Question

Alex is the Chief Executive Officer (CEO) of a large corporation. Alex has excellent management skills, but has little financial expertise. When the firm is caught inflating its profits on its financial statements, Alex claims he was unaware of any financial issues. Alex will most likely

Answer 1

be liable for any material misrepresentations in the financial statements since the Sarbanes Oxley Act does not allow CEOs or CFOs to simply say that they were not aware of them or that they did simply didn't have the required financial skills. If any stakeholder or government agency negatively affected by this sues Alex, he will probably lose.