Which of the following statements is true of the Sarbanes-Oxley Act?
A)Accounting firms are allowed to provide both auditing services and a full range of consulting services to their public company clients.
B)Those who commit securities fraud must be sentenced to 10 years in prison.
C)All private and foreign companies must issue an internal control report evaluated by an outside auditor.
D)Auditors of public companies are under the scrutiny of the Public Company Accounting Oversight Board.

Question

Quizplus · Accepted Answer

The Sarbanes-Oxley Act established the Public Company Accounting Oversight Board (PCAOB) to oversee auditors of public companies. The PCAOB is responsible for registering audit firms, conducting inspections, and enforcing compliance with Sarbanes-Oxley standards. Therefore, option D is the correct statement about the Sarbanes-Oxley Act. Option A is incorrect because the act restricts accounting firms from providing certain consulting services to their public company clients. Option B is incorrect because the act does not mandate a specific sentence for securities fraud. Option C is also incorrect because the act only requires internal control reports from public companies, not private or foreign companies.

Which of the Following Statements Is True of the Sarbanes-Oxley