In: Accounting
2.What are the auditors liability for failing to comply with Sections 302 & 404 of SOX?
Answer :
The Sarbanes-Oxley Act, commonly referred to as SOX, was designed with the goal of implementing accounting and disclosure requirements that increase transparency in corporate governance and financial reporting with a formalized system of internal checks and balances.
Formal penalties for non-compliance with SOX can include:
The auditor's liability are -
For Sec-302 & 404 : If any irregularities are detected in the reports signed by these officials, those that certify them face serious consequences. Besides lawsuits and negative publicity, a corporate officer who does not comply or submits an inaccurate certification is subject to a fine up to $1 million and/or ten years in prison, even if done mistakenly. Those caught willfully certifying a false report risk significantly greater penalties, including up to $5,000,000 in fines or 20 years in prison, or both.