Sarbanes-Oxley MCQs
Sarbanes-Oxley MCQs
Our experts have gathered these Sarbanes-Oxley MCQs through research, and we hope that you will be able to see how much knowledge base you have for the subject of Sarbanes-Oxley by answering these 150+ multiple-choice questions.
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1: What does SOX represent?
A. Serial Online Audit
B. Sarbanes Oxley Act of 2002
C. Sarbanes Overseas Act of 2002
D. Sarbanes Online Act of 2002
2: In general, Sarbanes-Oxley raised financial standards in which three main areas?
A. Initial public stock offerings, securities analysis, and the performance of CEOs
B. Corporate governance, securities issuance, and the performance of audit work.
C. Initial public stock offerings, securities analysis, and the performance of CFOs
D. Corporate governance, financial oversight, and the performance of audit work.
3: What was the Sarbanes Oxley Act also known as?
A. Internal Controls and Integrated Framework Act
B. International Accounting Standards
C. Public Company Accounting Reform and Investor Protection Act
D. International Financial Reporting Standards
4: Which of the following activities is performed during the Scoping Phase of a SOX project?
A. Develop Control Documentation
B. Determining Key Controls
C. Identify significant accounts, business processes and locations
D. Management informs Stakeholders of the Project timelines
5: For how many years do registered accounting firms have to maintain audit work papers?
A. Three Years
B. Five Years
C. Nine Years
D. Seven Years
6: The Sarbanes-Oxley Act (SOX) mandated strict reforms to improve financial disclosures from corporations and prevent what type of fraud?
A. Accounting
B. Investing
C. Consumer
D. Shareholder
7: Who would be affected by Section 307's standards for professional conduct?
A. Attorneys appearing and practicing before the SEC
B. Attorneys appearing and practicing before individual State Attorneys General
C. Attorneys appearing and practicing before the IRS
D. Attorneys appearing and practicing before the Interstate Commerce Commission
8: Which agency provides many of the details of SOX regulation?
A. U.S. Justice Department
B. Financial Accounting Standards Board
C. The Auditing Standards Board
D. U.S. Securities and Exchange Commission
9: How does the enforcement of the Sarbanes-Oxley Act help protect ordinary securities investors?
A. Requires notification of insider trading transactions
B. Requires notification of change of stock and/or bond prices
C. Requires notification of change in senior management
D. Requires notification of new product or service introduction
10: The Sarbanes-Oxley Act was passed by Congress to restore investor confidence in which aspects of a publically traded company’s operations?
A. Financial statements
B. Foreign exchange transactions
C. Retirement plan implementation
D. Stock market listing
11: Which of the following is a specific requirement of the Sarbanes-Oxley Act?
A. Publicly traded corporations must create internal and independent audit committees.
B. Publicly traded corporations must create internal and independent sexual harassment committees
C. Publicly traded corporations must create internal and independent shareholder investment committees
D. Publicly traded corporations must create internal and independent occupational safety committees
12: What companies need to comply with Sarbanes-Oxley?
A. All publicly-traded companies in the United States and Canada
B. All publicly-traded companies in the United States and Asia
C. All publicly-traded companies in the United States and Europe
D. All publicly-traded companies in the United States
13: Which agency enforces every aspect of SOX, including the various whistleblower-related provisions?
A. Securities and Exchange Commission
B. Department of Labor
C. Commodity Futures Trading Commission
D. Federal Bureau of Investigation
14: A company that violates Sarbanes-Oxley Act compliance is subject to which of the following sanctions?
A. Forced bankruptcy
B. Forced liquidation
C. They cannot conduct business
D. Significant fines
15: Under section 404 of Sarbanes Oxley, a registered auditor's report must verify that a company:
A. has internal whistleblower protection procedures in place
B. has internal executive compensation committee in place
C. has internal shareholders grievance procedures in place
D. has internal accounting controls in place
16: What is a Sarbanes-Oxley auditor required to review during a Section 404 audit?
A. External controls, policies, and procedures
B. Board of Directors qualifications
C. Internal controls, policies, and procedures
D. Senior management compensation
17: Which is the primary function of the IT departments of Sarbanes-Oxley?
A. Storage of electronic tread secret records
B. Storage of electronic financial records
C. Storage of electronic employment records
D. Storage of electronic litigation records
18: Auditors were not the only targets of Sarbanes-Oxley. The act also includes a broad range of provisions dealing with:
A. Corporate governance
B. Corporate profits
C. Corporate stock issuance
D. Corporate bond issuance
19: Under SOX, E-mail is considered a business record and must be:
A. Encrypted and cannot be audited
B. Read-only and delete-able
C. Encrypted and password protected
D. Read-only and cannot be audited
20: The American Competitiveness and Corporate Accountability Act of 2002, is commonly known as:
A. The Federal Trade Commission Act
B. The Sarbanes-Oxley Act
C. The Commodity Futures Trading Commission Act
D. The Dodd–Frank Wall Street Reform and Consumer Protection Act
21: Under the Sarbanes-Oxley Act, how long must commercial firms keep their business records (including electronic records and electronic messages)?
A. 4 Years
B. 5 years
C. 3 Years
D. 2 Years
22: How can we identify the existence of Internal Control Deficiency?
A. When the operation of a control does not detect misstatements
B. When the confidentiality of data is ensured
C. When transactions relevant to the business are authorized
D. When duplicate postings are rejected by the system
23: Which statement is true regarding a company that is out of compliance with the Sarbanes-Oxley Act?
A. It depends on which section of the act they’re out of compliance with
B. It depends on the size and capitalization of the company
C. It depends on the size and the industry the company is in
24: Which problem was The Sarbanes-Oxley Act primarily focused on fixing?
A. Fraudulent reporting of selected financial transactions
B. The collapse of the subprime mortgage market
C. Fraudulent securitization of subprime mortgages
D. The unregulated growth of collateralized debt obligations
25: Employees who prevail in a SOX whistle-blowing action are entitled to which of the following?
A. Employment reinstatement
B. Job promotion
C. Free health benefits
D. Life-time employment
26: Who is responsible for appointing the Chair and members of PCAOB?
A. Securities and Exchange Commission
B. American Institute of Certified Public Accountants
C. Investor Advisory Group
D. Financial Accounting Standards Board
27: The Sarbanes-Oxley Act was enacted in response to the accounting scandals conducted by which of the following companies?
A. Electrolux, Delta Airlines, & Halliburton
B. Enron, Tyco, & WorldCom
C. ExxonMobil, Chevron, & Cisco Systems
D. Epson, Hewlett-Packard, & Dow Chemical
28: Who exposes misconduct either internally or externally in an organization called?
A. Rigger
B. Safekeeper
C. Auditor
D. Whistleblower
29: Which is the official acronym for the Sarbanes-Oxley Act of 2002?
A. SO
B. Sbox
C. SX
D. SOX
30: Under Sarbanes-Oxley, the board of directors of most public companies must appoint which of the following committees?
A. Compensation
B. Marketing
C. Pension
D. Audit
31: Which of the following was established by Congress to oversee the audits of public companies?
A. Center for Audit Quality
B. American Institute of CPAs
C. Institute of Management Accountants
D. Public Company Accounting Oversight Board
32: Who would be affected by Section 306 of the Sarbanes-Oxley Act, which prohibits purchasing or selling any equity security during a pension plan blackout period?
A. The director or executive officer of a public company
B. The director or executive officer of a privately-held company
C. The rank-and-file employees of a public company
D. The sole perpetrator of a privately-held company
33: Why is the Sarbanes-Oxley Act widely considered as the most important securities legislation since the original federal securities laws of the 1930s?
A. It re-established employee confidence in the integrity of their corporate employer’s products and services.
B. It re-established investor confidence in the integrity of corporate disclosures and financial reporting.
C. It re-established consumers' confidence in the integrity of products and services offered for sell by corporations.
D. It re-established governmental agencies' confidence in the integrity of Chief Executive Officers in their ability manages their corporations.
34: Which of the following is NOT part of the 11 sections of the SOX Act?
A. Studies and Reports
B. Auditor Independence
C. Income Tax Returns
D. Corporate Responsibility
35: The Sarbanes-Oxley Act of 2002 is a piece of legislation created for the purpose of protecting investors from accounting fraud, specifically:
A. Disclosures related to senior management compensation
B. Disclosures related to number of shares outstanding
C. Disclosures related to earnings and profitability
D. Disclosures related to senior management conflicts of interest
36: What is the purpose of the SOX Act?
A. To maintain integrity in investment and trading markets so that investors are protected
B. To provide superior accounting disclosure system for organizations
C. To penalize companies for generating lower returns
D. To protect investors by improving the accuracy and reliability of corporate disclosures
37: What is the primary function of SAG (Standing Advisory Group)?
A. To advise PCAOB on establishment of auditing and related professional practice standards
B. To maintain back up of all important documents for all public companies listed on NYSE
C. To advise formulation of International Financial Reporting Standards
D. Liaise between Companies and Shareholders in the event of disputes
38: How did title IV of the Sarbanes-Oxley Act enhance the reporting requirements for financial transactions?
A. Off-balance-sheet transactions must be disclosed
B. Debt/Equity ratio disclosure
C. Net Profit margin disclosure
D. Institutional stock ownership must be disclosed
39: SOX's audit committee provision requires publicly traded corporations to establish procedures for:
A. shareholders filing internal whistleblower complaints
B. employees filing internal whistleblower complaints
C. nonemployees filing internal whistleblower complaints
D. bondholders filing internal whistleblower complaints
40: When does risk assessment lead to more robust testing of all relevant assertions for significant accounts?
A. Higher Risk Cycles
B. Low Risk Cycles
C. Medium Risk Cycles
D. Moderate Risk Cycles
41: Which type of evidence cannot be used by Auditors to reduce the extent of their testing?
A. Assignment of Authority and Responsibility
B. Evidence of Risk Management and Assessment
C. Board approved policies that address control practices
D. Evidence is furnished by the person who performs that control
42: Which services can a Public Accounting Audit Firm perform for the same client?
A. Establish or maintain Internal Controls
B. Design client's financial management system
C. Report to Board of Directors on behalf of Management
D. Evaluating and understanding the Internal Control System
43: Which group is responsible for reviewing logs in financial systems?
A. Users of the financial systems
B. System Administrator or Auditor with no interest in the system
C. Auditors who advised in financial system design
D. Configurators of the financial systems
44: As per the SEC, who is qualified to certify each quarterly or annual report of the public companies per Section 302?
A. Lending Banks
B. Auditor
C. CEO and CFO
D. Creditors
45: Under Sarbanes-Oxley, what is the CEO's responsibility in regards to corporate taxes?
A. The CEO must pay the company’s federal taxes
B. The CEO must have the CFO sign the company’s tax return
C. The CEO must sign the company’s tax return
D. The CEO must pay the company’s state taxes
46: Which of the following is to be avoided in documenting flowchart in business processes?
A. Overview of the process
B. Detailed process description
C. Meaningful information
D. Breakdown into sub activities
47: Which of the following are not relevant for the success of Section 404 Projects?
A. Supported by Banks and Lending Institutions
B. Supported by Audit Committee
C. Overseen by Global Controller
D. Overseen by Chief Risk Officer
48: Under Sarbanes-Oxley’s corporate responsibility provision, the Chief Executive Officer and Chief Financial Officer must certify and approve:
A. the integrity of their company's financial reports annually
B. the integrity of their company's financial reports quarterly
C. the integrity of their company's financial reports monthly
D. the integrity of their company's financial reports semi-annually
49: Which of the Management representations is not part of Financial Statement Assertions?
A. Valuation
B. Existence
C. Definition
D. Completeness
50: What is the main requirement of SOX Section 404(a)?
A. CEOs are required to produce Certification of Periodic Financial Reports
B. Management is required to report on the effectiveness of the company's internal controls over financial reporting
C. Management must implement civil and Criminal Disclosure Controls
D. Auditors are required to attest the effectiveness of the company's internal controls over financial reporting
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