Federal Statutory Liability Flashcards
Describe the Foreign Corrupt Practices Act.
A United States federal law known primarily for two of its main provisions, one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials.
What brought about the Foreign Corrupt Practices Act?
Post-Watergate response to illegal foreign bribes paid by U.S. companies.
What is the focus of Internal Financial Controls?
These controls focus on the integrity of information flowing into the financial statements.
What is the purpose of the Racketeer Influenced Corrupt Organizations Act?
To prevent organized crime’s infiltration into legitimate business.
List the activities that are punishable under the Sarbanes-Oxley Act.
- Failure to retain audit records for seven years.
- Destruction of records in federal matter.
- Corrupt tampering with documents.
What is the focus of Internal Accounting Controls?
These controls focus on Asset Accountability.
Describe the Sarbanes-Oxley federal securities crime provision.
Whoever knowingly executes, or attempts to execute, a scheme or artifice–(1) to defraud any person in connection with any security [of a public company]; or (2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any money or property in connection with the purchase or sale of any security of an issuer [of a public company]…shall be fined under this title, or imprisoned not more than 25 years, or both.
List the two federal fraud provisions under which accountants can be held criminally liable.
Mail fraud and wire fraud.
Describe the condition that must exist for the attachment of mail or wire fraud liability.
Use of mail or wires must be an essential part of the fraudulent scheme for liability to attach.
True or False: The Racketeer Influenced Corrupt Organizations Act provides for only criminal penalties.
False. The Act provides for extended criminal penalties and a civil cause of action for organized crime.
Describe the whistleblower protection under the Sarbanes-Oxley Act.
The act punishes those who retaliate against whistleblowers that lawfully provided information to their supervisors or the federal government regarding conduct believed to be in violation of the securities law.
List the four elements of a violation of the Racketeer Influenced Corrupt Organizations Act as outlined in Section 1962(c) of the Act.
A violation of Section 1962(c), requires (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.
Describe the Racketeer Influenced Corrupt Organizations Act.
Commonly referred to as the RICO Act, the Act is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. The RICO Act focuses specifically on racketeering, and it allows for the leaders of a syndicate to be tried for the crimes which they ordered others to do or assisted them, closing a perceived loophole that allowed someone who told a man to, for example, murder, to be exempt from the trial because they did not actually do it.
True or false: Sarbanes-Oxley Section 404: Assessment of internal control supplements the Foreign Corrupt Practices Act’s internal accounting controls with internal financial controls.
True - it supplements FCPA’s Internal Accounting Controls with Internal Financial Controls.
What actions are considered a crime under the Sarbanes-Oxley Act with regard to the destruction of evidence?
Destruction of records; Willful failure to retain audit review work papers; Corrupt tampering with documents to be used in an official proceeding.
