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) and the evaluation of internal controls?

SOX requires companies to develop their own unique internal control framework.

SOX allows companies to choose any suitable framework for evaluating internal controls, but does not mandate the use of COSO or COSO ERM.

SOX prohibits the use of the COSO framework for internal control evaluation.

SOX requires companies to use the COSO or COSO ERM framework when evaluating internal controls.

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Verified step by step guidance

Understand the Sarbanes-Oxley Act (SOX): SOX is a U.S. federal law enacted in 2002 to protect investors from fraudulent financial reporting by corporations. It emphasizes the importance of internal controls and corporate governance.

Clarify the role of internal control frameworks: SOX does not mandate a specific framework for evaluating internal controls. Instead, it allows companies to choose a suitable framework that aligns with their needs.

Learn about COSO and COSO ERM: The Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides widely recognized frameworks for internal control and enterprise risk management (ERM). These frameworks are commonly used but not required by SOX.

Evaluate the options provided in the problem: Analyze each statement to determine its accuracy based on the provisions of SOX. For example, SOX does not prohibit the use of COSO, nor does it require companies to use COSO or COSO ERM exclusively.

Conclude the correct statement: Based on the analysis, the correct statement is that SOX allows companies to choose any suitable framework for evaluating internal controls, but does not mandate the use of COSO or COSO ERM.