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Sox Discussion

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Auditing Principles and Procedures
ACC2366 Section311
SOX Discussion Question:
Section 302 of the Sarbanes-Oxley Act states that senior management must certify the accuracy of the financial statements produced by that accounting firm. How will this section of the act affect senior management’s cautiousness before signing off on the financial statements? Do you think this mandate will encourage more ethical people in senior management roles? Why? Which major corporation that we’ve studied recently had issues with management signing off on their financial statements? Why did they refuse to sign off on them?

Under section 302 of the Sarbanes-Oxley Act signing officers are responsible for various duties to ensure the final statements are fairly represented and not misleading to its users. Before management signs off on financial statements they have to be reviewed. They also have to ensure internal controls in place have been evaluated and effective within 90 days prior to the report being issued. According to the Sarbanes-Oxley Act, “the signing officers have designed such 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” (Sarbanes Oxley Act, 2012, s302). The act requires management to disclose these controls in their financial statements. Officers must also disclose “all significant deficiencies in the design or operation of internal controls which could adversely affect the issuer's ability to record, process, summarize, and report financial data and have identified for the issuer's auditors any material weaknesses in internal controls ;and any fraud, whether or not material, that involves management or other employees who have a significant role in the

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