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:

IRS

Stands for Internal Revenue Service, the federal agency responsible for administering tax laws in the United States.

Tax Advantage

Financial benefits that apply to certain investments or accounts that are favored by tax policy.

Sole Proprietorships

A business owned and operated by a single individual, with no legal distinction between the owner and the business entity.

Bankruptcy Filings

The formal process by which a company or individual legally declares their inability to pay their debts.