Misc.

Question 1

Conflict of Interest Protections

Answer 1

• CEO, Controller, CFO and CAccountingOfficer can’t have been at the auditing firm for the preceding year
• Lead auditor/partner must rotate every 5 years

Sarbanes Oxley

Question 2

Whistleblower Protections (SOX)

Answer 2

Section 806 of the Sarbanes-Oxley Act protects whistleblowers at covered employers who report to their supervisor or the government conduct that they reasonably believe constitutes wire fraud, mail fraud, bank fraud, securities fraud, or a violation of any rule or regulation of the SEC, or any provision of Federal law relating to fraud against shareholders.

SarbOx

Question 3

Independence of Audits

Answer 3

• It prohibits the registered external auditor of a public company from providing certain non-audit services to that public company audit client.
• Specifies communication that is required between the auditors and the public company’s audit committee (or board of directors), and requires periodic rotation of the audit partners managing a public company’s audits.
  1. Auditors should not have mutual or conflicting interests with their audit clients
  2. Auditors should not audit their own audit work
  3. Auditors should not function as client management or employees;
  4. Internal audit activity must be free from interference in determining the scope of internal auditing, performing work, and communicating results.
  5. The chief audit executive must disclose such interference to the board and discuss the implications.

SarbOx, PCAOB, COSO

Question 4

Whistleblower Protections (D-F)

Answer 4

• The Commodity Futures Trading Commission’s (CFTC) Whistleblower Program,
  created by the Dodd-Frank Act, provides monetary incentives to individuals who
  come forward to report possible violations of the Commodity Exchange Act
  (CEA). It also provides anti-retaliation protections for whistleblowers.
• If a whistleblower brings original insider information about financial fraud to the SEC
  and the agency successfully moves forward with action against the alleged
  perpetrator, the whistleblower may be entitled to anywhere from 10 percent to 30
  percent of the total fines levied if > $1M

Dod Frank Wall Street Reform Act