Below are several statements about the Sarbanes-Oxley Act (SOX).
1. SOX represents legislation passed in response to several accounting scandals in the early 2000s.
2. The requirements outlined in SOX apply only to those companies expected to have weak internal controls or to have manipulated financial statements in the past.
3. Section 404 of SOX requires both company management and auditors to document and assess the effectiveness of a company’s internal control processes that could affect financial reporting.
4. Severe financial penalties and the possibility of imprisonment are consequences of fraudulent misstatement.
5. With the establishment of SOX, management now has primary responsibility for hiring an external audit firm.
6. The lead auditor in charge of auditing a particular company must rotate off that company only when occupational fraud is suspected.
Required: State whether the answer to each of the statements is true or false.