The board has collectively signed off on the last set of financial statements for the corporation, despite some concerns by in-house and external accountants about the accuracy of some of the data. After all, it is time for many of the management staff and a few of the board members to receive stock options from the company. Many of the members of the board and several members of the management team have insisted that the options were past due and that their issuance date should coincide with a period of time 6 months earlier when the price of the stock was 50% of its current value.
The accuracy of financial data in company reports has become an area of growing activity and litigation. The Sarbanes-Oxley Act was created to ensure the accuracy of corporate financial reports. Your task is to do the following:
Explain to the board about the legal liability it incurs when financial statements are incorrect (under SEC regulations).
Examine both the criminal and civil liabilities to individual board members whose signature are or might appear on the financial statement.
The response address the queries posted in 1331 words with references.
//As per the directions, we will write about the Sarbanes-Oxley Act. It will assist in analyzing the rationale and role of the prescribed Act from the business perspective and financial performance of the Companies. Along with this, the importance of SEC regulations will also be discussed.//
The Sarbanes-Oxley Act was ordained in 2002 by the United States Federal Law. The act came into existence due to some major financial and corporate scandals. The main reason for introducing the act was to alter the financial practice and corporate governance of the business houses in the global market. The act mainly comprises of 11 titles and each of the titles contains particular sections. The titles cover the basic requirements of the financial reporting and particular authorizations to be followed by the corporate houses for maintaining their financial records, according to the legal rules and regulations (The Sarbanes-Oxley Act, 2006).
SEC (Securities and Exchange Commission) regulations provide the rules and standards to be followed by the business practitioners. These include the prescriptions for the management regarding the preparation and preservation of financial updates and practices. The commission also provides the rules to enforce Sarbanes-Oxley Act and the related standards for the implementation of professional practices of doing the business. Mainly, the regulations are based on the protection of investors and the other stakeholders of the company by providing accuracy in the records of the corporate financial statements, under the legal and ethical framework of business.
//Above, we discussed about the Sarbanes-Oxley Act and the importance of SEC regulations. Now, we will write about the legal liability and the SEC standards for making the fair business practices and incorporating justifiable financial statements.//
The corporate houses are required to maintain their original and correct financial statements, according to the rules and regulations of law. The committee of board is formed under the section 101 of SOX, which is known as Public Company Accounting Oversight Board. The board of the corporate house is liable for not providing the correct financial statements. The board members are liable to the client's direct relations, damages and defenses. In case of normal auditing, the auditor will not be held liable for discrepancies and irregularities in the records of the financial statements (Spotlight on Sarbanes-Oxley Rulemaking and Reports, 2005).
The auditor will be held liable for negligence, failure in performing the duty according to the legal laws and ...
This response addresses the queries posed in 1331 Words, APA References