Under the Sarbanes-Oxley Act,the Audit Committee of a Public Company

question 19

Multiple Choice

Under the Sarbanes-Oxley Act,the audit committee of a public company has the following requirement(s) :

• A) Each member of the committee must be a board member and shall be independent.
• B) The audit committee must preapprove all audit and nonaudit services.
• C) The audit committee must establish and maintain procedures to handle all issues that relate to accounting, internal control, and auditing.
• D) All of these.

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Definitions:

Discount Rate

A rate used to determine the present value of future cash flows.

Incremental Cash Flow Principle

The concept that financial decisions should be made based on the changes in cash flows that the decisions will cause, ignoring cash flows that will not be affected.

Negative Effects

Adverse outcomes or impacts that result from an action, event, or policy.

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not affect future business decisions.