SOX and Ethics

What is the main purpose of the Sarbanes-Oxley Act (SOX)?

• To regulate corporate mergers and acquisitions

• To ensure accurate financial reporting and prevent corporate fraud

• To regulate employee benefits and compensation

• To promote environmental sustainability in businesses

Which of the following is a key component of SOX related to internal controls

• The establishment of an independent auditing board

• The implementation of ethical training programs for executives

• The requirement for companies to create and report on internal controls over financial reporting (ICFR)

• The mandate for companies to pay executive bonuses only in stock

How does a company's ethical culture impact SOX compliance?

• It ensures employees follow company policies and regulations, supporting SOX compliance

• An ethical culture reduces the need for external audits

• It has no impact on SOX compliance

• An ethical culture weakens the necessity of SOX regulation

According to SOX, who is primarily responsible for ensuring the accuracy of financial reporting?

• The Chief Financial Officer (CFO) and the Chief Executive Officer (CEO)

• External auditors

• The Board of Directors only

• Internal audit teams

In the context of SOX, what role does internal auditing play?

• t helps in developing and setting company strategies

• It negotiates with external stakeholders for company growth

• It tracks employee performance

• It assesses the effectiveness of internal controls over financial reporting and compliance with SOX

Which of the following is a potential consequence for companies that fail to comply with SOX regulations?

• Legal penalties and fines

• A decrease in stock market value

• Increased employee turnover

• Both a and b

• Neither

What could be an example of unethical behavior that would violate both SOX and ethical standards?

• Disclosing all company information to the public

• Inflating financial statements to meet shareholder expectations

• Ensuring that financial reports reflect the true financial health of the company

• Implementing cost-cutting measures in a fair manner

What is one of the key elements of an effective ethics training program related to SOX?

• Limiting training to financial departments only

• eaching employees how to maximize company profits legally

• Providing clear guidelines on identifying and reporting ethical violations, including financial fraud

• Training only senior executives about the importance of SOX compliance