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

Because of the Sarbanes-Oxley Act, which of the following is now required of publicly traded companies in the United States?

Management must certify the accuracy of financial statements.

Auditors are allowed to provide unlimited consulting services to audit clients.

Companies are exempt from internal control audits.

Only private companies must disclose financial information.

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Verified step by step guidance

Understand the Sarbanes-Oxley Act (SOX): This legislation was enacted in 2002 to improve corporate governance and accountability in response to financial scandals. It applies to publicly traded companies in the United States.

Identify the key requirements of SOX: One of the primary provisions is that management must certify the accuracy of financial statements. This ensures accountability and reduces the risk of fraudulent reporting.

Evaluate the incorrect options: Auditors are not allowed to provide unlimited consulting services to audit clients under SOX, as this could create conflicts of interest. Companies are not exempt from internal control audits; in fact, SOX emphasizes the importance of internal controls. Lastly, SOX applies to publicly traded companies, not private companies, which are not required to disclose financial information under this act.

Focus on the correct answer: The requirement that management must certify the accuracy of financial statements is a cornerstone of SOX, ensuring transparency and reliability in financial reporting.

Summarize the reasoning: The Sarbanes-Oxley Act aims to protect investors by improving the accuracy and reliability of corporate disclosures. The correct answer aligns with this goal by holding management accountable for the financial statements they present.