The Sarbanes-Oxley Act of 2002 details that chief executive officers and chief financial officers must sign and certify every financial report or document that their corporations release to the public or file with government agencies. Failure to do so results in civil and criminal penalties.
Executive officers must certify that they have read each report, that each report does not contain any omissions or false statements, and that they have established a series of controls to ensure the accuracy of reports. In addition, executive officers must agree to report any errors or fraud that were discovered in a report or during the control process. Executives must certify that each report complies with sections 13(a) and 15(d) of the SEC Act of 1934. Failure to do so results in fines of up to $5 million and 20 years in jail.
In addition, the Sarbanes-Oxley Act makes it illegal for a company to lend money or extend credit to any of its executive officers. This prohibition also prevents loans for cars, home improvement and credit cards. However, the Act provides guidelines for companies to issue forms of credit to non-executive officers.
The Sarbanes-Oxley Act also makes it illegal for an executive officer, or any company employee, to destroy, alter, attempt to conceal or damage company records or paperwork that may be required by the government.