Question

• Given the requirements contained in the Act for CEO and CFOs to certify the adequacy of controls and financial statement accuracy, evaluate your comfort level with this requirement should you become a CFO of a publically traded company. Provide support for your rationale. • Given the requirements contained in the Act for CEO and CFOs to certify the adequacy of controls and financial statement accuracy, evaluate your comfort level with this requirement should you become a CFO of a publically traded company. Provide support for your rationale.

Answer 1

With respect to financial controls and accuracy of financial statements, there are two types for certifications required. One by the internal CEO or CFO and second, by the independent auditors who are not related to the firm. So the requirement contained in the act is with respect to the first internal certification required by the CFO/CEO. The financial statements have to be filed with securities exchange commission (SEC) and also the stock exchanges so that retail public can evaluate the performance of the business and take a decision whether to invest or not in the company.

So it is the responsibility of the CFO to act independently and make sure that there are no anomalies with financial reporting. Any type of small misreporting or smoothening of the numbers to make it look good should be corrected immediately. The CFO should cross verify the financial performance of each of the verticals in the organization and check for misreporting. Finally, he/she should amalgamate or combine the numbers so as to have single combined financial statement for the business.

In conclusion have worked previously with major corporation and managing their finances and analysing the performance of publicly traded companies, I am quite comfortable with this type of work.