Question

23) Which of the following requires that publicly traded U.S. companies maintain an effective SDO system of internal controls?

A) The Sarbanes-Oxley Act of 2002 (SOX)
B) Internal Revenue Service
C) Securities and Exchange Act of 1934
D) AICPA

Answer 1

The Sarbanes-Oxley Act of 2002 (SOX) mandates that publicly traded U.S. companies maintain an effective system of internal controls.

Step-by-step explanation:

The requirements for publicly traded U.S. companies to maintain an effective system of internal controls are established by the Sarbanes-Oxley Act of 2002 (SOX). This legislation came about as a response to multiple major accounting scandals, including those involving Enron, Tyco International, and WorldCom. Through the Sarbanes-Oxley Act, the U.S. government aimed to increase investor confidence in the financial information provided by public corporations, thereby providing a safeguard against accounting fraud.