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The Sarbanes-Oxley Act: Executive Responsibility

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The Sarbanes-Oxley Act: Executive Responsibility

In July 2002, President Bush signed the Sarbanes-Oxley Act into law. Due in large part to unethical actions by large corporations and their executives, this historic act created stricter repercussions for professionals within financial professions, and with the passage of the Sarbanes-Oxley Act of 2002 (the “Act”), these professions changed dramatically. It’s been a year plus now and some executives are still in the dark about what it all means for them, their companies and the investing public. This four page white paper is packed with relevant information. It explores the regulatory, liability, and enforcement conditions of the Sarbanes-Oxley Act that will most directly affect public company officers, directors, and counsel experiencing financial troubles or bankruptcy. Don't miss it! Your freedom and pocketbook could be at stake!




Three main aspects of the Sarbanes-Oxley Act exist to protect investors, and these elements improve the accuracy and reliability of corporate disclosures:
  • Toughen the Securities Exchange Act of 1934 (the "Exchange Act") and criminal laws on disclosure and malfeasance by corporate officers, directors, and counsel
  • Increase the regulation of accounting firms
  • Increase the SEC's involvement in the establishment of accounting standards
This white paper will primarily deal with the first element: The mandate that officers, directors, and counsel of publicly owned companies take responsibility for their actions within the company.

With the passage of the Sarbanes-Oxley Act, the SEC was granted more authority than it previously had, and it established rules that required the chief executive officer and chief financial officer to certify and approve certain factors of the quarterly and annual financial statements:
  • The officers have reviewed the report;
  • Based on the officers' knowledge, the report does not contain false statements or omissions of material facts that would render the report misleading;Based on the officers' knowledge, the financial condition of the reporting company is fairly represented;
  • The officers are responsible for establishing and maintaining disclosure controls and procedures and have
    • Designed such controls to ensure that material information related to the reporting company is made known to the certifying officers;
    • Evaluated the effectiveness of the controls within 90 days prior to making the filing;
  • Presented their conclusions regarding the effectiveness of the controls based on their evaluation;
  • The officers have disclosed, based on their latest evaluation, to the reporting company's audit committee and its board of directors:


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