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Presented Below Are Statement Regarding the Roles of Participants in the Financial

Question 102

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Presented below are statement regarding the roles of participants in the financial reporting process.Identify these as either true or false. If false, explain why the statement is false.

Premises:

Responses:

The FASB is an agency of the federal government that has the authority to establish accounting standards.

True

The Sarbanes-Oxley Act of 2002 requires the AICPA to register firms conducting independent audits.

False

Auditors are the agents of the shareholders and have responsibility for safeguarding and properly using the firm's resources.

The governing board, or board of directors, is responsible for selecting, compensating, and overseeing managers; for establishing dividend policy; and for making decisions on major issues such as acquisitions of other firms and divestitures of lines of business.

The Sarbanes-Oxley Act of 2002 established the Public Company Accounting Oversight Board (PCAOB), which is responsible for monitoring the quality of audits of SEC registrants.

Premises:

The FASB is an agency of the federal government that has the authority to establish accounting standards.

The Sarbanes-Oxley Act of 2002 requires the AICPA to register firms conducting independent audits.

Auditors are the agents of the shareholders and have responsibility for safeguarding and properly using the firm's resources.

The Sarbanes-Oxley Act of 2002 established the Public Company Accounting Oversight Board (PCAOB), which is responsible for monitoring the quality of audits of SEC registrants.

Responses:

True

False

Correct Answer:

Premises:

Responses:

The FASB is an agency of the federal government that has the authority to establish accounting standards.

The Sarbanes-Oxley Act of 2002 requires the AICPA to register firms conducting independent audits.

Auditors are the agents of the shareholders and have responsibility for safeguarding and properly using the firm's resources.

The Sarbanes-Oxley Act of 2002 established the Public Company Accounting Oversight Board (PCAOB), which is responsible for monitoring the quality of audits of SEC registrants.

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