Study Guide To Sarbanes-Oxley Act

Typed paper, no specific length or number of words

Read page 5 through Section 301 on page 33 in the “Student Guide to the Sarbanes-Oxley Act” by Robert Prentice (hereafter referred to as the Student Guide) and then respond to the questions below. You may also need to refer to the actual language of the Act, which you can access at: http://www.sec.gov/about/laws.shtml.

At the above links you can also access SEC Rules and Regulations related to SOX sections, which are very helpful with definitions, additional details and interpretations.

You do not need to provide references or citations for content in the Student Guide unless you directly quote. If you utilize any additional resources please properly cite the resource using APA guidelines.http://www.apastyle.org/learn/tutorials/basics-tutorial.aspx

Answer 1 to 7 based on page 5-33.

1. Title I §101 of SOX establishes the Public Company Accounting Oversight Board (PCAOB.) Describe the composition of the Board and any limitations as to who may be appointed to the Board.

2. Visit the PCAOB Web site. http://www.pcaobus.org/ Find the sample registration form. Identify at least four pieces of information required from the applicant (CPA firm).

3. Visit the PCAOB Web site. http://www.pcaobus.org/ The PCAOB inspection reports are available to the public.

a. Find an inspection report for any firm you choose and briefly review the PCAOB’s findings.

b. Did the PCAOB find any audit deficiencies?

c. If so, on what issues?

4. Tax services are not specifically prohibited by SOX §201.

a. In your opinion, should tax services be included in the prohibited list of services in SOX §201?

b. Why or why not?

c. In your opinion, should it matter if it is tax compliance work (tax returns) versus tax consulting?

5. Can an auditor assist a client with design and implementation of an information system if the client company’s audit committee pre-approves the fees in accordance with SOX §202?

6. SOX §203 requires the engagement and reviewing partners to rotate off audit clients after five years. In your reasoned opinion, does audit partner rotation result in higher quality audits? Why or why not? You should find resources that address this issue on the Internet.

7. SOX §301 provides additional authority and requirements for corporate audit committees.

i. Describe the relationship between a company’s Board of Directors and the company’s audit committee.

ii. Identify two audit committee responsibilities identified in SOX §301

8. Read Section 301 on pages 30 through 33 in the Student Guide.

9. Review the Investor Relations area of the Microsoft Web site. http://www.microsoft.com/msft/default.mspx

1. Does Microsoft have a procedure for employees or others to ask questions or report concerns about “...internal accounting controls, an accounting matter, or an auditing matter?”
2. If so, who (title of the person) responds to questions or concerns communicated?
3. Does Microsoft’s procedure seem to satisfy SOX section 301?

10. Identify the three certifications required by §302.

11. In your reasoned opinion, does §302 significantly increase the workload or responsibility of CEOs and CFOs? Why or why not?

12. SOX §402 was inspired in part by Tyco former CEO Dennis Kozlowski.

b. Google Kozlowski and read several articles or interviews.

c. How did he spend the money drained from Tyco?

d. If you were on the jury at his trial, how would you interpret his claim (made to Morley Safer on 60 Minutes, March 25, 2007) that the issue was just “a major pay dispute [?]”

13. Find the 2012 Annual report at the Investor Relations area of the Microsoft Web site. http://www.microsoft.com/msft/default.mspx

a. Read the Auditor’s Report in the Financial Review area.

b. What standards were used by the CPA firm to conduct the financial statement audit?

c. Find and read the certifications required by §302.

d. Find and read the auditor’s report required by §404.

e. What criteria were used by the auditors to conduct the audit of the internal control over financial reporting?

e. What are the two specifically cited “inherent limitations” that may not allow auditors to prevent or detect material misstatements due to error or fraud on a timely basis?

14. Visit the Investor Relations area of the Microsoft Web site. http://www.microsoft.com/msft/corporate/default.mspx

a. Find and read the code of ethics that meets the requirements of §406.

b. Which employees (by title or class) are subject to the code of ethics?