To Achieve the Objectives of Sections 302 and 404 of the Sarbanes-Oxley

question 12

Multiple Choice

To achieve the objectives of sections 302 and 404 of the Sarbanes-Oxley Act, management and independent auditors should:

• A) Disclose the minutia of the internal control structure.
• B) Conduct a cost-benefit analysis prior to deciding whether or not to adopt these sections.
• C) Emphasize those areas where the greatest risk of fraud or material misstatement is likely to occur.
• D) Analyze all financial transactions that are included in the reported financial statements.
• E) Work together to design the most effective internal control system.

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Definitions:

Relevant Information

Information that is applicable to the decision-making process, having the capacity to affect or change a decision based on its pertinence and timeliness.

Calculation

The process of determining the result of mathematical or logical expressions, often involving numerical computations.

Job Costing

An accounting method used to track the costs associated with a specific job or project, enabling businesses to estimate profitability.

Process Costing

A costing methodology used in manufacturing, where costs are assigned to batches or production processes, rather than individual units, making it effective for homogenous products.