CFS Corporate Governance & Whistleblower Programs Flashcards

Under the Sarbanes-Oxley Act (SOX), which section requires CEOs and CFOs to personally certify the accuracy of financial reports?

Answer: Section 302

SOX Section 302 requires the CEO and CFO to personally certify that financial statements fairly represent the company's financial condition, creating personal accountability for fraud.

Which SOX provision requires management and auditors to assess and report on the effectiveness of internal controls over financial reporting?

Answer: Section 404

SOX Section 404 mandates that management assess internal controls over financial reporting and that external auditors attest to that assessment, significantly raising accountability.

A company's audit committee is primarily responsible for:

Answer: Overseeing financial reporting and the external audit process

The audit committee, composed of independent board members, oversees financial reporting integrity, the external audit, and the company's internal audit function.

What is the primary purpose of a corporate code of conduct?

Answer: To set behavioral standards and ethical expectations for all employees

A corporate code of conduct establishes the ethical standards, behaviors, and values expected of all employees, forming the foundation of an anti-fraud culture.

Which governance concept describes the responsibility of a board of directors to act in shareholders' best interests?

Answer: Fiduciary duty

Fiduciary duty obligates board members to act with loyalty and care on behalf of shareholders, prioritizing shareholder interests over personal gain.

"Tone at the top" in fraud prevention refers to:

Answer: Senior leadership's demonstrated commitment to ethics and anti-fraud culture

Tone at the top describes how senior leadership's attitudes, actions, and communications set the ethical culture of an organization, directly influencing employee behavior.