The Sarbanes-Oxley Act of 2002 Requires That the Key Company

question 67

Multiple Choice

The Sarbanes-Oxley Act of 2002 requires that the key company officials certify the financial statements.Certification means that the company CEO and CFO must sign a statement indicating

• A) They have read the financial statements.
• B) They are not aware of any false or misleading statements (or any key omitted disclosures)
• C) They believe that the financial statements present an accurate picture of the company's financial condition.
• D) All of the above.

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Definitions:

Free Markets

Economic systems in which the prices for goods and services are determined by the open market and consumers, without government intervention.

Moral-Hazard Problem

A situation in which one party engages in risky behavior knowing that it is protected against the risk because another party will incur any resulting costs.

Monitoring

The process of systematically observing, checking, and recording activities or data to ensure proper compliance or performance.

Moral Hazard Problem

The risk that one party to a transaction takes on more risk because it knows that the other party bears the consequences of those risks.