The Sarbanes-Oxley Act,passed After the Fall of Enron and Arthur

question 94

Multiple Choice

The Sarbanes-Oxley Act,passed after the fall of Enron and Arthur Andersen,requires accounting firms to separate the auditing function from the consulting function.This example illustrates

• A) organizational complexity.
• B) how changing conditions are influenced by innovation.
• C) why control is necessary to reduce the accumulation of errors.
• D) how control helps organizations respond to changing standards.
• E) All of these choices

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Definitions:

Third-Party Auditor

An independent entity that examines an organization's or individual's financial statements to ensure accuracy and compliance with laws and regulations.

Board Of Directors

Governing body of a corporation.

Stockholders

Individuals or entities that own shares in a corporation, granting them certain rights and potential financial benefits.

Chief Executive Officer

The highest-ranking executive in a company responsible for strategic decisions, overall operations, and acting as the main point of communication between the board of directors and corporate operations.