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About this document
- Pages
- 119 pages
- Price
- $45 one-time, yours to keep
- Membership
- Included in every plan
- Format
- Subject
- Accounting, Business Law
- Module
- 08
This document contains multiple-choice questions on the Sarbanes-Oxley Act and internal controls. It covers the act’s purpose, application, and internal control objectives. It is useful for students studying Module 08.
What's inside
- Sarbanes-Oxley Act purpose and application
- Internal control objectives
- Control environment
- Separation of duties
- Cash management and internal controls
Who it is for: Students studying accounting and business law. (Undergraduate)
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Summary
The Sarbanes-Oxley Act is a law that applies to public companies. It aims to maintain trust in financial reporting. Internal controls are important for preventing fraud and ensuring accurate financial statements.
Sarbanes-Oxley Act
The Sarbanes-Oxley Act applies only to public companies. Its purpose is to maintain public confidence in financial reporting. It requires these companies to report on the effectiveness of their internal control procedures.
Internal Control Objectives
Internal control has three main objectives. These are to ensure accurate financial reports, to comply with laws and to safeguard the company's assets. The control environment is the overall attitude towards internal control.
Control Procedures
Separating responsibilities for different tasks is a key control procedure. This includes separating operations, custody of assets, and accounting. A voucher system is used to control cash payments.
Bank Reconciliation
A bank reconciliation compares the cash balance per bank statement with the cash balance per company's records. It includes adjustments for items like deposits in transit, outstanding checks, and errors.
Key terms
- Sarbanes-Oxley Act
- A law that applies to public companies to maintain trust in financial reporting.
- Internal control
- Procedures to ensure accurate financial reports, comply with laws and safeguard assets.
- Control environment
- The overall attitude of management and employees about the importance of internal control.
- Voucher system
- A set of procedures for authorizing and recording liabilities and cash payments.
- Bank reconciliation
- A process to compare and adjust the cash balance per bank statement with the cash balance per company's records.
- Cash equivalents
- Short-term investments that can be easily converted to cash.
Questions this document helps with
- What is the purpose of the Sarbanes-Oxley Act?
- What are the main objectives of internal control?
- What is a voucher system?
Summary written with AI from the document's text.
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