Designed to help the securities market and gain the confidence of investors once again
SOX was an extension of the Securities Act of 1933
Congress does not regulate AICPA or FASB, that job belongs to SEC
SOX does not mention COSO
SEC sends companies that violate principles and laws to the Justice Department
Small GAAP- smaller companies that are not publicly traded
Big GAAP- public companies
Sources of Regulation:
United States Congress
State and Local Regulators
1. Who represents the “accounting profession?”
Represented by numerous accounting professionals and governing bodies
FASB, PCAOB, CPAs, Accounting Firms, Students and Professors, SEC, IRS, Accounting Software Developers, IASB, Financial Accounting Foundation
FAF: provides financial resources to accountants, it is independent of SEC and other governing regulators
2. How many versions of IFRS are currently being practiced around the world? 7
3. Who generally signs the audit report of a publicly traded company? The partner
4. Do you need a CPA to practice tax? No
5. Can the mgt. of a publicly traded company claim incompetence in the U.S. court?
Yes you can in the US Justice System but you cannot in the United Kingdom
6. Who enforces applications of US GAAP for a publicly traded company? Private?
Private companies are not required to follow the rules of GAAP
7. Why are most well-known corporations registered in the state of Delaware?
8. What did you not like about Treadway Commission Recommendations?
Does not explain the enforcement policies well
9. Did SOX mention US GAAP anywhere? Did it mention FASB or COSO?
SOX does not mention any of these terms
10. What are the duties and responsibilities of the AICPA?
Must act within a Code of Professional Conduct and act with integrity, objectivity, due care, maintain client confidentiality, and serve the public interest at all times.
11. Is the AICPA more important than NASBA?
The AICPA is more important
12. How often does the SEC review a filer?
Once every three years
13. Why is the majority of PCAOB board members non-accountants?
Supposed to represent a model business climate, not just accounting
14. Who is the regulator of global capital markets?
International Organization of Securities Commissions
15. Can a Big 4 accounting firm in Germany audit Target in the US? Yes
16. Do most SEC registered accounting public accounting firms perform audits of publicly traded companies?
No, they mostly audit private companies
17. Name the major regulators supervising Bank of America?
18. Can a stock exchange such as the NYSE be a regulator for publicly traded companies? No
19. The U.S. Justice Dept. just charged S&P for fraud for $5 billion. Should the S&P auditor be worried?
Only if the auditor did not act with due professional care and acted negligently over the course of the audit
20. How long does it normally take for the IRS to complete reviewing Target’s tax return?
21. What is the record retention period per SOX?
Title I- Establishes the Public Company Accounting Oversight Board
SEC gives the PCAOB power and can enforce public accounting policies
5 members of the board and over 500 staff members (3 of 5 are non-accountants)
Set auditing standards
Title II- Auditor Independence
Title III- Corporate Responsibility
Management must take responsibility for the information presented in the financial statements
Title IV- Enhanced Financial Disclosures 02/05/2015
Quiz on Sarbanes-Oxley, Picture, Intro Material, and 21 Questions
COSO and Corporate Governance:
Enterprise Resource Management (8 items) o Environment- Management is responsible for establishing control practices o Executives need to react to incidents of fraud or breaks of control