Chapter 4: Video Case - Sarbanes-Oxley

Congress passed Sarbanes-Oxley into law as a response to: a. Financial scandals and corporate fraud b. Consumer protection violations c. Globalization d. Executive CEO pay

a. Financial scandals and corporate fraud

How does Sarbanes-Oxley attempt to improve business ethics? a. By regulating executive retirement plans b. By enacting legal protections against discrimination c. By legally requiring companies to certify the truth of their statements to investors d. By offering suggestions for how companies might be more transparent

c. By legally requiring companies to certify the truth of their statements to investors

According to Sarbanes-Oxley, accounting firms that provide consulting services to businesses are prohibited from providing auditing services. This prevents: a. Double-dipping b. Whistle-blowing c. Conflicts of interest d. Insider trading

c. Conflicts of interest

An unexpected outcome of Sarbanes-Oxley has been: a. It doesn't provide useful ethical controls for businesses b. It has led to more financial fraud c. It has led to a boom of new accounting businesses d. It has led to less accountability for CEOs

c. It has led to a boom of new accounting businesses

How did complying with Sarbanes-Oxley help Viper Motorcycle Company, according to its CEO? a. It exposed the company's accounting fraud before going public b. It created new expensive costs c. It made the company more attractive to investors d. It led to the creation of countless new accounting jobs and companies

c. It made the company more attractive to investors

What is controversial about Protivity, a new accounting firm that specializes in helping businesses comply with Sarbanes-Oxley? a. Businesses should have to comply on their own b. Protivity is an accounting company c. Protivity was created by employees of accounting firm Arthur Andersen, a firm that took part in the Enron scandal that led to Sarbanes-Oxley d. None of the options

c. Protivity was created by employees of accounting firm Arthur Andersen, a firm that took part in the Enron scandal that led to Sarbanes-Oxley

Which aspect of Sarbanes-Oxley has created severe difficulties for businesses? a. The law's aim to hold CEOs accountable b. The law's whistle-blower protections c. The cost and difficulties of compliance d. The creation of the Public Company Accounting Oversight Board

c. The cost and difficulties of compliance

Sarbanes-Oxley: a. Improves corporate governance by providing better controls b. Provides federal oversight of corporate accounting practices and reporting c. Protects investors from fraud d. All of the options are true.

d. All of the options are true.

What ethical concept does Sarbanes-Oxley promote and institutionalize? a. Diversity b. Shareholder activism c. Philanthropy d. Transparency

d. Transparency