|
|
|||
|
|||
|
|
CEOs Swear by Financial Statements NewsMax.com WiresWASHINGTON – Wednesday was the red-letter day, the day by which the chief executive officers of hundreds of America's largest publicly traded companies were required to attest, personally, to the accuracy of their companies' financial statements. Under the order issued by the U.S. Securities and Exchange Commission in June, companies and their officers are liable to penalties by federal agencies, with some of these penalties still to be determined. Of even more immediate importance is the perception among investors, who are likely to steer clear of companies whose financials are in question. Securities lawyer William S. Lerach of the firm Milberg and Weiss, which is lead counsel in the Enron Corp. shareholder litigation, said that in legal terms CEOs still have some room to maneuver. That is because the certifications require them to state that financial reports are accurate "to the best of their knowledge." 'Weasel Words' These, he said, were "weasel words." He said that executives "in over their heads" with financial statements they knew to be inaccurate might certify those statements anyway and "cross their fingers" that the problems didn't come to light. By the end of the business day, it appeared that nearly 90 percent of CEOs had complied with the order, heralding a sea change in U.S. corporate governance. Hundreds of CEOs filed signed statements with the SEC, although a number of companies asked for more time. Among the hold-outs was energy holding company Nicor Inc., which said Wednesday that its top executives could not certify the company's 2002 interim earnings statement and that the company was revising downward its earlier financial statements. By 5:30 p.m. EDT Wednesday, nearly 1,000 companies were required to have filed certified financial statements with the SEC. The date was chosen because Aug. 14 was the standard quarterly filing day for those companies. The SEC said there would be a delay in releasing all the certifications. The SEC requirement was imposed in response to the burgeoning problem of accounting malfeasance, with some companies revealing billions of dollars in accounting problems dating back years, which had artificially inflated profits and misled investors. Large companies that have made headlines since the end of last year include Enron Corp., Global Crossing and WorldCom Inc. Lerach noted that the U.S. is "awash in the largest wave of financial fraud since the 1920s." In addition to the SEC rule, new legislation, the Sarbanes-Oxley Act, gave this requirement greater force. Over the coming months, the top executives of all 14,000-plus publicly traded companies in the United States will be required to certify the accuracy of their quarterly and annual reports filed with the SEC. Under Sarbanes-Oxley, the penalties are more specific than the SEC's still-undetermined penalties. The law provides that CEOs who falsify their companies' financial reports can face a $5 million fine and up to 20 years in prison. Copyright 2002 by United Press International. All rights reserved.
Read more on this subject in related Hot Topics:
A product that might interest you: |
|
|||||||||||||||||
|
|||||||||||||||||||
|
| All Rights Reserved © 2008 NewsMax.Com |