Sarbanes Oxley requirements for CEOs and CFOs

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CEOs and CFOs must understand the new oxley requirement sarbanes and responsibilities imposed by these provisions. Here are some of the most important things they should know.

A written statement by the CEO and CFOor equivalent thereofof the issuer.ithat the periodic report containing the financial statements fully complies with the requirements of section 13 aor 15 dof the Securities Exchange Act of 1934.andiithat information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer.

For any person whowillfully certifies such a statementknowingthat it does not comply, the penalties are much higher up to 5 million and or 20 years.

For example, section 302 requires the CEO and CFO to certify that theyhave designed internal controls to ensure that material information relating to the issuer and its consolidated subsidiaries is made known to such officers by others within those entities, particularly during the period in which the periodic reports are being prepared.Under this provision, the CEO and CFO are responsible for ensuring that all material information is made known personally to the CEO and CFO themselves, and this obligation extends not only to material information concerning the company, but also to material information about all the companysconsolidated subsidiaries.Thus,302 creates a heavy burden on the CEO and CFO to become personally aware of material information on a timely basis.

Many companies are investing significant amounts of time and money into reviewing their oxley requirement sarbanes internal procedures with outside accountants and lawyers to ensure that their senior managers can file the appropriate certifications without risk of civil or criminal liability.

It is entirely possible that a companys existing internal controls are adequate, modifications may be appropriate to minimize risk.