Joan Is the CFO of Para Corp

question 2

Essay

Joan is the CFO of Para Corp. and is a year from retirement. In order to guarantee herself a very substantial bonus and to boost her retirement package, she knowingly certifies false financial reports that make the company appear to be much more profitable than it really is. She further takes steps to ensure that the financial report does not get reviewed through internal controls maintained by Para Corp. Under provisions of the Sarbanes-Oxley Act, what are the possible penalties that may be imposed when her actions are discovered?

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Definitions:

Fixed Overhead Volume Variance

The difference between the budgeted and actual volume of production, which results in a variance in fixed overhead costs allocated per unit.

Overhead Applied

The portion of manufacturing overhead costs allocated to individual products or job orders based on a predetermined overhead rate.

Products

Goods or commodities that are manufactured or refined for sale.

Variable Overhead Efficiency Variance

The difference between actual hours taken to produce something and the standard hours expected, multiplied by the variable overhead rate.