An "Integrated Audit" as Stated in Section 404 of the Sarbanes-Oxley

question 51

Multiple Choice

An "integrated audit" as stated in Section 404 of the Sarbanes-Oxley Act means

• A) The auditor must consider the integrated thoughts and ideas of everyone on the audit staff.
• B) The auditor must conduct two audits, one on the effectiveness of internal control and one on the financial statements, in an integrated way.
• C) The auditor must integrate the same objectives whether auditing internal control or auditing the financial statements.
• D) Two independent CPA firms must work together on the audit.

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Definitions:

Upstream Sales

Transactions in which a subsidiary sells goods or services to its parent company, often analyzed for transfer pricing and tax considerations.

Unrealized Profits

Profits that have been generated on paper through investments and other financial instruments but have not yet been realized through actual transactions.

Journal Entry

A recorded transaction in the financial accounting system, documenting the debits and credits necessary to maintain the balance sheet's integrity.

Inventory

Items that a company holds for the purpose of selling in the normal course of business, or materials used in the production of goods to be sold.