Question

The key provisions of the Sarbanes-Oxley Act include

A. Limiting the role of the FASB in accounting standard setting.

B. Restricting activities of auditors to prevent conflicts of interest.

C. Establishing the Securities and Exchange Commission.

D. Requiring that corporate executives certify financial statements.

E. Requiring documentation and assessing effectiveness of internal controls.

Answer 1

The Sarbanes-Oxley Act, established due to accounting scandals, includes restrictions on auditor activities, mandates for executives to certify financial statements, and requirements for internal control documentation. It does not establish the SEC nor limit the role of the FASB.

Step-by-step explanation:

The Sarbanes-Oxley Act of 2002 was established in response to major accounting scandals involving corporations like Enron and WorldCom, with the intent to protect investors and restore confidence in financial information from public corporations. Among its provisions, the Sarbanes-Oxley Act includes:

• Restricting activities of auditors to prevent conflicts of interest,
• Requiring that corporate executives certify financial statements, and
• Requiring documentation and assessing the effectiveness of internal controls.

It is important to note that the Sarbanes-Oxley Act did not establish the Securities and Exchange Commission; rather, the SEC was established earlier, in 1934. Also, the Act does not limit the role of the Financial Accounting Standards Board (FASB) in accounting standard setting.

Answer 2

The Sarbanes-Oxley Act, established due to accounting scandals, includes restrictions on auditor activities, mandates for executives to certify financial statements, and requirements for internal control documentation. It does not establish the SEC nor limit the role of the FASB.

Step-by-step explanation:

The Sarbanes-Oxley Act of 2002 was established in response to major accounting scandals involving corporations like Enron and WorldCom, with the intent to protect investors and restore confidence in financial information from public corporations. Among its provisions, the Sarbanes-Oxley Act includes:

• Restricting activities of auditors to prevent conflicts of interest,
• Requiring that corporate executives certify financial statements, and
• Requiring documentation and assessing the effectiveness of internal controls.

It is important to note that the Sarbanes-Oxley Act did not establish the Securities and Exchange Commission; rather, the SEC was established earlier, in 1934. Also, the Act does not limit the role of the Financial Accounting Standards Board (FASB) in accounting standard setting.