Question

Which of the following is a requirement of the Sarbanes-Oxley Act?

A) The outside auditor must issue an internal control report for each public company.
B) Accounting firms may not both audit a public client and provide certain consulting service for the same client.
C) The Public Company Oversight Board must create new accounting standards.
D) The Public Company Oversight Board must conduct audits of public companies.

Answer 1

The requirement of the Sarbanes-Oxley Act is that the outside auditor must issue an internal control report for each public company.

Step-by-step explanation:

The requirement of the Sarbanes-Oxley Act is:

A) The outside auditor must issue an internal control report for each public company.

The Sarbanes-Oxley Act was implemented to improve the accuracy and reliability of financial information provided by public companies. This requirement ensures that external auditors assess and report on the internal control systems of these companies to detect and prevent accounting fraud.

For example, if a public company has weak internal controls, such as inadequate segregation of duties or lack of oversight, the external auditor will identify and report these deficiencies in the internal control report.