Final answer:
The PCAOB requires the CEO and CFO to be responsible for financial reporting, highlighting the truth of the statement. Corporate governance, including the board of directors, audit firms, and investors, also plays a vital role in oversight, but individual executive responsibility remains critical, as seen in the Lehman Brothers case.
Step-by-step explanation:
The statement that the PCAOB (Public Company Accounting Oversight Board) makes it clear that the CEO and CFO are responsible for the internal control over financial reporting and the preparation of the financial statements is indeed true. The Sarbanes-Oxley Act of 2002, which created the PCAOB, requires that the CEO and CFO of publicly-traded companies certify the accuracy and completeness of financial reports.
Corporate governance plays a crucial role in maintaining the integrity of financial reporting. The board of directors, acting as the first line of oversight, alongside auditing firms and outside investors, should work together to ensure that the company's financial information is accurate and reliable. However, in cases like Lehman Brothers, it was evident that these governance mechanisms can sometimes fail, highlighting the importance of the individual responsibility of top executives in maintaining accurate financial reports.