Refer to Exhibit 2.5.

1. (Sections 101, 104, and 105) How does the establishment and operation of the PCAOB help to ensure quality external audits? How will audit firm inspections and investigations by the PCAOB help ensure high audit quality?
2. (Sections 201203) How do Sections 201203 address auditor independence concerns?
3. (Section 206) What is a cooling-off period, and how does it address auditor independence concerns?
4. (Section 301) How do the audit committee requirements help ensure effective corporate governance?
5. (Section 302) How do the officer certification requirements help to address the risk of fraud in publicly traded organizations? What is the likelihood that a CFO who is committing fraudulent financial reporting would sign the certification falsely, and what are your reactions to that possibility?
6. (Section 401) How does this section relate to the Enron fraud?
7. (Section 404) How do the management assessment and auditor attestation of internal controls contained in this section help to address the risk of fraud in publicly traded organizations?
8. (Section 407) Why is it important that at least one member of the audit committee be a financial expert? What are the financial reporting implications if the audit committee does not have any individuals serving on it who possess financial expertise?

Are nonpublic organizations required to adhere to the requirements of the Sarbanes-Oxley Act? Explain.

Identify several factors (red flags) that would be strong indicators of opportunities to commit fraud.

Refer to Exhibit 2.1.

1. What is a Ponzi scheme?
2. Describe the key elements of the Bernie Madoff fraud.
3. Is this fraud primarily a case of asset misappropriation or fraudulent financial reporting?