Question

By law, the financial records of publicly held companies are required to be:________.

A) Managed by an accounting department of at least five CPAs.
B) Summarized in the employee manual for new hires.
C) Reviewed quarterly by the IRS.
D) Audited by a certified professional accounting firm.

Answer 1

D) Audited by a certified professional accounting firm.

Step-by-step explanation:

The Securities and Exchange Commission (SEC) requires that publicly traded corporations file audited quarterly financial reports and annual audited financial reports. The Sarbanes-Oxley Act (2002) is the law that established the current external auditing rules imposed by the SEC. It also established legal responsibilities for CEOs and CFOs regarding the financial statements. If they fail to meet them or provide false information, they may face criminal charges and end in jail.