Bachelor of General Studies (BGS) Degree Practice Exam

Under the Sarbanes-Oxley Act, what must corporations' executives do regarding financial reports?

1. Present them to the media

2. Vouch for their accuracy

3. Submit them anonymously

4. Review them quarterly

The correct answer is: Vouch for their accuracy

Under the Sarbanes-Oxley Act, executives of corporations are required to vouch for the accuracy of financial reports. This legislation was enacted in response to major financial scandals, such as Enron and WorldCom, and aims to enhance corporate governance and accountability. By requiring executives, such as the CEO and CFO, to certify the financial statements, the law ensures that they are personally responsible for the accuracy and completeness of the information presented to shareholders and the public. This requirement is crucial because it reinforces the principle of accountability at the highest levels of a corporation. If executives certify misleading or fraudulent reports, they can face significant penalties, including fines and imprisonment. This has led to a greater emphasis on ethical conduct and the integrity of financial reporting within corporations. While some options present actions related to financial reporting, such as submitting reports anonymously or presenting them to the media, these do not align with the accountability focus mandated by the Sarbanes-Oxley Act. Additionally, the requirement to review reports quarterly, while a sound practice in corporate governance, does not capture the specific obligation to certify or vouch for their accuracy established by the Act.