Multiple-Choice Questions

1. Per Securities and Exchange Commission (SEC) rules, public companies must file which of the following if they experience a major event that could affect their financial condition? Companies must file with the SEC within 4 days of the event.

A. Form 10-K

B. Form 10-Q

C. Form 8-K

D. An internal controls over financial reporting (ICFR) form

2. Which of the following does NOT trigger a Form 8-K disclosure requirement?

A. Filing for bankruptcy

B. Selling off significant assets

C. Making a profit

D. Getting a loan

3. Which of the following types of information is NOT included on a Form 10-K?

A. Financial statements

B. Instances of known insider trading activities

C. Auditor's report

D. Explanation of how the company is organized and operates

4. Maria needs financial information for a publicly-traded company. Specifically, she is looking for the company's most recent Form 10-K report and SOX Section 404 report on internal controls. Which of the following is the best source for Maria?

A. EDGAR

B. COSO

C. COBIT

D. PCAOB

5. The Sarbanes-Oxley Act (SOX) requires companies to monitor internal controls over financial reporting (ICFR) for outsourced operations. Many companies do this by asking their outsourcing companies to provide them with a System and Organization Controls (SOC) report after an audit. Which of the following is NOT true of SOC audits?

A. SOC audits are created by the outsourcing company.

B. SOC audits review a service organization's control activities related to the services that it provides to its customers.

C. SOC audits review the IT controls on the outsourced service.

D. A SOC audit helps a service organization show that it has proper safeguards in place to protect its customers' data.

10. The Sarbanes-Oxley Act (SOX) requires the Securities and Exchange Commission (SEC) to review a public company's Form 10-K and Form 10-Q reports at least once every 3 years. It must do this to try to detect fraud and inaccurate financial statements that could harm the investing public. SOX identifies the factors that the SEC should consider when deciding to conduct a review. Which of the following is NOT one of the common factors that the SEC must consider?

A. Whether a company has amended its financial reports

B. How long the company has been in existence

C. How much stock the company has issued

D. The difference between a company's stock price and its earnings

8. The _______________ component of the Committee of Sponsoring Organizations (COSO) of the Treadway Commission framework refers to the identification and review of risks that are internal and external to the organization.

A. control activities

B. risk assessment

C. monitoring

D. control environment