9 Questions
What is the purpose of the Sarbanes-Oxley Act?
To increase regulatory visibility and accountability of public companies and their financial health
Who is responsible for certifying and being accountable for their firm's financial records and accounting?
CEOs and CFOs
What is the consequence of not complying with the Sarbanes-Oxley Act?
20-year jail term
What is the relationship between business environment uncertainty and IT decision-making?
The relationship between business environment uncertainty and IT decision-making is curvilinear
What is the optimal point of decentralization?
It is the point where centralization becomes more effective in managing IT infrastructure decisions
What is the reason for centralizing IT decision-making in uncertain environments?
To mitigate potential agency problems
What are internal controls?
The mechanisms, rules, and procedures implemented by a company to ensure financial integrity and prevent fraud
What is the purpose of internal controls?
To promote accountability and prevent fraud
What can happen if there are multiple significant deficiencies in a company's internal controls?
A greater number or magnitude of significant deficiencies can lead to a material weakness
Study Notes
Sarbanes-Oxley Act
- Enacted to protect investors and ensure accuracy of financial statements
- Holds top executives responsible for certifying and being accountable for their firm's financial records and accounting
Consequences of Non-Compliance
- Failure to comply with the Sarbanes-Oxley Act can lead to severe penalties, including fines and imprisonment
IT Decision-Making and Uncertainty
- Uncertainty in the business environment can impact IT decision-making
- Decentralization of IT decision-making can be optimal in low-uncertainty environments
- Centralization of IT decision-making is preferred in high-uncertainty environments to ensure quick response to changing conditions
Internal Controls
- Internal controls are processes and policies that ensure accurate financial reporting and compliance with laws and regulations
- The purpose of internal controls is to provide assurance on the achievement of an organization's objectives
- Multiple significant deficiencies in a company's internal controls can lead to material weaknesses, which can negatively impact the company's financial health and reputation
Get to know the Sarbanes-Oxley Act (SOX) with this informative quiz! Test your knowledge on the regulations that aim to ensure transparency and accountability in public companies' financial records. From CEOs and CFOs' personal accountability to independent testing of internal controls, this quiz covers it all. Sharpen your understanding of SOX and boost your expertise in financial regulations today!
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