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Auditing

1. Access the Journal of Accountancy article by Michael Ramos "Evaluate the Control Environment" from October 19, 2004. Hint: You can find this article in the eRosource Internet article section.

Situation: You are a senior auditor for a Big 4 audit firm and you have been assigned to a new internal client. It is a US based company that has operations all over the world. The lead partner on the engagement has indicate that during a recent planning meeting with colleagues from the other offices that will be working on this engagement it appears that most are very qualified and have dealt with large clients in the past. However, your firm's German office is relatively small and has not really dealt with SOX in the past.

Requirements: The lead partner has a lot of confidence in your abilities and asked you to prepare a power point presentation to the partners of your firm's German office explaining the importance of SOX and has asked you to incorporate some of the ideas that you may have learned in the article indicated above.

2. Access www.sec.gov and locate the SOX act. Please list all the section of the SOX Act. In addition, please explain in detail the content and purpose of Sections 302 and 404.

Solution Preview

STEP 1
The article "Evaluate the Control Environment" by Michael Ramos is the basis of the PowerPoint presentation.

STEP 2
List all sections of SOX: This material is taken from the website: http://www.law.uc.edu "
TITLE I

PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD
Section 101 -- Establishment; Administrative Provisions

Section 102 -- Registration with the Board

Section 103 -- Auditing, Quality Control, and Independence Standards and Rules

Section 104 -- Inspections of Registered Public Accounting Firms

Section 105 -- Investigations and Disciplinary Proceedings

Section 106 -- Foreign Public Accounting Firms

Section 107 -- Commission Oversight of the Board

Section 108 -- Accounting Standards

Section 109 -- Funding

TITLE II

AUDITOR INDEPENDENCE
Section 201 -- Services Outside the Scope of Practice of Auditors

Section 202 -- Preapproval Requirements

Section 203 -- Audit Partner Rotation

Section 204 -- Auditor Reports to Audit Committees

Section 205 -- Conforming Amendments

Section 206 -- Conflicts of Interest

Section 207 -- Study of Mandatory Rotation of Registered Public Accounting Firms

Section 208 -- Commission Authority

Section 209 -- Considerations by Appropriate State Regulatory Authorities

TITLE III

CORPORATE RESPONSIBILITY
Section 301 -- Public Company Audit Committees

Section 302 -- Corporate Responsibility for Financial Reports

Section 303 -- Improper Influence on Conduct of Audits

Section 304 -- Forfeiture of Certain Bonuses and Profits

Section 305 -- Officer and Director Bars and Penalties

Section ...

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