Which act requires executives to certify the accuracy of financial reports?

The Sarbanes-Oxley Act of 2002 was enacted in response to major corporate scandals that shook investor confidence in financial reporting and led to significant reforms in corporate governance and financial practices. One of the key provisions of this legislation is that it requires executives, specifically the CEO and CFO, to personally certify the accuracy and completeness of financial reports submitted to the Securities and Exchange Commission (SEC). This holds top executives accountable for the financial disclosures of their companies, aiming to enhance transparency and protect investors from fraudulent financial practices.

The act also established stricter penalties for misconduct and mandated stricter auditing and financial reporting standards, further reinforcing the need for accurate financial information. This context is critical in understanding the importance of the Sarbanes-Oxley Act in ensuring corporate accountability and maintaining investor confidence.