There are several aspects of the Enron fraud that are dealt with directly in SOX further connecting Enron to reform in the accounting profession. Which of the following is true?
A) SOX permitted the provision of internal audit service for audit clients
B) Off-balance-sheet financing activities were prohibited for all companies
C) Related-party transactions require disclosure in the notes
D) Cookie jar reserves must be disclosed in the notes

Question

Quizplus · Accepted Answer

SOX requires companies to disclose related-party transactions in the notes to their financial statements, which is directly connected to one of the major aspects of the Enron fraud. A is incorrect because SOX prohibits the provision of internal audit services for audit clients. B is incorrect because while SOX requires increased disclosure of off-balance-sheet financing activities, it does not completely prohibit them. D is incorrect because SOX requires the disclosure of any material reserves, not just cookie jar reserves.

There Are Several Aspects of the Enron Fraud That Are