The Sarbanes-Oxley Act requires corporate officers to do which of the following?

• A. Eliminate the use of internal controls
• B. Personally certify the accuracy of financial statements
• C. Prepare tax returns for shareholders
• D. Delegate all financial reporting responsibilities to external auditors

Answer: (B)

Verified step by step guidance

1. Understand the Sarbanes-Oxley Act (SOX): The Sarbanes-Oxley Act was enacted in 2002 to improve corporate governance and accountability, primarily in response to major corporate scandals. It emphasizes the importance of accurate financial reporting and internal controls.
2. Review the role of corporate officers under SOX: Corporate officers, such as the CEO and CFO, are required to take personal responsibility for the accuracy and completeness of financial statements. This includes certifying that the financial reports are free from material misstatements.
3. Eliminate incorrect options: The Sarbanes-Oxley Act does not require corporate officers to eliminate internal controls; in fact, it mandates the implementation and assessment of effective internal controls. Similarly, preparing tax returns for shareholders and delegating all financial reporting responsibilities to external auditors are not requirements under SOX.
4. Focus on the correct requirement: The Act specifically requires corporate officers to personally certify the accuracy of financial statements. This certification ensures accountability and reduces the risk of fraudulent reporting.
5. Understand the implications: By certifying financial statements, corporate officers can face legal consequences, including fines and imprisonment, if the certification is found to be false or misleading. This reinforces the importance of ethical financial practices and compliance with SOX regulations.