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

The Sarbanes-Oxley Act (SOX) mandates which of the following?

Auditors are prohibited from providing any tax services to their clients.

Private companies must file quarterly reports with the SEC.

All companies must use the cash basis of accounting.

Public companies must establish and maintain adequate internal controls over financial reporting.

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Verified step by step guidance

Understand the Sarbanes-Oxley Act (SOX): SOX was enacted in 2002 to protect investors from fraudulent financial reporting by corporations. It primarily applies to public companies and focuses on improving the accuracy and reliability of corporate disclosures.

Identify the key requirement of SOX: One of the main provisions of SOX is that public companies must establish and maintain adequate internal controls over financial reporting. This ensures that financial statements are accurate and free from material misstatements.

Eliminate incorrect options: Review the provided options and eliminate those that do not align with SOX. For example, auditors are not prohibited from providing tax services to their clients under SOX, private companies are not required to file quarterly reports with the SEC, and SOX does not mandate the use of the cash basis of accounting.

Focus on the correct option: The correct answer is that public companies must establish and maintain adequate internal controls over financial reporting. This requirement is outlined in Section 404 of SOX, which mandates management and auditors to assess and report on the effectiveness of these controls.

Summarize the importance of internal controls: Internal controls are essential for ensuring the integrity of financial reporting, preventing fraud, and maintaining investor confidence. SOX emphasizes the accountability of management and auditors in maintaining these controls.