Sarbanes-Oxley Case Pros And Cons

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7.1. a. According to the textbook, Sarbanes-Oxley requires public companies to have an audit committee of outside, independent directors. However, the Go-Go’s audit committee consists of the Go-Go’s employees. The members of audit committee should be members of the board of directors. The audit committee is responsible for financial reporting, regulatory compliance, internal control, and hiring and overseeing internal and external auditors who reports all critical accounting policies and practices to them. b. Treasurer in a company is typically responsible for cash management and issuing debts and securities. It is better that this position be owned by someone with good commitment to integrity, ethical values, and competence. Since the treasurer is recognized as a former aide to someone was convicted of fraud, we should always keep the question in mind. However, previously working with someone who was convicted of fraud does not mean the people is also dishonest, because we do not have specific evidence indicated that the treasurer has committed a fraud before. So, we should thoroughly examine the human resources standards. c. The main reason why most of the companies want to change their depreciation methods is because they want to use the new depreciation method to reduce their deprecation expense s well as increase net income. However, according to the policy, company should definitely provide an appropriate reason why they want to change their deprecation methods to the auditors. If the company cannot give a good reason, the auditors should thoroughly audit the company’s commitment to integrity, ethical values, and competence as well as the management’s philosophy, operating style, and risk appetite. d. The internal audit... ... middle of paper ... ...nsible for the company’s information security policy. k. There is not a problem. l. The problem is that the implementation schedule is unduly aggressive and not appropriate. So, the management’s philosophy, operating style and risk appetite should be tested. m. Internal control on employee training seems to be not good, and the organizational structure and methods of assigning authority and reasonability have weakness in the company. According to the human resources standards, company should conduct ongoing training on employees. n. This is not a problem. o. This can cause other purchasing agents buy more from the specific vendors, and it may indicates that there is a problem with favoring specific vendors. This problem is involved with management’s philosophy, operating styles and risk appetite and commitment of integrity, ethical values and competence.

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