The Sarbanes-Oxley Act requires that a corporation’s CEO (chief executive officer) and CFO (chief financial officer) include statements of personal certification in the disclosures accompanying the financial reports that they file with the SEC. In essence, these statements hold the CEO and CFO personally liable for their company’s annual report content. The personal certifications must be signed by both the CEO and the CFO. Each certification requires that the CEO and CFO commit to the following statements:
1. I have reviewed this annual report.
2. Based on my knowledge, this report does not contain any untrue statements of material facts or omissions of material facts.
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the business.
4. I am responsible for establishing and maintaining disclosure controls and procedures.
5. I have disclosed any fraud, whether or not material, and have disclosed all significant control deficiencies and material weaknesses involving the company’s financial reporting.
Instructions
As a group, discuss the meaning and purpose of the personal certification requirement. How might this requirement contribute to improved investor confidence?
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