The Sarbanes-Oxley Act Requires All of the Following Except

question 28

Multiple Choice

The Sarbanes-Oxley Act requires all of the following except

• A) that audit partners rotate every five years to limit the likelihood that auditing relationships become too cozy over long periods of time.
• B) strict limits on the amount of non-audit fees (consulting or otherwise) that an accounting firm can earn from the same firm that it audits.
• C) that senior management and the boards of public companies to be comfortable enough with the process through which funds are allocated and controlled, and outcomes monitored throughout the firm, to be willing to attest to their effectiveness and validity.
• D) the auditor must personally attest to the accuracy of the financial statements presented to shareholders and to sign a statement to that effect.

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Definitions:

Period Costs

Costs that are not directly tied to the production process and are expensed in the period they are incurred, such as sales, general, and administrative expenses.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and the government.

Product Costs

Expenses directly associated with the creation of a product, including direct materials, direct labor, and manufacturing overhead.

Period Costs

Expenses that are not directly tied to production activity and are expensed in the period in which they occur.