Ain2601 Assignment 6 Semester 1 2024

corporate governance - Correct Answer the procedures designed to ensure that the company is managed in the interests of the shareholders -For apple, it is aimed at ensuring integrity in the financial reporting process -If done well, it leads to an ease in the company's access to capital, lowering both the costs of borrowing (interest rates) and perceived riskiness of the stock what would happen to the stock of a company if it were to disclose a fraud - Correct Answer it would drop 20% in value Sarbanes-Oxley Act - Correct Answer a law that strengthens US financial reporting and corporate governance regulations -This includes the Public Accounting Reform and Investor Protection Act securities and exchange commission (SEC) - Correct Answer the US govt agency that determines financial statements that public companies must provide to stockholders and the measurement rules that they must use in producing those statements -Oversees FASB and PCAOB -Reviews the reports filed with it for compliance with its standards, investigates irregularities, and punishes violators -From , they brought forth 651 enforcement actions -Results in enormous financial penalties as well as bankruptcy Financial Accounting Standards Board (FASB) - Correct Answer the private sector body given the primary responsibility to work out detailed rules that become generally accepted accounting principles -The SEC oversees them Public Company Accounting Oversight Board (PCAOB) - Correct Answer the private sector body given the primary responsibility to work out detailed auditing standards -The SEC oversees them Who has the primary responsibility for a company's fianancial statements and related disclosures with management? - Correct Answer CEO and CFO ceo - Correct Answer the highest officer in the company who has responsibility for the information in the financial statement cfo - Correct Answer highest officer associated with the financial and accounting side of business that is responsible for information on the financial statement What should the CFO and CEO personally certify? - Correct Answer -Each report filed with the Securities and Exchange Commission does not contain any untrue material statement or omit a material fact and fairly presents in all material respects the financial condition, results of operations, and cash flows of the company. -There are no significant deficiencies and material weaknesses in the internal controls over financial reporting. -They have disclosed to the auditors and audit committee of the board any weaknesses in internal controls or any fraud involving management or other employees who have a significant role in financial reporting. What happens to officers who knowingly certify false reports? - Correct Answer Fine of $5 and they get a 20 year prison term accounting staff - Correct Answer actually prepare the details of the financial reports required by the SEC in public companies who bear responsibility for the information they put in the reports. They have smaller legal responsibility than the CFO and CEO -If they file something incorrectly, they are fired and have a hard time finding another job board of directors - Correct Answer elected by the shareholders to represent their interests; its audit committee is responsible for maintaining the integrity of the company's financial reports -Has an audit committee audit committee - Correct Answer composed of nonmanagement (independent) directors with financial knowledge that is part of the board of directors -Responsible for ensuring that processes are in place for maintaining the integrity of the company's accounting, financial statement preparation, and financial reporting -Responsible for hiring independent auditors -Meet separately with these people unqualified (clean) audit opinion - Correct Answer audito