56. What key piece of legislation was passed in response to corporate accounting scandals by Enron, WorldCom, and others?
a. Sarbanes-Oxley Act.
b. 1933 Securities Act.
c. 1934 Securities Exchange Act.
d. Regulation Fair Disclosure.
57. Which of the following does not represent a major provision of the Sarbanes-Oxley Act?
a. Nonaudit services.
b. Quarterly financial statements.
c. Auditor rotation.
d. Corporate executive accountability.
58. Under the provisions of the Sarbanes-Oxley Act, corporate executives:
a. Have limited responsibility for financial statements.
b. Must personally prepare the company’s financial statements.
c. Must personally certify the company’s financial statements.
d. Are not allowed to view the company’s financial statements.
59. Under the provisions of the Sarbanes-Oxley Act, auditors must do which of the following?
a. Provide nonaudit services for their clients.
b. Audit public companies whose chief executives worked for the audit firm in the preceding year.
c. Be hired by company management.
d. Maintain working papers for at least seven years following an audit.
60. Occupational fraud:
a. Is the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources.
b. Occurs in only a few organizations and generally involves minor amounts.
c. Will be prevented when companies employ an auditor.
d. Is committed only by lower-level employees.
61. The three elements of the fraud triangle are:
d. All of the other answers are elements of the fraud triangle.
62. Which element of the fraud triangle do companies have the greatest ability to eliminate?
63. Fraudulent reporting by management could include:
a. Fictitious revenues from a fake customer.
b. Improper asset valuation.
c. Mismatching revenues and expenses.
d. All of the above.
64. The Sarbanes-Oxley Act (SOX) mandates which of the following?
a. Increased regulations related to auditor-client relations.
b. Increased regulations related to internal control.
c. Increased regulations related to corporate executive accountability.
d. All of the above.
65. Which of the following is NOT a design feature of effective internal controls?
a. Allow greater reliance by investors on reported financial statements.
b. Prevent fraudulent or errant financial reporting.
c. Ensure the company’s price advantage over competitors.
d. Prevent misuse of company funds by employees.
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