Which of the following is a requirement of the Sarbanes-Oxley Act?
A)An outside auditor must evaluate the client's internal controls and report on the internal controls as part of the audit report.
B)The Public Company Oversight Board must conduct audits of public companies.
C)The accounting firm that audits a public client must also provide consulting services for the same client.
D)The Public Company Oversight Board must create new accounting standards.

Question

Quizplus · Accepted Answer

The Sarbanes-Oxley Act requires an outside auditor to evaluate the client's internal controls and report on them as part of the audit report. This requirement is aimed at increasing the accuracy and reliability of financial reporting by public companies.

Answer: B and D are incorrect. The Public Company Oversight Board (PCAOB) was created by the Sarbanes-Oxley Act to oversee the auditors of public companies, but it is not required to conduct audits of public companies itself. The PCAOB is also not responsible for creating new accounting standards; that is the responsibility of the Financial Accounting Standards Board (FASB).

Answer: C is incorrect. The Sarbanes-Oxley Act prohibits accounting firms that audit public clients from providing certain types of consulting services for the same client. This is intended to promote independence and ensure that auditors do not have conflicts of interest.

Which of the Following Is a Requirement of the Sarbanes-Oxley