Sarbanes-Oxley Video Case PDF

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Chapter 04: Video Case - Sarbanes-Oxley...

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In response to accounting scandals and the collapse of Enron at the turn of the century, the U.S. Congress passed the Sarbanes-Oxley Act to establish a system of federal oversight of corporate accounting practices. The purpose of the law is to hold CEOs accountable in matters of financial reporting, and to ensure the truthfulness of statements offered to investors. Despite the law's good intentions, businesses must now spend millions of dollars each year just to comply with the regulations. However, the steep challenges of compliance have created a boom in new accounting firms that specialize in helping companies meet the law's requirements. Answer the multiple choice questions that follow the video content. Congress passed Sarbanes-Oxley into law as a response to: a.Globalization b.Financial scandals and corporate fraud c.Executive CEO pay d.Consumer protection violations Feedback

How does Sarbanes-Oxley attempt to improve business ethics? a.By enacting legal protections against discrimination b.By regulating executive retirement plans c.By legally requiring companies to certify the truth of their statements to investors d.By offering suggestions for how companies might be more transparent Feedback Correct. Sarbanes-Oxley attempts to improve business ethics by legally requiring companies to certify the truth of their statements to investors.

Which aspect of Sarbanes-Oxley has created severe difficulties for businesses? a.The creation of the Public Company Accounting Oversight Board b.The cost and difficulties of compliance c.The law's aim to hold CEOs accountable d.The law's whistle-blower protections Feedback Correct. The cost and difficulties of compliance of Sarbanes-Oxley have created severe difficulties for businesses.

How did complying with Sarbanes-Oxley help Viper Motorcycle Company, according to its CEO? a.It made the company more attractive to investors b.It exposed the company's accounting fraud before going public c.It led to the creation of countless new accounting jobs and companies d.It created new expensive costs Feedback Correct. According to its CEO, Sarbanes-Oxley helped Viper Motorcycle Company by making the company more attractive to investors. What ethical concept does Sarbanes-Oxley promote and institutionalize? a.Shareholder activism b.Diversity c.Philanthropy d.Transparency Feedback

Correct. Sarbanes-Oxley promotes and institutionalizes the ethical concept of transparency. According to Sarbanes-Oxley, accounting firms that provide consulting services to businesses are prohibited from providing auditing services. This prevents: a.Insider trading b.Conflicts of interest c.Double-dipping d.Whistle-blowing Feedback Correct. According to Sarbanes-Oxley, accounting firms that provide consulting services to businesses are prohibited from providing auditing services. This prevents conflicts of interest.

What is controversial about Protivity, a new accounting firm that specializes in helping businesses comply with Sarbanes-Oxley? a.Businesses should have to comply on their own b.Protivity is an accounting company c.Protivity was created by employees of accounting firm Arthur Andersen, a firm that took part in the Enron scandal that led to Sarbanes-Oxley d.None of the options Feedback Correct. Protivity was created by employees of accounting firm Arthur Andersen, a firm that took part in the Enron scandal that led to Sarbanes-Oxley. An unexpected outcome of Sarbanes-Oxley has been:

a.It has led to more financial fraud b.It doesn't provide useful ethical controls for businesses c.It has led to a boom of new accounting businesses d.It has led to less accountability for CEOs Feedback Correct. An unexpected outcome of Sarbanes-Oxley has been that it has led to a boom of new accounting businesses. Sarbanes-Oxley: a.Improves corporate governance by providing better controls b.Provides federal oversight of corporate accounting practices and reporting c.Protects investors from fraud d.All of the options are true. Feedback Correct. Sarbanes-Oxley improves corporate governance by providing better controls, provides federal oversight of corporate accounting practices and reporting, and protects investors from fraud....