Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act requires certain disclosures in periodic reports. Those disclosures include:

1. All adjusting entries identified by the public accounting firm reporting on the financial statements. 2. The financial statements disclose all material off-balance sheet transactions including operating leases, contingent obligations, and relationships with unconsolidated subsidiaries. 3. Pro forma financial statements shall include all relevant information and shall not include misleading or untrue information.

The Sarbanes-Oxley Act defines the responsibilities of the audit committee of an issuer as including:

1. Appointment of the auditor 2. Compensation of the auditor 3. Oversight of the auditor a. Resolve disagreements between management and the auditor b. The auditor reports directly to the audit committee

Title VIII of the Sarbanes-Oxley Act considers what topics?

1. Criminal penalties for altering documents 2. Statute of limitations for securities fraud 3. Whistle-blower protection 4. Criminal penalties for securities fraud

Title IV of the Sarbanes-Oxley Act, Enhanced Financial Disclosures, includes the following topics:

1. Disclosures in periodic reports 2. Enhanced conflict-of-interest provisions 3. Disclosures of transactions involving management and principal stockholders 4. Management assessment of internal controls 5. Certain exemptions 6. Code of ethics for senior financial officers 7. Disclosure of audit committee financial expert 8. Enhanced review of periodic disclosures by issuers

The Sarbanes-Oxley Act defines the criteria for the independence of audit committee members for issuers as including the following characteristics:

1. Each member of the audit committee shall be a member of the board of directors of the issuer but shall otherwise be independent. 2. Audit committee members may not accept any consulting, advisory, or other compensation or fees from the issuer other than pursuant to their roles on the board. 3. Audit committee members may not be an affiliated person of the issuer or any subsidiary of the issuer.

The Sarbanes-Oxley Act includes provisions for management assessment of internal controls. Those provisions include a report showing:

1. Management's assertion that it is responsible for adequate internal control structure. 2. Management's conclusions regarding its assessment of the effectiveness of the internal control structure and procedures for financial reporting. 3. The auditor's attestation regarding management's assessment of internal control.

Title III of the Sarbanes-Oxley Act, Corporate Responsibility, includes the following topics pertaining to financial reporting. What are they?:

1. Public company audit committees 2. Corporate responsibility for financial reports 3. Improper influence on conduct of audits 4. Forfeiture of certain bonuses and profits

The Sarbanes-Oxley Act requires than an issuer's audit committee establish a complaint procedure that includes:

1. Receipt, retention, and treatment of complaints received by issuers regarding: a. Accounting b. Internal Controls c. Auditing 2. Confidential or anonymous submissions by employees of issuers regarding questionable accounting or auditing manners.

The Sarbanes-Oxley Act imposes certain financial penalties on officers who are responsible for material misstatements resulting from their misconduct. Penalties include:

1. Refund to the issuer of any bonus or other incentive-based or equity-based compensation during the 12 month period following the first public issuance of the financial document. 2. Refund any profits realized from the sale of securities of the issuer during the 12 month period following the first public issuance of the financial document.

An issuer periodic report containing financial statements filed with the SEC must include the following written certifications:

1. That the periodic report complies with the SEC Act of 1934 2. That information in the report fairly presents, in all materials respects, the financial condition and operating results of the issuer. 3. Which must be signed by the CEO and CFO of the issuer, who bear responsibility for these statements.

For purposes of service on the audit committee, what qualifies an individual for classification as a financial expert?

1. Understanding of GAAP 2. Experience in the preparation or auditing of financial statements for comparable issuers 3. Application of GAAP 4. Experience with internal controls 5. Understanding of audit committee functions

Under Title XI, Corporate Fraud Accountability, what are the penalties for tampering with a document used in an official proceeding or retaliating against an informant providing information to the SEC?

Document tampering will result in fines and/or prison term of not more than 20 years. Retaliation against informants providing information to the SEC will result in fines and/or a prison term of not more than 10 years.

The Sarbanes-Oxley Act specifically prohibits improper influence on the conduct of audits defined as follows:

No officer or director may take any action to fraudulently influence, coerce, manipulate, or mislead an independent CPA engaged in an audit of the financial statements of an issuer for the purpose of rendering the financial statements materially misleading.

The Sarbanes-Oxley Act includes certain enhanced conflict-of-interest provisions. Those provisions include:

Prohibitions on personal loans to executives, with some exceptions.

The Sarbanes-Oxley Act includes provisions for disclosure of transactions involving management and principal stockholders. Those provisions include:

Reporting by persons with ownership of 10% or more. Statements are filed at the time of registration, when a person achieves 10% ownership, and when there has been a change in ownership.

The Sarbanes-Oxley Act assigns the following corporate responsibilities regarding the required disclosures to the auditors and audit committee by officers:

The CEO and CFO must certify the following for annual and quarterly reports to the auditors and the audit committee: 1. All significant deficiencies in the design or operation of internal controls. 2. Any fraud, whether or not material, that involves management.

The Sarbanes-Oxley Act assigns the following corporate responsibilities regarding internal controls that must accompany financial reports:

The CEO and CFO must certify the following for annual and quarterly reports: 1. The officers are responsible for establishing and maintaining internal controls. 2. Internal control is designed to ensure that material information is provided to internal and external users. 3. Internal controls have been evaluated within 90 days prior to the report. 4. The officers' conclusions regarding internal control effectiveness as of the evaluation date.

The Sarbanes-Oxley Act assigns the following corporate responsibilities for financial reports for issuers:

The CEO and CFO must certify the following for annual and quarterly reports: 1. The officers have reviewed the report. 2. The report does not include untrue statements or omit material information. 3. The financial statements are fairly stated. 4. The signing officers make assertions regarding their responsibilities for internal control. 5. The signing officers have disclosed internal control weakness and instances of fraud to the auditors and the audit committee. 6. The status of changes to internal control subsequent to the date of their evaluation.

The Sarbanes-Oxley Act includes provisions for audit committee disclosures. Those disclosures include:

The issuer must disclose the existence of a financial expert on the committee or the reasons why the committee does not have a member who is a financial expert.

Title IX of the Sarbanes-Oxley Act considers what topics?

Title IX, White-Collar Crime Penalty Enhancements, includes the following: 1. Attempt and conspiracy 2. Amended sentencing guidelines for white-collar offenses 3. Failure of corporate officers to certify financial reports

Title XI of the Sarbanes-Oxley Act considers what topics?

Title XI, Corporate Fraud Accountability, includes the following: 1. Tampering with a record or impeding an official proceeding 2. Temporary freeze of authority for the SEC 3. Authority of the SEC to prohibit persons from serving as officers or directors 4. Retaliation against informants