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Auditing and the Sarbanes Oxley Act (SOX)

The Sarbanes-Oxley Act is a law passed in the United States in America in 2002 that sets an enhanced standards for companies when reporting financial statements.  The goal was to protect potential investors from investing in a company that had severely altered its financial statements to make it appear as though it was in good financial position when, realistically, it may not have been.  The major elements of the act include the appropriate and ethical accounting for all financial activity within a company.  Another important element of the act was the severity of punishment for fraudulent activity was increased. 

In regards to auditing specifically, the Sarbanes-Oxley Act states that auditors must ensure that the financial statements of a company are in no way misleading to potential investors.  The auditor is also explicitly disallowed from participating or assisting a company in altering its financial statements or reports so that it appears in better financial position than it is in reality.  The auditor is also not allowed to be closely involved with the company in any way, in order to avoid potential bribery or alternative incentive.  Essentially, the auditor cannot risk any part of their objectivity in reporting on the financial statements.  The auditor is required to produce a completely unbiased report on the company's financial position.  

Categories within Auditing and the Sarbanes Oxley Act (SOX)

Parson Co Audit procedures detect errors & objective

Parson Company has an inexperience staff auditor who failed to detect the errors listed below. Give the substantive test that should have found each error. Indicate the account and the audit objective for each item and indicate the type of evidence obtained. 1) Some accounts were incorrectly aged in the Accounts Receivable

Criminal Penalties Under the Sarbanes-Oxley Act

Read and review the excerpts from the Sarbanes-Oxley Act in the Appendix of the textbook (The Legal Environment of Business and Online Commerce, Henry Cheeseman, Seventh Edition). Identify three of the criminal penalties that can be charged under the Sarbanes-Oxley Act. How do these sections of the Sarbanes-Oxley Act promote eth

Apollo Shoes Casebook Response

Audit Program Design Part I Resource: Apollo Shoes Casebook Write an engagement letter for Apollo Shoes. Assume that Apollo Shoes is a publicly traded company and that they have asked for SOX Section 404 consulting. Include the following key points: • Significant regulations and guidelines related to audits of internal C

Financial Implications of the Sarbanes Oxley Act

Discuss the financial impact of SOX and consider its effect on economic growth and enterprise. As with the Enron, WorldCom, and other crises of the late 90s and early 2000s, the recent scandals and subsequent mortgage crisis were brought about by companies cheating on their balance sheets. Arguably, this has had a more far-re

Durango Manufacturing Company

- Predict the economic and business environment over the next five (5) years, indicating at least two (2) ways it may impact Durango Manufacturing Company's ability to achieve the desired 10% growth in revenue. Provide support for your prediction. - Formulate a strategy to improve the opportunities for Durango to reach its re

SOX Requirements

Describes the main aspects of the regulatory environment which will protect the public from fraud within corporations. Pay particular attention to SOX requirements. Required Elements: • No more than 1400 words • Specifically evaluate whether SOX will be effective in avoiding future frauds. • Format consistent with AP

Ligand Pharmaceuticals Fraud

- Determine what provision(s) of SOX was / were violated in the health care fraud case in question. Indicate whether or not SOX adequately provides sanctions to deter the behavior or if changes are needed to the regulations to remedy the issue(s) and thus ensure compliance. - Based on the fraudulent activity that occurred, r

Audit Findings

Determine both the relationship of risks in the planning of the audit and factors that influence those risks. Speculate on which type of risk creates the most uncertainty for the auditor, and recommend at least two ways to plan the audit to mitigate those risks. Provide specific examples and give references. Imagine that you

Role of the Production Manager: Terra Firma

The production manager at Terra Firma is responsible for estimating the percentage of completion for all terra cotta planters, figurines, and yard art. Recently, she determined that the work in process inventory was 40 percent complete with respect to conversion costs. Shortly after the production manager produced her monthly re

The Sarbanes-Oxley Act and the Establishment of the PCAOB

Assuming that you are the controller for a publicly traded company, your CFO has asked you to prepare a presentation for the accounting department personnel and the public auditors about the importance of the SOX Act and the requirements and responsibilities that the Act establishes for the auditors in charge of an annual audit.

Accountable Action

1. Systems are only as good as the managers who enforce them. If the work environment is lax and employees are not held accountable for their actions, invariably they will create their own processes and workflows, which may not be aligned with company procedures. The sentiment around our office is "that's the way we've alway

Regression model

In 2009, the New York Yankees won 103 baseball games during the regular season. The table on the next page lists the number of victories (W), the earnedrun- average (ERA), and the batting average (AVG) of each team in the American League. The ERA is one measure of the effectiveness of the pitching staff, and a lower number

Grammar practice

Part I: True or False 1. The following word group is a FRAGMENT: That movie, one of my favorites. __True __False 2. The following word group is a FRAGMENT: The local baseball team, needing a good pitcher most of all. __True __False 3. The following word group is a FRAGMENT: Using a flashlight, he looked under the

Vioxx, Dodgeball: Did Merck Try to Avoid the Truth?

Read Case 12 - Vioxx, Dodgeball: Did Merck Try to Avoid the Truth? After you read the case, address the following: Offer an opinion on the outcome. Explain whether you feel the consumer has any responsibility. Explain the role of the FDA. Assess the punishment. Is it too much or too little? Describe an appropriat

four pieces of legislation passed in the U.S. in the last 100 years

What four pieces of legislation passed in the U.S. in the last 100 years, in your opinion, have had the greatest impact on the U.S. banking/financial sector? For each of your choices: 1. What were the problems/conditions giving rise to the legislation? 2. What were the major provisions of the Act? 3. What were the si

COSO and internal controls

These all need to be based on the United States 1)What is COSO? What were the two principal purposes of its efforts regarding internal control, and why did it undertake these efforts? 2)Identify and describe one of the inherent limitations of internal control. 3)Identify and describe one of the six components of intern

Process for Issuance of Statements of Auditing Standards

These all need to be based on the United States. 1. What are SASs, and what is the process for their issuance? 2. Under common law, a CPA may be liable to a client. Explain how an auditor may breach a contract. 3. Identify how the Sarbanes-Oxley Act of 2002 changed the audit environment for auditors. 4. What is the over

Expain legislation and responsibilities of the FDIC and the PCAOB

You decide to develop a presentation for your international accounting firm's new hires explaining the basics of the FDIC and the PCAOB. Please include the following: Explain what each of these pieces of legislation was designed to solve. Explain, generally, what they are to do and how they are to do it. Discuss the respo

What is the Sarbanes-Oxley Act of 2002?

What is the Sarbanes-Oxley Act of 2002? Why was it enacted? How did it affect the reporting requirements for U.S. companies? How does it affect small business owners like Dan Brown? Make sure that you describe what this act actually is, how it changed the way certain items are reported, and how this act affects small busi


Please help with the following problem. What are COSO and COBIT? What role did COSO and COBIT play in the internal control area?

Issues with the case

PROBLEM: Subsequent to year-end, the auditors have determined that they believe that management has understated its warranty obligations. The auditors know that, according to AU 312.36, they should consider the difference between management's estimate and the closest reasonable estimate as "likely misstatement." The chief fina

The Enron Scandal and SOX

Topic: The Enron Scandal and SOX The Term project is a research paper on the above topic. Your paper should be Professional in appearance, at least 5 typed pages, double spaced. You should attach a bibliography page citing all sources of your information. Of major importance will be your own thoughts, opinions and conclusi

Influence Tactics

Please respond to this question by identifying three specific business problems that can be addressed through the use of "influence tactics." For each specific problem, describe the influence tactic that should be used, the source of power behind that influence tactic, and why you believe that this influence tactic will effec


Please include a detailed explaination of how the Sarbanes-Oxley Act impacts the internal controls of an organization.

Sarbanes-Oxley Requirements

I need help with the following questions please: 1. How have control systems been changed by Sarbanes-Oxley requirements in a hospital organization. 2. Could you please provide an example of how it has effected the managing of hospital documentation.