes-Oxley Act of 2002 requires that the members of the audit committee be
independent with regard to the issuer. Within the meaning of the law, which of the following
corporate officers would be considered independent?

Answer 5

yes: BOARD MEMBER and INDEPENDENT AUDITOR

Question 6

MCQ-06745
The Sarbanes-Oxley Act of 2002 seeks to improve investor confidence by providing greater
transparency for all of the following issues, excep

Answer 6

Means and methods for balancing risk and growth

Question 7

MCQ-05014
Which of the following organizations was established by the Sarbanes-Oxley Act of 2002 to
control the auditing profession?

Answer 7

Public Company Accounting Oversight Board (PCAOB).

Question 8

MCQ-08910
Audit committee members of issuers are required, under the Sarbanes-Oxley Act of 2002,
to maintain which of the following traits?

Answer 8

INDEPENDENCE

Question 9

MCQ-14803
According to the Sarbanes-Oxley Act of 2002, each of the following is a corporate
responsibility requirement, EXCEPT:

Answer 9

The audit committee chairperson must certify that the quarterly report filed with
the SEC fairly presents the financial condition and results of operations.

Question 10

MCQ-15753
According to COSO, which of the following organizational structures best promotes internal
control?

Answer 10

Corporate internal audit staff with direct reporting to the corporate director of
internal audit, who in turn reports to the AUDIT COMMITTEE.

Question 11

MCQ-08745
Who is required to make special certification statements regarding the establishment of
internal control systems on Form 10-K?

Answer 11

BOTH the principal executive officer and the principal financial officer.

Question 12

MCQ-12441
Which of the following employees of an issuer is required to certify the company’s financial
reports filed with the SEC?

Answer 12

BOTH the chief executive officer and the chief financial officer.

Question 13

MCQ-06491
Conflict-of-interest provisions of the Sarbanes-Oxley Act of 2002 generally prohibit the
directors or executive officers of an issuer from:

Answer 13

Receiving a PERSONAL LOAN from the issuer not in the ordinary course of business.

Question 14

MCQ-07021
Knox, president of Quick Corp., contracted with Tine Office Supplies, Inc. to supply Quick’s
stationery on customary terms and at a cost less than that charged by any other supplier.
Knox later informed Quick’s board of directors that Knox was a majority stockholder in Tine.
Quick’s contract with Tine is:

Answer 14

Valid because THE CONTRACT IS FAIR to Quick

Question 15

MCQ-05161
According to the COSO, the presence of a written code of conduct provides for a control
environment that can:

Answer 15

Encourage teamwork in the pursuit of an entity’s objectives

Question 16

MCQ-06740
The Sarbanes-Oxley Act of 2002 requires that one or more members of the audit committee
be a financial expert and that the financial reports disclose:

Answer 16

The existence of financial expert(s) on the audit committee or the reasons why
the audit committee does not have a financial expert.

Question 17

MCQ-06742
Arnold Astor, CPA, is a local tax practitioner who has been asked to sit on the Board of
BigLarge Corporation, a multinational issuer. Astor has never had any involvement either as
an employee or as an auditor with publically traded companies but does teach an
accounting principles class at the community college. Under the provisions of SarbanesOxley Act of 2002:

Answer 17

The BOARD OF DIRECTORS would likely evaluate Astor’s qualifications to serve on the
audit committee and be designated as a financial expert based on mix of
knowledge and experience.

Question 18

MCQ-06743
The Sarbanes-Oxley Act of 2002 requires that the officers of a corporation be held
accountable to a code of ethics. According to the Act, codifications of ethical standards
should include provisions for all of the following, EXCEPT

Answer 18

Prompt internal reporting of code provisions and accountability for adherence to
the code.

Question 19

MCQ-06744
The Sarbanes-Oxley Act of 2002 requires that the management report on internal control
include all of the following, except:

Answer 19

A statement that there are NO DISAGREEMENTS between management and the
auditor as to the effectiveness of internal controls.

Question 20

MCQ-07014
Which of the following is necessary to be an audit committee financial expert, according to
the criteria specified in the Sarbanes-Oxley Act of 2002?

Answer 20

Experience with INTERNAL ACCOUNTING CONTROLS.

Question 21

MCQ-07073
Under the Sarbanes-Oxley Act of 2002, which of the following statements is correct
regarding an issuer’s audit committee financial expert?

Answer 21

If an issuer does not have an audit committee financial expert, the issuer must
disclose the reason why the role is not filled.

Question 22

MCQ-12455
According to the Sarbanes-Oxley Act of 2002, an issuer must disclose whether or not it has
adopted a code of ethics for which of the following?

Answer 22

The issuer’s senior financial officers, but not for other employees of the issuer.

Question 23

MCQ-08363
Each of the following statements is correct regarding the existence and implementation of
codes of conduct, EXCEPT

Answer 23

The codes of conduct must be in WRITING and displayed in public areas, such as a
break rooM

Question 24

MCQ-09000
According to the Sarbanes-Oxley Act of 2002, anyone who knowingly alters, destroys,
covers up, or makes a false entry in any record or document with the intent to obstruct or
influence the investigation of any matter within the jurisdiction of any department or agency
of the United States may be fined and/or imprisoned for up to:

Answer 24

20 years.

The penalty of 20 years for altering (destroying, covering up, etc.)
documents falls under Title VIII (Corporate and Criminal Fraud Accountability) of the
Sarbanes-Oxley Act.

Question 25

MCQ-08757
Pursuant to the Sarbanes-Oxley Act of 2002, an accountant who destroys documents to
impede an investigation by a U.S. agency can be:

Answer 25

Fined and/or imprisoned not more than 20 years.