Sarbanes-Oxley Act: Understanding Section 404 and Its Importance

What must the CEO and CFO provide according to Section 404 of the Sarbanes-Oxley Act?

• A statement of corporate social responsibility

• A report on employee satisfaction

• An assessment of the effectiveness of internal controls

• A financial forecast for the next fiscal year

What is the role of external auditors as per Section 404B?

• To oversee the company's marketing strategies

• To conduct market research for the company

• To examine and report on management's assertion of internal controls

• To prepare the company's financial statements

How is the external auditor's examination of internal controls different from the financial statement audit?

• It is separate from the financial statement audit

• It only examines the company's revenue streams

• It is a part of the financial statement audit

• It focuses on the company's marketing strategies

Why is it important to evaluate both internal controls and financial statements?

• Because it is a part of the company's marketing strategy

• Because it is required by law

• Because they can provide different outcomes

• Because they always provide the same outcome

What is the general idea behind having stronger internal controls?

• To increase the company's market share

• To ensure more reliable financial statements

• To improve employee satisfaction

• To enhance the company's brand image