Which of the Following Is a Requirement of the Sarbanes-Oxley

question 21

Multiple Choice

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

• A)An outside auditor must evaluate the client's internal controls and report on the internal controls as part of the audit report.
• B)The Public Company Oversight Board must conduct audits of public companies.
• C)The accounting firm that audits a public client must also provide consulting services for the same client.
• D)The Public Company Oversight Board must create new accounting standards.

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Definitions:

Default Risk

The likelihood that a borrower will fail to meet the obligations of a debt agreement.

Financing Lease

A lease in which the lessee effectively acquires ownership of the leased asset. Also called a capital lease. Accounted for by showing the leased asset on the balance sheet offset by a liability representing the obligation to make future lease payments. Compare with Operating lease.

Balance Sheet

An accounting report displaying the financial condition of a business, including what it owns, owes, and the equity held by shareholders on a given date.

Leases

A contractual arrangement where a lessee (user) pays the lessor (owner) for the use of an asset for a specified period of time.