Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Sarbanes-Oxley Act

Financial Accounting

6. Internal Controls and Reporting Cash

Sarbanes-Oxley Act

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Multiple Choice

Which of the following statements is true regarding the Sarbanes-Oxley Act (SOX)?

SOX applies only to private companies in the United States.

SOX requires public companies to establish internal controls over financial reporting.

SOX was enacted in response to the 2008 financial crisis.

SOX eliminated the need for external audits of financial statements.

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Verified step by step guidance

Understand the context of the Sarbanes-Oxley Act (SOX): SOX was enacted in 2002 in response to major corporate scandals such as Enron and WorldCom, not the 2008 financial crisis. Its purpose is to improve corporate governance and accountability, particularly for public companies.

Clarify the scope of SOX: SOX applies to public companies in the United States, not private companies. It mandates stricter regulations for financial reporting and internal controls to protect investors.

Examine the requirement for internal controls: SOX requires public companies to establish and maintain internal controls over financial reporting. This ensures the accuracy and reliability of financial statements and reduces the risk of fraud.

Address external audits: SOX does not eliminate the need for external audits. In fact, it strengthens the role of external auditors by requiring them to assess the effectiveness of a company's internal controls over financial reporting.

Evaluate the statements provided: Based on the above clarifications, the correct statement is: 'SOX requires public companies to establish internal controls over financial reporting.'