MODULE 21 PROFESSIONAL RESPONSIBILITIES 73

4. Companies required to disclose if they have adopted a code of ethics

5. Names of "financial experts" required who serve on companies' audit committees
6. Actions prohibited that fraudulently manipulate or mislead auditors
7. New conflict of interest rules for analysts
8. SEC may petition courts to free~e payments by companies that are, extraordinary
9. CEOs and CFOs of mo t large companies listed on public stock exchanges are now required to
certify
financial statements filed with SEC
10. This generally means that they certify that information "fairly represents in all material respects
the financial conditions and results of operations" of those companies and that
(1) Signing officer reviewed report
(2) Company's report does not contain any untrue statements of material facts or does not omit
any statements of material facts to the best of hislher knowledge
(3) Officers have internal control system in place to allow honest certification of financial
statements
(a) Or if any deficiencies in internal control exist, they must be disclosed to auditors
11. Blackout periods established for issuers of certain security transaction types that limit
companies'
purchase, sale, or transfer of funds in individual accounts
12. Stiffer penalties for other white-collar crimes including federal law covering mail fraud and wire
fraud
13. .Addltional Statutory Liability against Accountants
14. Auditors are required to use adequate procedures to uncover illegal activity of client
15. Civil liability is proportional to degree of responsibility
16. One type of responsibility 'is through auditors' own carelessness
17. Another type of responsibility is based on auditor's assisting in improper activities that s/he is
aware or should be aware of