According to the Section-302 of the Sarbanes-Oxley Act of 2002, what does certification of reports implies? Each correct answer represents a complete solution.
Choose three.
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A. B. C. D.BCD.
Section 302 of Sarbanes-Oxley act has the tremendous impact on the risk management solution adopted by corporations.
This section specifies that the reports must be certified by the CEO, CFO, or other senior officer performing similar functions.
Certification of reports establishes: -> The signing officer has reviewed the report.
-> The financial statement does not contain, to the knowledge of signing officer, any materially untrue or misleading information and represent fairly all financial conditions and results of the enterprise's operations.
-> The signing officers: - are responsible for establishing and maintaining internal controls - have designed such internal controls to ensure that material information relating to the issuer and its consolidated subsidiaries is made - known to such officers by others within those entities, particularly during the period in which the periodic reports are being prepared - have evaluated the effectiveness of the issuer's internal controls as of a date within 90 days prior to the report - have presented in the report their conclusions about the effectiveness of their internal controls base on their evaluation as of that date -> The signing officer have disclosed to external auditors, audit committee, and other directors: - all significant deficiencies in the design or operation of internal controls which could adversely affect the reliability of the reported financial data - any fraud, whether or not material, that involves management or other employees who have a significant role in the internal controls of the enterprise -> The signing officer have indicated in the report any internal controls or changes to those internal controls which have been implemented since they were evaluated.
Incorrect Answers: A: The signing officer has evaluated the effectiveness of the issuer's internal controls as of a date within 90 days prior to the report, not at the time of the report.
Section-302 of the Sarbanes-Oxley Act of 2002 requires the CEO and CFO of public companies to certify that the company's financial statements are accurate and complete, and that they fairly present the financial condition, results of operations, and cash flows of the company. The certification must be provided in the company's quarterly and annual reports filed with the Securities and Exchange Commission (SEC). The certification consists of several elements, three of which are:
A. The signing officer has evaluated the effectiveness of the issuer's internal controls as of a date at the time of the report.
This element requires the CEO and CFO to evaluate the effectiveness of the company's internal controls over financial reporting. Internal controls are policies and procedures that are designed to provide reasonable assurance that financial transactions are recorded accurately and completely, that assets are safeguarded, and that financial statements are prepared in accordance with generally accepted accounting principles (GAAP).
B. The financial statement does not contain any materially untrue or misleading information.
This element requires the CEO and CFO to certify that the financial statements included in the report do not contain any material misstatements or omissions. A material misstatement is one that would affect the decision of a reasonable investor.
C. The signing officer has reviewed the report.
This element requires the CEO and CFO to review the report and to confirm that they are aware of all the information in the report, including any disclosures that are necessary to make the financial statements not misleading.
D. The signing officer has presented in the report their conclusions about the effectiveness of their internal controls based on their evaluation as of that date.
This element requires the CEO and CFO to present their conclusions about the effectiveness of the company's internal controls over financial reporting based on their evaluation as of the date of the report. This conclusion must be based on an evaluation that is conducted within 90 days prior to the report. If there are any material weaknesses in the internal controls, the CEO and CFO must disclose them in the report.
Therefore, the correct answers to the question are A, B, and C.