ACG 2071 EXAM 3 COMPLETE STUDY
GUIDE QUESTIONS AND VERIFIED
ANSWERS
●● Sarbanes-Oxley Act
Answer: Legislation passed to restore investor confidence by improving
internal controls and financial reporting in public companies
Passed after fraud scandals
Requires companies to:
Have strong internal controls
Have top management certify financial statements
Basically: "No more shady accounting"
●● internal auditors
Answer: company employees who continuously evaluate the
effectiveness of the company's internal control systems
●● External Auditors
Answer: Independent CPAs who are retained by organizations to
perform audits of financial statements.
●● audit
, Answer: to check the accuracy of financial accounts and records
●● information systems
Answer: A collection of data and information used to support the
management of an organization. Also refers to the technical components
and human resources that enable the assembly, storage, and processing
of data and the delivery of information. This has existed for a lot longer
than computers.
●● Control Procedures
Answer: Policies and procedures used by management to meet their
objectives.
Competent, ethical employees ii) Assignment of responsibilities iii)
Separation of duties:
Don't let one person:
Handle cash AND record it
Separate:
Operations from accounting
Custody of assets from accounting
iv) Audits v) Documents (receipts, invoices) vi) Electronic devices
(passwords, security) vii) Other controls
●● Control environment
GUIDE QUESTIONS AND VERIFIED
ANSWERS
●● Sarbanes-Oxley Act
Answer: Legislation passed to restore investor confidence by improving
internal controls and financial reporting in public companies
Passed after fraud scandals
Requires companies to:
Have strong internal controls
Have top management certify financial statements
Basically: "No more shady accounting"
●● internal auditors
Answer: company employees who continuously evaluate the
effectiveness of the company's internal control systems
●● External Auditors
Answer: Independent CPAs who are retained by organizations to
perform audits of financial statements.
●● audit
, Answer: to check the accuracy of financial accounts and records
●● information systems
Answer: A collection of data and information used to support the
management of an organization. Also refers to the technical components
and human resources that enable the assembly, storage, and processing
of data and the delivery of information. This has existed for a lot longer
than computers.
●● Control Procedures
Answer: Policies and procedures used by management to meet their
objectives.
Competent, ethical employees ii) Assignment of responsibilities iii)
Separation of duties:
Don't let one person:
Handle cash AND record it
Separate:
Operations from accounting
Custody of assets from accounting
iv) Audits v) Documents (receipts, invoices) vi) Electronic devices
(passwords, security) vii) Other controls
●● Control environment
