Question

For this discussion, we will consider the responsibilities imposed on senior executives by the Sarbanes-Oxley Act. In addition to certifying the accuracy of the financial statements filed with the SEC, executives are responsible for assessing and articulating their internal control procedures for ensuring the accuracy of the documents filed with the Securities and Exchange Commission (SEC).

First Post
For your discussion, in one paragraph, convey your thoughts on the following:

The significance of senior executives certifying that all documents filed with the SEC are accurate and thorough

The impact of senior leadership describing their methods for ensuring that their financial statements are accurate

The impact on the investment community if this act were eradication

Reply Post
In your reply to a classmate's post, offer a different viewpoint regarding Sarbanes-Oxley Act's impact on corporate senior leadership. Alternatively, expand on their post's position regarding the act, particularly the impact on the investment community if the act was repealed. Be sure to include your reasons for your viewpoint.

Student Post:

The financial documents certified by the CEO's and CFO's of publicly traded organizations are used by external users such as creditors and investors. If the reporting is inaccurate, the company would be at risk of loosing these potential investors. It is also significant that the CEO and CFO are held accountable for these documents, because if this information is incorrect or falsified, they are responsible for the repercussions. By having the senior leaders discuss how they ensure their financial statements are accurate, they once again are held accountable to these actions. If the senior leaders are unable to speak to these methods on their own, it shows they are not engaged in the accuracy of the financial statements as they should be. Overall, the financial sector encompasses a very large group of businesses and industries. If this sector failed, it could lead to tremendous economic and social anguish. By having the Sarbanes-Oxley Act in place, it helps to limit the potential of this occurring.

Answer 1

Reply Post:-

The Sarbanes Oxley Act was enacted post the debacle of Enron and Worldcom and came into force in 2002 to protect the investor community from accounting frauds by the organization. It ensures that all financial reports submitted to the SEC are properly verified by CEO and CFO of the company and that they would vouch for the authenticity and correctness of the financial reports. In the absence of the Act, the investor community would not be able to ascertain whether the financial reports are accurate or not and this will definitely affect their investment appetite. Also in the absence of management's commitment about the accuracy of the reports, the investment would go down which will affect the growth in the economy and major frauds may happen which would affect the overall fabric of the economic engine.