Question

The Sarbanes-Oxley Act of 2002 dramatically changed the daily work of financial accountants and auditors because it

A. required that external auditors report on the effectiveness of an
organizations system of internal control
B. expanded the opportunities for auditors to engage in consulting activities with their audit clients
C. required that organizations work with their auditors to design systems
of internal control
D. expanded the scope of the audit beyond financial information

Answer 1

The Sarbanes-Oxley Act of 2002 significantly affected financial accountants and auditors by mandating them to report on the internal control systems of organizations. It aimed to improve investor trust after several accounting scandals and reinforced the role of corporate governance.

Step-by-step explanation:

The Sarbanes-Oxley Act of 2002 was a response to a series of major accounting scandals, which included high-profile companies like Enron, Tyco International, and WorldCom. The act was designed to restore investor confidence in the financial information provided by public corporations and to prevent accounting fraud. One of the significant impacts of the Sarbanes-Oxley Act on financial accountants and auditors was that it required external auditors to report on the effectiveness of an organization's system of internal control. This new responsibility dramatically changed the daily work of these professionals as it increased the scope and depth of their audits beyond just financial information.

This legislation also affected corporate governance by reinforcing the responsibilities of the board of directors and auditing firms as key institutions in overseeing corporate executives and financial practices. In the wake of the 2008-2009 recession, criticisms rose about the effectiveness of corporate governance, especially regarding the regulators who had not foreseen the financial shakiness of banks which led to significant losses.