Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 1 - Financial Accounting and Accounting Standards - Review and Practice - Questions - Page 23: 26


Some of the key provisions of the Sarbanes-Oxeley Act incorporate: i. Implements stronger independence rules for auditors, .i.e. audit partners are usually required to rotate every five years and auditors are limited from offering specific types of consulting services to corporate clients. ii. Establishes an oversight board for accounting practices. The Public Company Accounting Over-sight Board (PCAOB) is usually charged with the responsibility of monitoring and enforcing authority and establishes auditing, quality control and independence standards as well rules. iii. It requires audit committees to be compromised of independent members as well as those members with financial expertise. iv. Requires CEOs and CFOs personally certify that financial statements and disclosure are accurate and complete. In the same manner it also requires CEOs and CFOs to forfeit bonuses and profits when there is an accounting restatement. v. Requires codes of ethics for senior financial officers.

Work Step by Step

In relevance to the provision of the Sarbanes-Oxeley Act, it also requires that (that is section 404), public enterprises to attest to the effectiveness of their internal controls over financial reporting.
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