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CEO & CFO
Certifications

1

Prologue

Asked in court whether he was aware
of the misstatements in the company's
financial
statements,
which
had
fraudulently reported a large profit
instead of a loss, the Enron CEO said
that he was unaware of such an act as
he had not signed the financial
statements.
Jeffrey Skilling, Ex-Enron CEO

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2

WorldCom goes bankrupt amid allegations
that it had misrepresented more than $3.8
billion in expenses as assets in its financial
statements.
Xerox admits to overstating profits and sales
as the firm revises its pre-tax profits down by
$1.4 billion over the 1997-2001 period.
Merck recorded $12.4 billion in consumer-topharmacy co-payments that it never collected

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3

Global Practice Relating to CEO/
CFO certification
As per Sarbanes- Oxley Act’ 2002, there are two
kinds of certification requirements:
1. Section 302 of SOXA requires that CEO and CFO
each must submit a certificate to SEC with all
quarterly and annual reports.
2. Sarbanes Oxley goes further to the extent of seeking
documentation of the evaluation of the effectiveness
of the internal controls. In addition, it requires the
attestation of statutory auditors on the management’s
assessment of effectiveness of internal controls.
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4

Clause 49

Emergence of Clause 49
Naresh Chandra/Narayan Murthy Committee


Amendments/additions to provisions relating to definition of independent directors,
Strengthening the responsibilities of audit committees,
Improving quality of financial disclosures, like Related party transactions
Requiring CEO/CFO certification of financial statements The roles and responsibilities of the audit committee in all matters relating to internal controls and financial reporting have been consolidated, and the accountability of top

management— specifically the CEO and CFO—has been
enhanced
Improving disclosures to shareholders.

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What does this mean to your
company?

You must implement a long-term strategy
to establish and evaluate internal control
over your financial reporting.
It is not enough to merely sign off on the
“what” of your financials. You will have
to certify the “how” — that you have
effective internal controls that attest to
the transparency and accountability of
your numbers.

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6

India Fraud Survey Report
by KPMG

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Keywords

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