Sarbanes-Oxley Act of 2002

Question 1

Enhanced disclosure requirements for periodic reports (quarterly or annually) include the following:

Answer 1

• all material correcting adjustments identified by the auditor should be reflected in the FS
• the FS should disclose all material off-balance sheet transactions: operating leases, contingent obligations (lawsuits), relationships with unconsolidated subsidiaries
• conformace of pro forma FS to the following: no untrue statements, no omitted material info, reconciled with GAAP basis FS
• use of special purpose entities (SPEs)

Question 2

What are the requirements for a disclosure of transactions involving management and principal stockholders?

Answer 2

• disclosures are required for persons who generally have a direct/indirect ownership of more than 10% of any class of most any equity security

Question 3

What is the code of ethics for senior officers?

Answer 3

• Senior officers are the CEO, CFO, controller and chief accountant
• Issuers must disclose whether the issuer has adopted a code of conduct for senior officers
• Issuers must disclose the reasons why no code of conduct has been adopted
• the code of ethics promotes: honest and ethical conduct; full, fair, accurate and timely disclosures in financial reports and compliance with laws, rules and regs.

Question 4

What does FACT stand for regarding financial reports?

Answer 4

Fair, accurate, complete and timely

Question 5

An individual who alters, destroys, conceals, falsifies or makes false entries in any document with the intent to impede, obstruct or influence an investigation will be fined, imprisoned (or both) for how long?

Answer 5

20 years max

Question 6

An auditor who fails to retain all audit and review workpapers for 7 years from the end of the fiscal period in which the audit was conducted will be fined, imprisoned (or both) for how long?

Answer 6

10 years max

Question 7

What is the statute of limitations for securities fraud?

Answer 7

no later than the earlier of 2 years after the discovery of the facts constituting the violation, or 5 years after the violation

Question 8

An individual who knowingly executes, or attempts to execute securities fraud will be fined, imprisoned (or both) for how long?

Answer 8

25 years max

Question 9

What is the penalty for mail and wire fraud (a white collar offense)?

Answer 9

Increased from 5 to 20 years in prison

Question 10

What is the penalty for violating ERISA?

Answer 10

$100,000 max fine and/or 10 year max sentence

Question 11

What does the US Sentencing Commission do?

Answer 11

• reviews and amends, as needed, the Federal Sentencing Guidelines and policy statements to carry out the provisions of the Attempt and Conspiracy Act
• will review any additional aggravating or mitigating circumstances for a particular offense that could justify an exception to the existing sentencing ranges

Question 12

An individual who alters, destroys or conceals a document with the intent to modify the document and its integrity or the availability of the document in an official proceeding will be fined/sentenced for how long?

Answer 12

20 years max

Question 13

An individual who knowingly takes harmful action against another person with the intent to retaliate for that person providing truthful information to the SEC regarding a possible federal offense will be fined/imprisoned for how long?

Answer 13

10 years max- this is the why we have whistleblower protection