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29 Cards in this Set
- Front
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Title III of SOX |
Corporate Responsibility:
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What is the audit committee responsible for? (3) (Title III) |
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Who does an auditor report to? (Title III) |
Directly to the audit committee, but the committee does not verify the auditors work |
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Who is allowed to be members of the audit committee? (Title III) |
Members of the BOD, but must otherwise be independent |
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What is the independence criteria for an audit committee? (2) (Title III) |
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What is the criteria for accepting reports of complaints regarding audit, accounting, or internal control issues? (2) (Title III) |
1) procedures must accommodate confidential, anonymous reports by employees
2) must accommodate receipt & retention of complaints, as well as a method to address these complaints |
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CEO & CFO must sign quarterly & annual reports including their assertion that: (6) (Title III) |
1) they have REVIEWED the report 2) does not contain UNTRUE statements or OMIT material information 3) FS fairly represent in all material aspects the financial condition (CONFORMITY w/GAAP) 4) CEO & CFO assume responsibility for INTERNAL CONTROLS 5) all appropriate DISCLOSURES have been made 6) must explain any significant CHANGES to internal controls |
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By signing the reports, CEO & CFO assume responsibility for internal control, including assertions that: (3) (Title III) |
1) ICs have been DESIGNED to ensure that material info has been made available
2) ICs have been EVALUATED for effectiveness within 90 days prior to their report
3) report included CONCLUSIONS as to the effectiveness of IC |
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By signing the reports, CEO & CFO assert that the following disclosures have been made to the issuer's auditors & the audit committee: (2) (Title III) |
1) all significant deficiencies in the design or operation of ICs which might adversely affect the FS
2) any fraud (regardless of materiality) that involves mgmt or any other employee with a significant role in IC |
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Noncompliance of Title III of SOX may result in: |
CEO/CFO being required to reimburse the issuer for:
1) bonuses, incentive-based, or equity-based compensation
2) gains on sale of securities during that 12 month period |
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Title IV of SOX |
Enhanced Financial Disclosures:
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Title IV enhanced disclosures should include: (4) |
1) All material correcting ADJUSTMENTS identified by the auditor
2) All material OFF-BALANCE SHEET transactions (operating leases, contingent liab, related parties)
3) Conformance of pro-forma FS
4) Use of special purpose entities (SPEs) |
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Conflict of Interest Provisions (Title IV) |
Issuers are prohibited from making personal loans to directors or executive officers, except:
1) loans are made in the ordinary course of business
2) terms offered to the officer are similar to terms offered to public |
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Disclosures are required for persons who have direct or indirect ownership of __ percent (Title IV) |
10% |
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Statements of 10% ownership are filed at the following times: (3) (Title IV) |
1) At the time of registration
2) When the person achieves 10% ownership
3) If there is a change in ownership |
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What is Section 404? (Title IV) |
managements assessment of IC |
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Each annual Section 404 report must include: (2) (Title IV) |
1) a statement that mgmt is responsible for establishing & maintaing an adequate IC structure & procedures for financial reporting
2) an assessment, as of the end of the most recent fiscal year, of the effectiveness of the IC structure & procedures for financial reporting (auditor must attest to this) |
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Code of Ethics for Senior Officers (Title IV) |
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The Code of Ethics contemplates standards that promote: (3) (Title IV) |
1) Honest & ethical conduct (including handling of conflicts of interest)
2) Full, fair, accurate, & timely disclosures in periodic FS
3) Compliance with laws, rules, & regulations |
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Section 407 - Audit Committee Financial Expert (Title IV) |
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Section 407 - Knowledge of the "financial expert" should include: (5) (Title IV) |
1) Understanding of GAAP 2) Experience in the preparation or auditing of FS for comparable issuers 3) Application of GAAP 4) Experience with IC 5) Understanding of audit committee functions -Section 407 provides these guidelines, but they are not requirements -CPA does not qualify an individual as an expert |
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When the SEC reviews disclosures, they should consider: (Title IV) |
1) Issuers that have issued material misstatements (risky) 2) Issuers that experience significant volatility in their stock prices (motivation) 3) Issuers with the largest market capitalization (material to market) 4) Emerging companies with disparities in price-to-earnings ratios 5) Issuers whose operation significantly affect any material sector of the economy (large banks/insurance) |
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Title VIII of SOX |
Corporate & Criminal Fraud Accountability: 1) Criminal Penalties for Altering Documents 2) Statue of Limitations for Securities Fraud 3) Whistle-Blower Protection 4) Criminal Penalties for Securities Fraud |
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Criminal Penalties for Altering Documents (Title VIII) |
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Statue of Limitations for Securities Fraud (Title VIII) |
no later that the earlier of two years after the discovery of the violation, or five years after the violation |
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Whistle-Blower Protection (Title VIII) |
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Criminal Penalties for Securities Fraud (Title VIII) |
An individual who knowingly executes, or attempts to execute, securities fraud will be fined, imprisoned not more than 25 years, or both. |
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Title IX of SOX |
White-Collar Crime Penalty Enhancements:
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Title XI of SOX |
Corporate Fraud Accountability:
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