Discuss WGU WGU Financial Management (C214) Exam Topic 2 Question 1

What is the significance of Section 302 of the Sarbanes--Oxley Act (SOX)?

AIt requires management to certify the accuracy of financial reports.

BIt requires the external auditor to take responsibility for financial accuracy.

CIt relaxes the requirements for internal control.

DIt allows companies to opt out of internal control reporting.

Suggested Answer: A

Section 302 of the Sarbanes--Oxley Act requires a company's chief executive officer (CEO) and chief financial officer (CFO) to personally certify the accuracy and completeness of financial statements and disclosures. This certification affirms that management is responsible for establishing and maintaining effective internal controls and has evaluated their effectiveness. The provision was introduced to enhance accountability and restore investor confidence following major accounting scandals. By placing legal responsibility directly on senior executives, Section 302 strengthens corporate governance and reduces the likelihood of fraudulent reporting. Financial management and governance literature consistently highlight this section as a cornerstone of SOX compliance. Option A accurately reflects its purpose.

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12 comments · newest first

Valentin 3 months ago

B sounds good too, but A is more significant in my opinion.

Viki 3 months ago

Definitely A! It holds them accountable for financial reports.

Gracia 3 months ago

I think A is the right answer. Management must ensure accuracy.

Ashlyn 3 months ago

I thought SOX made things stricter, not relaxed!

Giuseppe 3 months ago

Definitely not B, auditors don’t take responsibility for accuracy.

Larae 4 months ago

Wait, does it really hold management accountable though?

Angella 5 months ago

Totally agree, that's a big deal for accountability!

Judy 5 months ago

It requires management to certify the accuracy of financial reports.

Crista 6 months ago

I know it doesn't relax internal control requirements, but I can't recall if it allows opting out of anything. I should have reviewed that section more!

Rory 6 months ago

I feel like I might be mixing it up, but I thought Section 302 had something to do with auditors, maybe about their responsibilities?

Melinda 6 months ago

I remember practicing a question like this, and I think it was definitely about management's responsibility for accuracy.

Cristy 6 months ago

I think Section 302 is about management certifying financial reports, but I'm not completely sure if that's the only thing it covers.

WGU Financial Management (C214) Exam - Topic 2 Question 1 Discussion