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How does Sarbanes-Oxley impact executives?
Home » Accounting » Sarbanes-Oxley » How does Sarbanes-Oxley impact executives?The majority of the blame for the recent corporate scandals fell on executives, so understandably, Sarbanes-Oxley has specific wording and directives for these individuals.
Above all, Sarbanes-Oxley clearly places responsibility on the shoulders of executives. The CEO and the CFO of corporations have to review and sign off on financial audits. In addition, Sarbanes-Oxley spells out that executives are responsible, an act that is meant to force executives to set the standard for the company’s finances and to be aware of what finances the company is practicing.
In addition, Sarbanes-Oxley placed additional restrictions on the ties between corporate finances and executive finances. The law bans companies from granting loans to executives and requires public reporting of both executive insider trading and executive compensation and benefits.
The final strong stand Sarbanes-Oxley makes is to increase the penalties for white-collar criminals. Congress set maximum executive penalties of twenty years in prison and $5 million in fines for Sarbanes-Oxley violations. With this stipulation, as with all its requirements, Sarbanes-Oxley makes clear that executives should hold themselves to a higher standard, if for no other reason than because the government now does.
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