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When the CEO and CFO sign off on the financial statements, they assume an extraordinary amount of risk. If there is fraud occurring in the financial reporting o
by pwpw 3y ago
When the CEO and CFO sign off on the financial statements, they assume an extraordinary amount of risk. If there is fraud occurring in the financial reporting of their company, they will be severely disciplined. I suggest reading up on Sarbanes-Oxley Section 302[0] and the Enron[1] and WorldCom[2] accounting scandals. Sarbanes-Oxley was issued as a response to the aforementioned scandals and lays out the bulk of the risk that a CEO and other executives take on.
[0] https://www.law.cornell.edu/uscode/text/15/7241 https://www.law.cornell.edu/uscode/text/15/7241
[1] https://en.wikipedia.org/wiki/Enron_scandal https://en.wikipedia.org/wiki/Enron_scandal
[2] https://en.wikipedia.org/wiki/WorldCom_scandal https://en.wikipedia.org/wiki/WorldCom_scandal
- dopamean 3y agoAt Enron and Worldcom the CEOs were committing fraud. They brought that in themselves. It wasn't a "risk" they assumed. This is a bit of a ridiculous statement.
- pwpw 3y agoI’m not discussing the CEOs from those scandals. I’m discussing the ramifications of the scandals that have been passed onto present day CEOs. The GP asked what risk current CEOs assume. I linked them directly to Section 302 of Sarbanes-Oxley, which is the authoritative body on risk that a CEO assumes for a publicly-traded company in the US.