Which section of the Sarbanes-Oxley Act specifies "Periodic financial reports must be certified by CEO and CFO"?
Click on the arrows to vote for the correct answer
A. B. C. D.A.
Section 302 of the Sarbanes-Oxley Act requires corporate responsibility for financial reports to be certified by CEO, CFO, or designated representative.
Incorrect Answers: B: Section 404 of the Sarbanes-Oxley Act states that annual assessments of internal controls are the responsibility of management.
C: Section 203 of the Sarbanes-Oxley Act requires audit partners and review partners to rotate off an assignment every five years.
D: Section 409 of the Sarbanes-Oxley Act states that the financial reports must be distributed quickly and currently.
The correct answer is A. Section 302.
The Sarbanes-Oxley Act (SOX) was enacted by the US Congress in 2002 in response to corporate scandals, such as Enron and WorldCom. The act was designed to improve corporate governance and financial reporting to protect investors and the public.
Section 302 of the SOX Act requires the CEO and CFO of a publicly traded company to certify that their company's financial statements are accurate and complete. This certification must be included in the company's periodic financial reports, such as its quarterly and annual reports.
The certification must state that the company's financial statements:
The certification must also state that the CEO and CFO are responsible for establishing and maintaining internal controls and have evaluated the effectiveness of the company's internal controls within the previous 90 days.
Section 404 of the SOX Act requires companies to assess and report on the effectiveness of their internal controls over financial reporting. Section 203 of the act requires companies to disclose whether they have an audit committee and the composition of that committee. Section 409 requires companies to disclose material changes in their financial condition or operations on a real-time basis.
Therefore, A is the correct answer as Section 302 specifically outlines the requirement for CEOs and CFOs to certify the accuracy of financial statements in periodic reports.