Question

Public reporting on the effectiveness of internal control over financial reporting, as required by the Sarbanes-Oxley Act, includes:

1) a statement that the public accounting firm that audited the financial statements has provided input on the design of internal controls.
2) the auditor provides an opinion on whether the entity maintained, in all material respects, effective ICFR as of the specified date, based on the control criteria.
3) an explicit statement as to whether management agrees with the public accounting firm's assessment of internal controls.
4) a detailed statement describing changes or additions to the internal control environment that occurred in the current year.

Answer 1

The correct answer to the question on public reporting requirements under Sarbanes-Oxley Act is that the auditor provides an opinion on the effectiveness of the entity's Internal Control over Financial Reporting (ICFR). It does not involve the public accounting firm's input on internal controls design, management's explicit agreement with the auditor's assessment, or a detailed statement on changes to internal controls.

Step-by-step explanation:

The question revolves around the provisions of the Sarbanes-Oxley Act of 2002, which emerged in response to various accounting scandals involving firms like Enron, Tyco International, and WorldCom. This Act was instrumental in restoring the trust of the public and investors in the financial information provided by public corporations. It introduced stringent measures for corporate governance and financial disclosures.

Concerning the public reporting on the effectiveness of internal control over financial reporting as required by Sarbanes-Oxley Act, the correct answer among the provided options is: (2) the auditor provides an opinion on whether the entity maintained, in all material respects, effective Internal Control over Financial Reporting (ICFR) as of the specified date, based on the control criteria.

It does not include a statement that the public accounting firm has provided input on the design of internal controls, nor does it require an explicit statement from management agreeing with the auditor's assessment, nor a detailed statement describing changes to the internal control environment.